Nokia, Microsoft head for "Last Chance Saloon"

Fri Aug 31, 2012 2:37pm EDT
 

By Sinead Carew and Bill Rigby

NEW YORK/SEATTLE (Reuters) - Microsoft Corp and Nokia Oyj are loading up for their best -- and possibly last -- shot at denting a smartphone market dominated by Apple Inc's iPhone and Google Inc's Android mobile software.

If the new Lumia phones do not appeal to consumers when they are unveiled next Wednesday, it could mean the end for Nokia, and a serious blow to Microsoft's attempts to regain its footing in the mobile market, analysts and investors said.

"This is very high stakes," said Canaccord Genuity analyst Michael Walkley. "Nokia bet everything on Windows, and if this doesn't succeed the next step might be having to do what's best for shareholders, and that might include selling off key assets or selling the whole company."

The Finnish handset maker has logged more than 3 billion euros in operating losses in the last 18 months, forcing it to cut 10,000 jobs and pursue asset sales.

Its share of the global smartphone market has plunged to less than 10 percent from 50 percent during its heyday before the iPhone was launched in 2007.

For Microsoft, a successful Lumia launch would convince more handset makers and carriers to support its latest phone software, which is based on the same code as the upcoming Windows 8 computing system, and promises faster performance and a customizable start screen.

Windows phones have only captured 3.7 percent of the global smartphone market, according to Strategy Analytics. Android phones have 68 percent, while Apple has 17 percent.

The new Lumia phones will hit the market just as the world of Android reels from a potentially crushing legal blow, and as Research In Motion Ltd's BlackBerry continues its decline.   Continued...

 
Nokia phones are displayed in a shop in Riga July 18, 2012.REUTERS/Ints Kalnins