Nokia Delays First E7 Smartphone Shipments Until 2011

Nokia Oyj, the world’s biggest maker of mobile phones, will postpone the first shipments of the E7 smartphone until early next year, after missing an earlier deadline for handsets using the Symbian operating system.

“We just wanted to make sure it’s the best product possible in both hardware and software,” Carol Soriano, a spokeswoman for the Espoo, Finland-based company, said by phone. Only a few markets were originally supposed to receive E7s this year, Soriano said, without specifying any locations.

The E7 is the most complex of Nokia’s latest series of handsets using a new version of the Symbian operating system. Intended to appeal to earlier users of Nokia’s Communicator line and Qwerty-keyboard phones, it has both a touchscreen and a slide-out keypad, and gives business users access to corporate applications using the Microsoft Exchange program.

“This is a clear disappointment and again proves that certain things are just not right at Nokia,” said Sami Sarkamies, a Helsinki-based analyst at Nordea Bank. “Recent communication has been that they would start shipping in December as promised. We’re talking about an image loss, however, as this isn’t a volume model and wouldn’t have had a major impact on the fourth quarter.”

Nokia fell as much as 1.9 percent to 7.34 euros and was down 0.9 percent as of 5:17 p.m. in Helsinki trading. The stock has dropped 17 percent this year.

Nokia’s lead in smartphones narrowed in the third quarter to a 33.7 percent unit-based market share compared with 39.3 percent last year, according to Gartner Inc. Handphones using Google Inc.’s Android accounted for 25.5 percent of the quarter’s smartphone shipments, while Apple Inc. held 16.7 percent, Gartner said.

Bad PR

Nokia struggled this year to revamp Symbian while also preparing devices running a new platform called MeeGo. Shipments of the first device with the new Symbian, the N8, squeaked out on the last day of the third quarter rather than the first half of this year as planned. Nokia has also delayed MeeGo devices until next year after promising them for the second half.

“Once again it’s bad PR for the company,” said Michael Schroeder, an analyst at FIM Bank in Helsinki. “With the majority of profits generated from high-end devices like the E7, this will also postpone the positive results contribution.”

Interface Upgrades

The company is rolling out features including a vertical on-screen keyboard and swipe-keyboard input to recently introduced Symbian phones after Chief Executive Officer Stephen Elop said in October that user-interface upgrades wouldn’t necessarily wait for new hardware.

“We’ve shipped a lot of Symbian devices in the past few months and we just want to make sure the next one we come out with is the best it can be,” Soriano said.

“Given Symbian’s inferior user experience and interface compared to iPhone and Android, execution risk will likely be even higher in 2011,” Zahid Hussein, an analyst at Citigroup, wrote in a report. “We believe competitive high-end MeeGo devices will be pushed out until the second half of 2011 at the earliest.”

Nokia said last month that it was working to fix a powering fault affecting a “limited number” of the N8, the first model in the line. The E7’s delivery postponement isn’t related to the power issue affecting the N8, Soriano said in an e-mail today.

‘Cannibalizing Effects’

Nokia may have wanted to include the upcoming Symbian updates in the E7 from the beginning, Nordea’s Sarkamies said. Nokia may also be improving the mechanical keyboard operation and enterprise software from the prerelease version, he said.

The absence of the E7 during the holiday season could “marginally” affect Nokia’s fourth-quarter smartphone shipments and selling price, Citigroup’s Hussein said.

The E7 was introduced at the Nokia World trade show on Sept. 14 at a list price of 495 euros ($662) before taxes and operator subsidies.

“Some Finnish handset distributors are now indicating E7 availability the week of March 8 and if this coincides with the launch of Nokia’s MeeGo device it could have cannibalizing effects,” FIM’s Schroeder said.

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

To contact the editor responsible for this story: Vidya Root in Paris at vroot@bloomberg.net

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