By itself, that would be bad but not devastating. But the Finnish handset maker was also beset by problems in its bread-and-butter business, selling feature phones in the world's emerging markets. The ubiquitous no-frills Nokia phones were losing out to inexpensive Android-powered smartphones from Asian phone makers, which were heavily subsidized by Chinese telecoms.
All that has added up to kick the king of cell-phone makers off its throne. The usurper, according to technology research company Gartner, is Samsung, which now has a worldwide market share of 20.7%. Nokia fell to 19.8%, down from 25.1% just a year ago.
But Nokia isn't going down without a fight. Its latest strategy is to release an inexpensive phone for the mass market that's more than a feature phone yet less than a full-blown smartphone.
Earlier this week, the company introduced two such devices, the Nokia 112 and 110. Users will be able to browse the Web through the Nokia Browser, have direct access to Facebook and Twitter, and be able to download dozens of games from Electronic Arts
The cost for these contract-free tweener-phones will be less than $50.
Nokia's stock price has fallen 50% since Feb. 24, and the company has to do something to stop its low-end business from tanking any further. That 16% first-quarter sales drop in its feature and basic phone segment was more than a slap in the face -- it was a home invasion. For Nokia to regain its supremacy in the mobile-handset world, the Nokia 112 and 110 will have to make an immediate impact.
These new phones may be an early indication whether or not Nokia can recover from its tailspin.
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Fool contributor Dan Radovsky owns shares of Nokia. The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of Nokia, Microsoft, and Apple, as well as 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.