Nokia's Not-So-Big Boost

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Nokia is banking on the 6300 and other new collections to claw back some market share in its traditional stronghold of Europe, where Sony Ericsson's popular Walkman music phones and Cyber-shot camera phones have been consumer darlings in the past year. But it hasn't happened yet: Though unit sales in the region were up 18% year-on-year, they tumbled 28.3% from the previous quarter. That could be partly due to the delayed release of Nokia's all-singing, all-dancing N95 multimedia phone with embedded global positioning system (GPS) technology, which finally debuted earlier this month.

U.S. Weakness

Still, some analysts fret about whether Nokia is being quick enough to adapt to consumer tastes—especially when rivals aren't standing still. Samsung's first-quarter handset sales were up 30% to 34.8 million from the previous year on the back of its new Ultra line. Sony Ericsson has also introduced an ultra-thin version of its Walkman phone.

"The 6300 is a good step—but it's only one phone," says Martin Garner, an analyst at Ovum in London. What's more, Garner adds, Samsung's Ultra thin line is a "warning that you can do many of the things Nokia's N-Series can in a sleeker package."

Meanwhile, several problem spots remain. For one, Nokia has yet to hatch a successful strategy for the U.S. market, where the mobile-phone titan sold 20% fewer handsets from the previous quarter. Its "enterprise solutions" unit—which hawks smartphones for the business user—narrowed its operating loss to $51.7 million from $89.8 million a year ago. But the jury's still out on whether the division will break even by June, as Nokia has forecast.

Unassailable Lead?

The company's phone equipment unit, formed by the merger with the equipment arm of Germany's Siemens (SI), is another area that will take some nurturing. The unit, which began operation earlier this month, said it expects only "slight" market growth this year.

Nokia will undoubtedly reap eventual benefits from Motorola's woes, analysts say. But its first-quarter earnings show that work remains to be done. Coming a day after Motorola's tough report, the Finns' lead in mobile phones looks unassailable. True, margins and growth may never return to the heyday of five years ago, says Neil Mawston of British Strategy Analytics. But relative to rivals, Nokia is "as far ahead as it has ever been."

Norton is a BusinessWeek.com correspondent in London.