Nokia Says Preorders for N8 Smartphone Are Strongest Ever Seen

Nokia Oyj, trying to claw back ground lost to Apple Inc.’s iPhone, said its new N8 smartphone got the most preorders the company has had for a product.

Nokia has taken “knocks” in past years and the N8 and other new smartphones showcased today will help to win back market share, Anssi Vanjoki, the company’s outgoing smartphones chief, said at the Nokia World summit in London. Nokia shares dropped 3.2 percent in Helsinki trading as analysts doubt whether the new handsets will be a match for the iPhone and handsets based on Google Inc.’s Android operating system.

“None of the new devices will help Nokia to get ahead of the competition,” Informa Telecoms & Media analyst Gavin Byrne said via phone. “Nokia is getting better and closer, but the iPhone is still the best device in the market.”

The touchscreen N8 is the latest effort by Nokia, which last week appointed Microsoft Corp.’s Stephen Elop as chief executive officer, to win back market share from iPhone and Android devices. The N8 has an anodized aluminum case surrounding a 3.5-inch screen, with streaming and on-demand television services to show it off.

“The N8 is certainly a step in the right direction, it’s much more multimedia,” Per Lindberg, an independent technology analyst at MF Global in London, told Maryam Nemazee on Bloomberg Television’s “Countdown.” “But whether it will move Nokia’s market share upwards is more debatable,” he said, adding that Android phones are becoming a “formidable force.”

Shares Slump

Nokia dropped 25 cents, for the biggest percentage decline since June 16, to close at 7.645 euros.

Nokia shares have slumped more than 60 percent since Apple introduced the iPhone in June 2007 and the company’s market share in smartphones, the fastest-growing part of the industry, has shrunk. The struggle to develop a smartphone with the same mass appeal forced Espoo, Finland-based Nokia to cut prices, sacrificing profits to defend its market share.

Nokia, the world’s biggest maker of mobile phones, today also introduced a family of new smartphones based on Symbian 3, a revamped version of Nokia’s main smartphone operating system. The C6, C7 and E7 smartphones will begin shipping by the end of the year, Nokia said. The E7 is an enterprise version of the N8 with a full slide-out Qwerty keyboard and a 4-inch display.

The company predicts it will ship more than 50 million new Symbian phones in coming years and this is a conservative estimate, said Niklas Savander, executive vice president for marketing.

12 Megapixel Camera

The company’s last hit high-end smartphone, the N95 which introduced navigation, sold more than 10 million in the two years after it was released in March 2007.

Nokia may ship as many as 10,000 N8s a week during the early launch in the U.K. alone, Morgan Stanley’s analysts have estimated.

The N8 features a 12 megapixel camera, high-definition video recording, film editing software, navigable 3-D maps and the ability to mirror its display on a television screen. The device allows users to combine feeds and updates from social- networking services such as Facebook and Twitter on one application.

“On the hardware side, it’s a very compelling offer at a very aggressive price point,” Carolina Milanesi, a research director with Gartner Inc.’s U.K. unit, said in a Bloomberg TV interview. “You also look at what else is in the market, from the high-end Android products and iPhone and you see how much more work Nokia needs to do.”

Margin Pressure

The N8 was announced at an initial price of 370 euros ($476) before taxes and subsidies. Nokia needs strong holiday sales with new devices to meet its goal of rebuilding device margins to 10 to 11 percent for the year after lowering forecasts for two consecutive quarters.

Nokia said in July that the operating margin in devices could fall as low as 7 percent in the third quarter as it prepared to release the N8. The margin was 12.5 percent last year and 18.2 percent in 2008. In July, Nokia posted a 40 percent drop in second-quarter profit.

Marketing efforts for the Nokia World summit on Sept. 14 and Sept. 15 include a press event in Helsinki today, a promotional film featuring former Playboy model and Baywatch star Pamela Anderson, shot with the N8 camera, and a prize winner chosen by lottery. Nokia has held the annual event for customers and the press since 1996.

Nokia yesterday said that Vanjoki, a 20-year Nokia veteran, resigned and will stay in his job for now. He became the first casualty of the change at the top of the company after Nokia last week appointed Elop, Microsoft Corp.’s business division president, to take over from Olli-Pekka Kallasvuo as CEO.

Value Drop

Elop, a 46-year-old Canadian, will be the first non-Finn to head the company. A computer engineer by training, Elop joined Microsoft in January 2008. Elop, who has a management degree from McMaster University in Hamilton, Canada, came to Microsoft from Juniper Networks Inc., where he was chief operating officer.

Nokia’s current market value of 29 billion euros compares with Cupertino, California-based Apple’s $243 billion, and is a shadow of its 1999 peak of 203 billion euros, the highest in Europe.

Nokia was slow to catch the wave created by the emergence of the iPhone, which with its multitude of applications for everything from music, restaurants and games, to the weather and news, took the mobile phone from a calling handset to an all- purpose consumer device.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

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