Nokia: Losing the Smartphone War One Ugly Pink Handset at a Time

Earlier this year, Rick Simonson, outgoing head of Nokia’s mobile phone business, set an ambitious goal for the company: “By 2011…we will be at par with Apple and RIM in smartphones,” he said. “Not only [will] we draw level with them, we will also win the war.”

Evidently, pulling ahead of Apple (AAPL) and Research in Motion (RIMM) is proving quite a bit more difficult than Simonson or Nokia (NOK) imagined. This morning, the company slashed its second-quarter financial guidance, and among the reasons cited: The beating Nokia is taking in the smartphone market.

“Multiple factors are negatively impacting Nokia’s business to a greater extent than previously expected,” the company said in a statement. “These factors include: The competitive environment, particularly at the high-end of the market, and shifts in product mix towards somewhat lower gross margin products. In addition, the recent depreciation of the euro affects Nokia’s cost of goods sold, operating expenses and global pricing tactics.”

So when Nokia reports second-quarter earnings on July 22, expect handset revenue and margins to be “at the lower end of or slightly below” the range of its previous forecasts. And expect the same of the company’s mobile device value share for the year.

An ugly admission for Nokia, but with smartphone designs like that of the new X5 (pictured above, further details here), hardly a surprising one.