Nokia Profits Slump: Is The Cellphone World About to Change?

Though Nokia's not a massive name in the U.S., across the rest of the world it's enormous—the biggest cell-phone retailer by far. But the giant company's just announced its second-quarter profits, and they're terribly bad.

In fact, the figures for the second quarter net profits of €380 million represent a slump of some 66% year-on-year. That's an incredible downwards trend, and it's got Nokia on the defensive as the company also noted that it thinks the low demand for its products is beginning to bottom out.

The reasons behind the company's change in fortune are complex. The economic downturn has certainly had an impact on consumer spending, and new cell phones are an obvious luxury. But Apple's cell-phone sales have actually skyrocketed over this period—implying there're other influences going on here. It's possible that Nokia's late uptake of touchscreen technology, and its reluctance to innovate the look and feel of its smartphones is having an impact, especially in a world where everyone is excited by the iPhone 3G S, the new HTC android phones, and the Palm Pre. Nokia's entry to this arena is the N97, and that's had an almost universal thumbs-down in the press.

But Nokia's problems may be seen even in the dumbphone designs it's been putting out. Take the latest Xpress Music cells from the company—though the Comes With Music service is a tempting proposition, the actual phone isn't particularly revolutionary.

Will these figures represent serious trouble for Nokia? I suspect not—it's been profitable for years, and it still is, albeit at a lower rate. But what it might signify is that the next N-series phone really needs to be better, with a new respect for innovation and novelty similar to what Sony Ericsson seems to be employing in its newest smartphone designs.

[via The Wall Street Journal]

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