Nokia struggled on Thursday as it saw a drop both in its financials and its market share. Its operating profit dropped 35 percent year-to-year to the equivalent of $1.03 billion as a slight increase in smartphone shipments wasn't enough to offset steeper drops in its basic phone mix. It shipped 108.5 million phones in the winter, a one-point increase from last year but low enough that Nokia expected to drop from 33 percent share to 29 percent.
Most of the losses came in Asia-Pacific and North America. Sales in China have been hit hard by low-cost Android phones and the lack of dual-SIM phones, leading to a sales drop of seven percent, while North American sales were cut by a steep 56 percent as the combination of Android and the iPhone left Nokia with just 1.2 million phones selling in the continent.
The average price was lower on smartphones as it turned to cheaper models to get sales, but Nokia saw a slight boost for the prices of basic phones.
The poor news nonetheless came as Nokia and Microsoft formally signed their official agreement. Along with a decision to use Windows Phone and an ad revenue sharing deal, Nokia is providing its Ovi Maps and other location services to Windows Phone as a whole. It will also contribute improvements to camera technology for the OS and run a Nokia-labeled app store that uses the Windows Phone Marketplace backbone but will also serve Symbian and S40 hardware.
Microsoft, along with the artificial jump in market share, will get to run Bing search on Nokia devices as well as use Nokia's carrier billing to help users pay for apps without needing a credit card. Many in developing countries can't buy from mobile app stores as they have to use cash and prepaid services.
Nokia admitted that the "unique nature" of the deal meant that Microsoft was paying for the increased market share with "billions of dollars," including some for patent deals.
As part of the signing, Nokia confirmed that it planned "volume shipments" of its first Windows Phone devices in 2012. The statement didn't preclude a late 2011 launch, but converted phones like the rumored W7 may be used as test runs before ground-up designs arrive later.
Nokia still faced trouble for the rest of 2011 as it predicted that its device sales would largely stay the same through the spring and summer, going up in the fall only because of the usual holiday boost. Most of its planned phone launches for 2011 wouldn't ship until the second half of the year, it said.