Where is Nokia Corporation (NOK) Heading?

In 1998, Nokia Corporation (NYSE:NOK) was considered to be the world’s leading mobile phone manufacturer, a position that managed to keep for almost a decade. However, fierce competition within the telecommunications arena caused Nokia to lose its crown. It went from being every household’s most common brand name to a “fallen angel” fighting for a revival. Nevertheless, despite the overall bearish sentiment over the company’s future prospects, I do believe that there still is hope for this struggling giant.

Falling down the hill
The major hit came with the smartphone revolution and the introduction of’s iPhone in 2007. Since then, Nokia’s market penetration has suffered a steep deterioration, combined with a significant value loss that has left longtime investors praying for a miracle.

At the moment, despite considerable progress in boosting sales volumes, the firm has a steep hill to climb before claiming a meaningful market share.

According to the latest sales data from Kantar Worldpanel ComTech, Windows-based handsets have started to gain respectable market acceptance in several European countries. In particular, for the last three months of 2012, Nokia’s sales in Britain, the country with the highest smartphone penetration in the region, experienced an over 50% acceleration. However, Windows phones’ sales in the top 5 European markets (Germany, UK, France, Italy, and Spain) accounted for roughly 5.4% of all smartphone sales.

In the tough U.S. market, Nokia keeps struggling to attract customers’ interest. According to Kantar’s estimates, the clear winner is Apple Inc. (NASDAQ:AAPL), which appears to be stealing share straight from. About 20% of iOS sales came from former Android users. For the last quarter of 2012, Apple maintained the lead and claimed a market share of over 50%. Google Inc (NASDAQ:GOOG)’s Android operating system remained stable compared to last year and accounted for 44.2% of the market. Windows OS held the third position and claimed a below 3% market share.

For the holiday quarter, Nokia’s North America devices and services volumes were up by 40% compared to the same period in 2011. However, Nokia actually sold less than one million handsets or a fraction of the tens of millions Android and iPhone devices sold for the period. For the full year of 2012, net sales in the U.S. market accounted for 7% of Nokia’s total sales marking a small increase of 3% from 2011. The company’s sales performance was weak considering the sizable marketing investment on WP 8 in the United States and Canada. Nokia confirmed that smart devices volumes were negatively affected by supply constraints. Hence, on the positive side, sales volumes did not match the actual customer demand.