Finnish phonemaker Nokia has fallen behind Apple in the smartphone race, selling 16.7 million smartphones in the second quarter, compared with Apple’s 20.3 million iPhones.
This week, both Apple and Nokia reported their quarterly financial results. While Apple’s sales soared earning the company record revenue, up 82%, Nokia’s operating profit suffered a loss of €487m.
While Nokia disclosed that it has sold 16.7 million smartphones in the quarter, compared with 24 million in 2Q 2010 and 25.2 million in 1Q 2011. Apple’s iPhones sales in the quarter were 20.3 million.
Nokia CEO and former Microsoft employee Stephen Elop said the challenges the company is facing during its "strategic transformation" manifested in a greater than expected way during the quarter.
Elop added, "However, even within the quarter, I believe our actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business."
Nokia is still the world’s largest phone maker by volume. However, the total mobile device volume decreased 20% to 88.5 million units from 111 million units in 2Q 2010 and 108.5 million units in 1Q 2011.
Year-on-year, net cash from operating activities in Q2 2011 decreased due to negative net working capital impacts mainly driven by lower net sales and an unfavourable geographic mix, as well as lower underlying profitability.
The Devices & Services business witnessed 20% drop in net sales in Q2 2011 from €6.8m to €5.47m in the previous year.
"While our Q2 results were clearly disappointing, we are executing well on the initiatives that are most important to our longer term competitiveness," Elop said.
"Some progress is already evident, and thus we are targeting to end this year with more net cash and liquid assets than at the end of Q2 2011."
Nokia has been struggling to maintain its lead in the mobile phone market since 2008. Now it faces intense pressure from the growing number of Android-based phones as well as Apples iPhones.
Earlier this year, Elop had announced many drastic steps to revive the fortunes of the company. Those included outsourcing software development, a software partnership with Microsoft and job cuts.
Many believed Nokia’s in-house Symbian OS was a drawback after its phones started facing competition from Apple and Android-based phones. At the lower end, Nokia started losing its market share to the growing number of Chinese mobile manufacturing companies.
The company plans to release its first phones running on Windows 7 OS in the last quarter this year.
