Apple overtakes Nokia in smartphone stakes

Nokia has voiced increased optimism that its new alliance with Microsoft will revive the group’s fortunes, in spite of second-quarter results that showed the Finnish mobile phone maker losing more ground to Apple and other rivals.

Stephen Elop, chief executive, said Nokia was making “better than expected progress” towards launching a new range of internet-enabled smartphones using Microsoft’s Windows Phone software, with the first device due by the end of this year.

Analysts said the group was facing a race against time to get a competitive product into the market amid rapid share losses to the Apple iPhone and a range of devices using Google’s Android operating system.

Nokia was overtaken by Apple as the world’s biggest smartphone maker by volume in the second quarter, when shipments declined 34 per cent from last year to 16.7m, compared with the 20.3m iPhones shipped by its US rival in the same period.

Timo Ihamuotila, Nokia chief financial officer, told the Financial Times there was “increased confidence” over the group’s ability to deliver its first Windows Phone device on time and said a “good buzz” was building around the alliance.

He said the number of software applications available for Windows Phone users had quadrupled to 25,000 since Nokia teamed up with Microsoft in February as more independent developers are drawn to the platform.

Mr Ihamuotila said Nokia was also expecting strong support from telecoms providers. “Operators want to see a third [smartphone] ecosystem to challenge Apple and Android,” he added.

As Nokia shifts to the Microsoft platform, sales of its existing range of much-criticised Symbian devices are declining at an accelerating pace. The group reported net losses of €368m in the second quarter as revenues fell 7 per cent to €9.3bn. Investor expectations were low after a profit warning in May and the stock closed up more than 2 per cent on Thursday amid relief the results were not worse.

Losses were cushioned by a €430m one-off royalty payment resulting from last month’s deal with Apple over alleged violations of Nokia patents, with further smaller fees to come.

Total handset sales were down 20 per cent from last year at 88.5m units and IDC, the telecoms consultancy, said Nokia could be overtaken by Samsung Electronics of South Korea as the world’s biggest producer during the current quarter.

“Nokia is bleeding on all fronts,” said Francisco Jeronimo, analyst at IDC. While the Windows Phone offered hope of recovery, he warned it could come too late. “The past has proven it to be very difficult or impossible for a company to regain its leadership after it has been lost.”