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Nokia profits hit by smartphone competition

Nokia profits hit by smartphone competition

The battle at the top end of the smartphone market is being won by Apple's iPhone and Research in Motion's (RIM) BlackBerry range, prompting Nokia to forecast tougher operating conditions ahead.

Android is also beginning to pose a bigger threat to Nokia's market share - a factor in the Finnish giant's below par performance in the first quarter of 2010.

Nokia was unable to meet its target profits for the period after cutting the retail prices of its smartphones to encourage consumers to choose its products over those of rivals.

The company is now pinning much of its hopes on the Symbian 3 platform, which it hopes will allow it to produce handsets that can match up to the high standards set by the iPhone.

Thus far the industry-wide consensus is that it has been unable to achieve this and the confirmed delay of the first Symbian 3-based smartphone will only add to shareholders' woes.

It is believed that the Nokia N8-00 is set to be this first phone which the firm hopes will compete directly with the next iPhone.

However, Nokia has this week confirmed that it will not be able to get the N8 onto shelves until the autumn, which will leave Apple and its rivals a few months to further establish themselves in the smartphone market.

The "general price erosion" within Nokia's mobile phone ranges have meant that shares in the firm now cost an average of £54 - down significantly from the same period last year.

Olli-Pekka Kallasvuo, Chief Executive Officer at Nokia, said: "We continue to face tough competition with respect to the high end of our mobile device portfolio, as well as challenging market conditions on the infrastructure side."

Further price cuts are predicted by mobile phone industry analysts, who believe that Nokia might be forced to reduce the retail value of its range by 10 per cent in order to bring itself back into a position of dominance in the market.

Nokia is still estimating that the total size of the mobile industry will increase by 10 per cent in 2010.

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