Though Nokia still dominates the overall mobile phone market, a steady decline in its smartphone market share could threaten the company's long-term success. In spite of being the world's biggest mobile phone maker, Nokia, has been lagging behind the cutting-edge innovations in the industry in recent years. It was expected out of Nokia to launch a device to compete with other trendy devices, such as, iPhone and Blackberry.

In the past few years, with the emergence of iPhone and the increasing popularity of Blackberry has changed the industry landscape. Whereas, Nokia being a key player, did not live up to the expectations of introducing an ‘iPhone killer’. Thus, to regain its competitive advantage, Nokia has decided to split its business into various functions, so that each unit can focus on its specific offerings.

Nokia is splitting its phone business into three units as it seeks to improvise its effectiveness. ‘Smartphones’ will focus on improving expensive handsets, while ‘Mobile Phones’ will be responsible for traditional, lower-cost phones. ‘The Solutions’ unit seeks to dovetail phones and its services, such as games. These changes are made with an aim to focus specifically on the smartphone market, the fastest-growing segment of the market.

Moreover, it has posted a loss for the first time since 1996. Despite making a profit of 1.09 billion Euros last year, the company has lost 559 million Euros in the last quarter.