Going Down?

I missed Nokia’s bad news yesterday, and it’s really bad:

Nokia Corp. says its net loss narrowed in the second quarter to 227 million euros ($298. million) compared to a net loss of 1.41 billion euros a year earlier.

The struggling Finnish cellphone maker said sales fell by 24% to 5.7 billion euros from 7.5 billion in the second quarter last year.

The good news in there is that Nokia must have tightened its belt to narrow its losses on plunging sales. Also, its Lumia smartphone line increased sales year-over-year by 32%.

But if there’s a black spot on that silver lining, it’s that Apple’s iPhone — the very definition of an entrenched play — increased on Verizon by 44%. Yes, that’s just one carrier in just one country. But it’s the biggest carrier in the most profitable country. So if Verizon is any kind of indicator, then Lumia may have actually lost marketshare last quarter simply by growing more slowly than the market as a whole.

Part of Nokia’s problems might stem from the decision to build exclusively Windows smartphones. Here’s Nokia CEO Stephen Elop:

“I’m very happy with the decision we made,” he said. “What we were worried about a couple of years ago was the very high risk that one hardware manufacturer [Samsung] could come to dominate Android. We had a suspicion of who it might be [Samsung], because of the resources available [to Samsung], the vertical integration [of Samsung], and we were respectful of the fact that we were quite late in making that decision [already made by Samsung]. Many others were in that space already [especially Samsung].

The problem is, Windows Phone might be plenty good, but there doesn’t seem to be any room at the table for it. Apple’s iOS and Samsung’s version of Android own virtually all of the smartphone industry’s profits, and lesser Android models own the lion’s share of the marketshare.

Given that, would it have perhaps of been wiser for Nokia to compete with Samsung, rather than competing with an entire market that’s uninterested in Windows phones at all?