Smartphone sales plunge at Nokia Smartphone sales at Nokia dropped by almost a third in the fourth quarter as initial sales of the Windows phone platform failed to counter a collapse in shipments of its older operating system. However, the sharp decline was not as bad as analysts had predicted, sending the Finnish company's shares 7 per cent higher. Nokia posted an operating loss of €954m ($1.26bn), compared with a profit of €884m last year, on the back of a 21 per cent drop in sales to €10bn. Stephen Elop, chief executive, said that the fourth quarter was a "significant step in Nokia's transformation," but he declined to give an annual target for 2012. He added: "Overall, we are pleased with the performance of our mobile phones business." Nokia is forecast by analysts to have lost as much as 7 percentage points of global market share to about 24 per cent during the fourth quarter as its older smartphones struggled and its market-leading emerging markets handsets met fierce competition from low-cost phones from China. Even so, Nokia gave the first indications of a fightback for the high-end smartphone market - seen as crucial for the group's long-term future - after revealing that initial sales of handsets launched in partnership with Microsoft last year exceeded 1m. Nokia has so far launched two phones in Europe and Asia, including the flagship Lumia 800, with more expected in the next six months, and announced its first handsets ready to launch in the US this summer. Mr Elop said: "From this beachhead of more than 1m Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful. We also plan to bring the Lumia series to additional markets including China and Latin America in the first half of 2012. The booming smartphone market has become an increasingly two-horse race between the Apple iPhones and Android's many manufacturers, in spite of attempts by Nokia to claw back ground using the Windows Phone platform under a partnership agreed with Microsoft this time last year. This gulf has become particularly apparent this week given stellar earnings from Apple on Tuesday, when it revealed that sales more than doubled from a year earlier. The strength of Apple's iPhone has meant that rival products from HTC, RIM, Motorola and Sony Ericsson have all had difficulty competing, leading to a series of disappointing recent results. Samsung is seen by analysts as the only serious competitor in the current market, given its popular Galaxy series. A return to the high-margin market is seen as crucial for Nokia, which had been dominant across mobile phone sales until only a few years ago. Nokia has been left behind by the innovations of Apple and Android in an unforgivingly swiftly-moving market, a fact that led Mr Elop to declare the company to be on a "burning platform" this time last year as he undertook extensive restructuring and pledged its smartphone future to the Microsoft platform. However, the results of this turnround strategy have yet to fully materialise, even if initial sales of the Windows platform were not as bad as expected. There was a steep drop in shipments of phones that use its older Symbian operating system in the fourth quarter in spite of Nokia's promise to maintain the platform until 2016. Smartphones, most of which still operate the old Symbian software, fell by about a third from a year ago to 19.6m handsets. Mr Elop admitted that "changing market conditions are putting increased pressure on Symbian." Even so, the company still shipped about 113.5m mobile devices globally in the fourth quarter, down about 8 per cent from last year, which means that it has retained its position as the leading phone maker by volume in spite of a threat by Samsung to catch up this year. Nokia remains a popular brand of low cost, reliable "feature phone" handsets in emerging markets, and saw a boost in sales this year following its decision to introduce a dual SIM device that is used in countries such as India to take advantage of operator offers. In total, Nokia shipped 417.1m devices during the year, an 8 per cent decline on the year previously. Analysts at Kantar this week confirmed that the Nokia Lumia 800 failed to break into the top 10 smartphones sold in the UK, and the Windows platform had not taken more than 2 per cent of any market around the world. The initial response from operators has been lukewarm in spite of their desire to see greater competition on the market and an end to the dominance of Apple. The Lumia 800 has remained outside the top ten handsets sold in the UK. More damningly, operators report that the numbers of returns of the phone are three to four times higher than for the equivalent iPhone, suggesting that the company either needs to improve its functionality or its education of a platform without almost any presence in the market. However, analysts hope that Nokia will gain ground during 2012 as the platform becomes more widely accepted, with Microsoft rumoured to be supporting its US launch with hundreds of millions of dollars of marketing and advertising. There is also likely to be a steady release of new phones - a traditional Nokia strategy being to cover all price points with slightly diverging handsets - as well as talk of a tablet launch towards the end of the year.