The battle for Nokia's survival has lately been seen as a fight to wrest away smartphone market share from Apple's
The dying feature phone
But the cause for Nokia's warning this week that its mobile handset unit would post first-quarter operating margins of negative 3%, and which sent the company's shares tumbling to a 15-year low, came from its traditional strongholds: not only Africa, but India, China, and the Middle East. The ubiquitous feature phones that could only call and text are being replaced by low-priced smartphones running the Android OS. Those phones are being manufactured by companies such as Chinese firm Huawei. And Nokia just doesn't have a smartphone yet that can compete against prices as low as $150 for an Android phone in China.
Nokia CEO Stephen Elop expressed surprise at the speed at which low-end smartphones were able to encroach on the feature-phone market. In a call to media and analysts on Wednesday, he said, "The rate at which this is happening is beyond what we expected." However, he added, "We're accelerating the rate we can push Windows Phone devices downmarket."
Nokia may be fighting on two fronts, but it hasn't been knocked out yet.
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Fool contributor Dan Radovsky owns shares of Nokia. The Motley Fool owns shares of Google, Apple, Coca-Cola, and Microsoft. Motley Fool newsletter services have recommended buying shares of Apple, Nokia, Microsoft, Coca-Cola, and Google and creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.