Nokia Loses Smartphone War Amid £1bn Loss

Nokia has reported a billion pound loss for last year as the world's largest mobile phone maker struggles to maintain its market position.

The Finnish company posted a net loss of £1.01bn in 2011, compared to a £1.5bn profit for 2010.

It suffered a £90m shortfall in the final three months of last year, in stark contrast to a profit of £625m in the same period a year earlier.

Nokia phones are still the industry's biggest seller, but Apple iPhones and Google Android phones are overtaking it in the growing smartphone market.

Nokia has attempted a comeback with smartphones using Microsoft Windows software, which hit stores in Europe and Asia in November and the US in January.

Nokia Share Price 1-Year Chart

But despite selling one million of the new Lumia phones it has failed to compensate for an overall sales drop of 21% in the fourth quarter of 2011.

Analyst Nick Dillon from research firm Ovum said: "More than one million shipped Windows Phones to date is more than some were expecting, [but] it's not going to worry Apple or Google."

In an interview with Sky News, he added: "There's still a chance for [Nokia], but the longer it leaves it the more entrenched those competitors will be."  

Apple recently announced record iPhone sales and the best quarterly trading period in the company's 35-year history. 

Michael Schroder, an analyst at FIM, added: "The report highlights that the start of the Windows strategy is slow, and we have very little concrete data to predict its success at this point.

"Uncertainty is still great.

Smartphone war: Nokia hopes to match the popularity of the Apple iPhone

"These are critical times for the future of the whole company. The next months will be extremely important."

But Nokia CEO Stephen Elop remained buoyant.

He said: "From this beachhead of more than one million Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful."