Over the past couple of years, Nokia (NYSE:NOK) and BlackBerry (NASDAQ:BBRY) have been the two prime turnaround candidates in the competitive smartphone market. Both companies had fallen from grace, but were looking to reclaim relevance. Of the two, Nokia has emerged as the player with a better chance at a successful turnaround, although it's still very much a chance at this point.

Nokia's Lumia lineup continues to perform decently in the face of a slow season for smartphone sales and intense competition. The company just reported 7.4-million unit shipments in the second quarter, a sequential increase from the 5.6 million Lumias shipped last quarter. However, that was still shy of the 8.1 million Lumias that analysts were calling for.

Nokia's transition to Microsoft (NASDAQ:MSFT) Windows Phone as its primary platform is now complete -- Symbian is now completely out of the picture.

Nok Lum Labels

Source: Nokia.

As Lumia grows, so does Windows Phone's position in the market. Microsoft's platform has now overtaken BlackBerry as the No. 3 operating system. The software giant is also expanding its carrier and OEM partnerships, possibly adding LG to the mix in the near future.

Both Nokia and BlackBerry have bet their turnarounds on next-generation operating systems and, in this respect, Nokia's turnaround has progressed much farther than BlackBerry's. The Canadian vendor only sold 2.7 million BlackBerry 10 units last quarter, which thoroughly disappointed investors. Even if you include all of BlackBerry's 6.8 million smartphone units, Nokia's Lumia has BlackBerry beat.

Better than bad doesn't mean good
Unit volumes are just part of the overall picture, though, which remains dreary. Total revenue fell 24%, to $7.5 billion, which translated into a net loss attributable to shareholders of $297 million. Mobile phone shipments, including feature phones, were 53.7 million, while investors were hoping for 56.2 million.

The Nokia Siemens Network, or NSN, segment improved its adjusted operating profit significantly, to $429 million. Nokia is in the process of buying out Siemens' stake, which will allow it to keep more of the black ink to itself, but will also further add to Nokia's debt burden at a time when it's still facing a cash crunch. Operating cash flow was negative $256 million, and Nokia's total cash position declined by $785 million.

With Nokia shares opening in the red today, investors aren't impressed with the overall results. It doesn't take much to have a better chance than BlackBerry, though.

Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.