"It's very sad to see
The ancient and distinguished game that used to be
A model of decorum and tranquility
Become like any other sport
A battleground for rival ideologies
To slug it out with glee."

--"Quartet," from Benny Andersson, Bjorn Ulvaeus, Tim Rice musical Chess

Nokia (NYSE: NOK) used to be one of those models of decorum and tranquility. Quietly dominating the global cellphone markets, the stock would rise softly over the years while also paying out a decent dividend. What's not to love about that?

But in the age of the iPhone, the Finns have lacked a suitable response to Apple (Nasdaq: AAPL) with disastrous results for shareholders. The smartphone wars forced Nokia into an alliance with Microsoft (Nasdaq: MSFT) that looks tantamount to a sell-out, and the company has a lot to prove over the next few quarters. Nokia's stakes have never been higher.

The first-quarter report Nokia published this morning was a small step in the right direction. When I say "small," I mean "minuscule."

Revenue rose by 9% year over year, but that boost was powered by software sales and network installations; handset revenue lagged behind at just 6% growth. That's on 13% higher volumes of smartphone units. More unit growth than dollar growth can only mean one thing: lower average selling prices. While the company managed 9% higher selling prices in old-fashioned mobile devices compared to last year, its smartphone selling prices fell 6% versus last year and also took a steep hit compared to last quarter.

Worse, pro forma operating income took a 14% dive as those network contracts hardly pull in any profit at all and the booming Navteq software division is still too small to matter much.

In other news, Nokia and Microsoft signed their mobile partnership ahead of schedule. CEO (and former Microsoftie) Stephen Elop called it a "win-win" deal thanks to "the complementary nature of our assets." I read that as, "Thanks to the fact that our businesses have nothing in common," but that's just me.

Elop also noted that the first quarter saw Nokia move "from defining our strategy to executing our strategy." Well, I suppose the payoff from the Microsoft deal will show up toward the end of the year, if there is any. For now, I remain suitably unimpressed by how Nokia's formerly super-smooth machinery is coughing and sputtering, and I'd expect the stock to drift even lower over the summer. If you truly believe in a Microsoft-based turnaround, that would be the time to buy shares.

Want to know more about Nokia, either out of genuine interest or morbid curiosity? Add Nokia to your Foolish watchlist.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. He does hold National Poetry Month in high regard. Microsoft is a Motley Fool Inside Value pick. Apple is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a bull call spread position on Apple. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple and Microsoft. Alpha Newsletter Account LLC 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. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.