Nokia, the former top mobile company in the planet, is now losing its market share in China, a massive area of growth for the mobile sector.  Right now, Nokia is still holding 20-30% of the smartphone market, placing them in the top spot as far as China’s smartphones.  However, because of the increasing demands and tight competition in the Smartphone world, Nokia fears that they will forever be replaced by their competitors, namely Apple and the Android phone vendors.

“The rankings in the smartphone sector in China is expected to undergo a drastic realignment during the period from the second half of 2011 to the first half of 2012, as Apple may extend iPhone partnerships to also include China Mobile and China Telecom in addition to China Unicom currently, while HTC’s brand image in China has been strengthened significantly, the sources noted.”  As reported in Digitimes.

Moreover, smartphones using Google’s Android operating system now dominate half the market, prompting tight competition even amongst manufacturers, including Samsung Electronics, HTC and Motorola Mobility.

With Apple and Android phones on the rise, Nokia is continuing to drop in customer reach and performance.  As a matter of fact, Standard and Poor has downgraded Nokia’s long-term corporate credit rating to BBB from BBB+.  And at the end of last month, Moody’s Investors Service also cut Nokia’s debt rating by two steps , nearly halfway to junk status, the third lowest with   jump from A3 to Baa2.

“The rating downgrade reflects a severe weakening of Nokia’s business position from one of clear leadership previously. This deterioration has been caused by a loss of competitiveness of Nokia’s Symbian-based smartphone portfolio and the transition of its operating systems to [Microsoft’s] Windows Phone platform which we expect to take until the second half 2012 to fully complete, combined with increasing price pressure and gaps in the company’s mobile phone portfolio that are now being filled.”  An announcement made by Moody’s Senior Vice President Wolfgang Draak.

Last month we saw a major development from Nokia, its first since teaming with Microsoft to power its mobile OS.  However, the new device has already been getting negative results and is not showing good signs for Nokia to get back on track.

With technology’s fast pace and the mobile sector’s rapid innovation, Nokia must find ways to be able to stay in the game.   A thorough analysis must be done because they cannot afford to commit mistakes—at least not this time.   As the former leader in the market, I believe that Nokia still has the capability to overcome this struggle.  We’ll see if Nokia and Microsoft can pull it off.