SINGAPORE (Reuters) – Nokia Chief Executive Stephen Elop unveiled a new smartphone on Tuesday that uses software the firm plans to ditch, a move analysts said would probably condemn the device to obscurity.
Once the undisputed leader in hand phones, Nokia has rapidly lost ground in the smartphone market to Apple's iPhone and Google's Android devices, and at the low end of the market to Asian rivals such as China's ZTE and India's Micromax.
At a telecoms conference in Singapore, Elop reiterated that Nokia would launch its first smartphone using Microsoft's Windows platform later this year, even as he unveiled the new all-screen N9 smartphone, which uses a platform called MeeGo.
The model -- Nokia's first and last to use MeeGo -- can be navigated by a single finger swipe and comes in black, cyan and magenta colors in a polycarbonate design.
"It seems pointless to launch a phone like the N9 on a platform that has been cut by management," RBS analyst Didier Scemama in London said in a research note.
Elop said the N9 was part of Nokia's drive to introduce "an exciting experience around the user interface, the industrial design and the developer platform".
"Our primary smartphone strategy is to focus on the Windows phone," said Elop, who moved to Nokia from Microsoft last year.
"I have increased confidence that we will launch our first device based on the Windows platform later this year and we will ship our product in volume in 2012."
The MeeGo platform -- a newcomer in the market dominated by Google Inc and Apple Inc -- was born in February 2010 when Nokia and Intel unveiled a merger of Nokia's Linux Maemo software platform with Intel's Moblin, which is also based on Linux open-source software.
Nokia pulled back from the project four months ago.
"The N9 comes too close to the expected launch of Nokia's Windows Phone device to have any impact on its current smartphone woes," said Ben Wood, head of research at London-based mobile consultancy CCS Insight.
"The strength of rival ecosystems leaves little room for MeeGo powered devices. It's difficult to see the N9 being anything more than a niche device ... the N9 will be a tough sell."
Research firm IDC's analyst Melissa Chau said the N9 would probably be a prototype to showcase what Nokia can bring in future phones.
"I don't expect, and don't even think Nokia expects, this phone to turn around their fortunes," she said. "All it wants to do with the phone is to inspire some confidence in people that they are not out of the game yet."
Nokia's head of design Marko Ahtisaari, in a dig at Apple's iPhone 4, said the N9's polycarbonate body would give the phone "extremely good antenna performance, so unlike some competitor products, you do not need to hold it in special way to have reliable phonecalls".
FEW CLUES ON STRATEGY
Elop's speech in Singapore was billed by Nokia as "an update on progress in our new strategy", but he provided few details on how he planned to tackle the company's troubles.
Last month, Nokia said it had abandoned hope of meeting key targets just weeks after setting them, raising questions over whether Elop can deliver on a turnaround he promised in February.
Nokia's market value has plunged by more than half since February, after the leak of a memo from Elop that compared the company's market position to a man standing on a burning oil platform.
Nokia's market share has fallen in key markets. In China, for example, it has shrunk to 19 percent from 33 percent two years ago, research firm Gartner estimates.
So-called no-brand handset manufacturers -- small Chinese firms using low-cost chipsets -- control 45 percent of the market in the world's most populous country, Gartner said.
Nokia's woes bear a striking resemblance to troubles at Research In Motion, whose dismal results and failure to deliver exciting new devices on time pushed its shares more than 20 percent lower on Friday.
Shares in the Blackberry maker fell a further 7 percent on Monday after a marketing executive left the company, the second departure in four months and the latest news contributing to a halving in the company's market value this year.
IDC's Chau said Elop's presentation on Tuesday gave few clues on Nokia's future strategies to get back on track.
"From what they have announced today it is really hard to say because they left out so many details," she said.
"It will take a lot of cooperation between Microsoft and Nokia to do it and with this kind of business deal we only have a 50-50 percent (chance) to begin with."
Nokia also said it plans to launch up to 10 new smartphones using its own Symbian operating system. It introduced three affordable handsets which can use dual sim-cards, years after Asian rivals put such features into their phones.
"Any new products by Nokia will be a stop-gap ... until its first Microsoft phone is out in the market," said Seo Won-seok, an analyst at NH Investment & Securities in Seoul.
"It won't be easy for Nokia to aggressively market these products and even new product lineups will be limited given that it is spending heavy resources in developing Windows phones. Under such circumstances, I'm quite doubtful whether they'll get a strong response from customers."
In a research note this month, Nomura said Samsung Electronics would become the world's largest smartphone maker this quarter and Apple would take the number two spot next quarter, pushing Nokia to third place.
(Additional reporting by Saeed Azhar and Eveline Danubrata in SINGAPORE, Tarmo Virki in HELSINKI and Miyoung Kim in SEOUL; Writing by Raju Gopalakrishnan; Editing by Anshuman Daga and Dean Yates)
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