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Motorola, Nokia suffer at the hands of impending Verizon Wireless iPhone launch

Two firms that aren’t cheering the Verizon Wireless iPhone are Nokia Corp. (NOK) and Motorola Mobility Holdings Inc. (MMI), who both saw shipments and average selling prices of their own smart phone devices drop in the fourth quarter.
Nokia said it had managed to shift just over 5 million N8s and other Symbian^3 smart phones in during the fourth quarter of 2010 and 28.3 million smart phones in total, though ASPs took a 16% hit and yearly device sales for the Finnish phonemaker were just 123.7 million units, down from its 2009 numbers.
Motorola, meanwhile, fell short of analyst expectations and only managed to ship 4.9 million Android-powered smart phones in Q4 and a total of 13.7 million smart phones for the year, with 37.3 million handsets sold in total.
“We have seen some slowdown as a result of the [iPhone] announcement at Verizon,” Motorola Mobility CEO Sanjay Jha said on the earnings call.
Nokia, meanwhile, lamented its continuing decline and seems to be accepting that it needs some real innovation to survive in a smart world. “Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it’s time for Nokia to change faster,” admitted CEO Stephen Elop.
Of course, neither firm is struggling financially, and indeed both managed to do reasonably well in the fourth quarter earnings, but shareholders and analysts seem concerned about the longer term vision – or lack thereof.
Neither firm seems terribly optimistic, either. Nokia was predicting 2011 device sales of between $9.35 billion and $10.04 billion in the first quarter, down from the $11.69 billion in the fourth quarter, while Motorola said it believed it would see a whopping loss of between $26 million and $62 million in the fourth quarter, with only 20-25 million Android smart phones expected to sell throughout the entire year.
Unsurprisingly, this crippling lack of confidence led to stock drops for both companies after earnings were announced.
While Nokia seems rather justified in its descent into self-pity, Motorola shouldn’t be having the same cause for concern. The recent Consumer Electronics Show saw Motorola unveiling some rather innovative products on Nvidia Corp.’s Tegra 2 chips, including its first tablet, the Xoom, a new member of the popular Droid family, the Bionic, and the much praised cell-to -aptop transformer, the Atrix 4G.
Still, going up against a behemoth sales machine like Apple, which managed to sell over 16 million iPhones last quarter alone, it’s not difficult to see why Motorola may feel daunted now that Apple has turned up on its Verizon Wireless doorstep. Motorola is a notorious comeback-kid, however, which means critics may want to hold their fire for the meanwhile.
Nokia faces a much more daunting task in North America, where its clunky, rather old-school phones have not been popular and have little chance of winning over iPhone and Android fans. This has come as a serious shock to Nokia, which was king of the smart phone market back in 2007 when it held 78% of the world’s smart phones market, running on its S60 operating system. That figure has now dropped to 31%, with Symbian^3 not looking like a knight in white armor.
Both Nokia and Motorola have some serious thinking and strategizing to do, but if the mobile market has proved anything, it’s that innovation never sleeps and trends are dynamic. It may take blood, sweat and tears to wring out new and exciting innovation, but the payoff may well be worth it.

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