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Nokia's (NYSE:NOK) stock has been going nowhere for the past few months and recent news will definitely not help Nokia gain some positive momentum. In Q1, Samsung (OTC:SSNLF) beat out Nokia for the top sales spot for smartphones in Finland, Nokia's home market. Samsung now controls 36.1% of the Finnish smartphone market compared to 33.6% for Nokia. Just a year ago, Nokia had almost double the market share of Samsung in Finland, 48% to 28%. Nokia's loss of so much market share in even its strongest market raises serious concerns about Nokia losing it competitive edge in all markets.

Nokia was one of the first successful cell phone companies. It played an essential role in the development of the Global System for Mobile Communications. GSM was a revolutionary technology, which became the standard mobile technology that connected the masses. As a result, Nokia's stock shot up to the stratosphere, peaking in the early 2000s.

Since then BlackBerry (NASDAQ:BBRY), Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) have taken the smartphone industry by storm, virtually driving Nokia out of business. Today, Nokia is still struggling, despite its partnership with Microsoft (NASDAQ:MSFT) and the release of its Lumia line of smartphones. In fact, the company doesn't look fundamentally sound of late:

Forward P/E

Qtrly Revenue Growth (yoy)

Operating Cash Flow (Q1 2013)

Operating Profit Margins

Return on Assets

Nokia

N/A

-20.40%

264M

-1.28%

-1.23%

Source: Daily Finance

So what does Nokia need to do to regain its competitive edge? Let's first compare Nokia's flagship phone, the Lumia 920, to its competitors:

Nokia Lumia 920

Apple

iPhone 5

Samsung Galaxy S3

Samsung Galaxy S4

Display

4.5-inch

(1280x768)

~332ppi

4.0-inch

(1136x640)

~326ppi

4.8-inch (1280x720)

~306ppi

5.0-inch (1920x1080)

~440ppi

Weight

185g

112g

133g

130g

Thickness

10.7mm

7.6mm

8.6mm

7.9mm

Processor

Dual-core 1.5 GHz Krait

Dual-core 1.2 GHz

Quad-core 1.4 GHz Cortex-A9

Quad-core 1.6 GHz Cortex-A15 & quad-core 1.2 GHz Cortex-A7

Connectivity

4G LTE

4G LTE

4G LTE

4G LTE

Camera

8MP Rear

1.3MP Front

8MP Rear

1.2MP Front

8MP Rear

1.9MP Front

13MP Rear

2MP Front

Capacity

32GB Internal

16/32/64GB Internal

16GB Internal

16/32/64GB Internal

Price

$99 on contract

$199 on contract (16GB)

$199 on contract

$199 on contract (16GB)

Source: GSM Arena.

In terms of hardware, the Nokia Lumia 920 is comparable to the iPhone 5 and Samsung Galaxy S3. The Lumia slightly edges out the iPhone 5 screen for highest pixel density; however, the Samsung Galaxy S4 has the best processor with four cores.

The most glaring problem with the Lumia 920 is its weight and size. At 185 grams, it's more than 65% heavier than the iPhone 5, and 39% heavier than the Galaxy S3 -- a phone with a larger display. Not to mention the Lumia 920 is also 2mm thicker than both phones. This gives the Lumia 920 a very bulky feel, which can put off consumers who are already apprehensive about carrying a larger phone.

Samsung, on the other hand, was able to incorporate a 4.8" screen on the S3 without adding significant bulk. Impressively, the Galaxy S4, has a 5" screen but weighs less and is thinner than the S3. Nokia needs to learn a lesson from Samsung. Its next flagship phone, the Lumia 928, needs to be sleek and light if it wants to remain competitive moving forward. In terms of software, Nokia's partnership with Microsoft and its Windows Phone OS distinguishes Nokia from Apple and the various Android manufacturers. The unique user interface of the Windows 8 OS, the windows "tiles" and social networking integration, coupled with the lower price point of the Lumia smartphones gives casual smartphone users an alternative to the Apple and Android smartphones that dominate the market. This enables Nokia to carve out its own little niche in the smartphone market.

However, Nokia hasn't been able to generate nearly enough hype for its products, compared with Apple and Google. To generate more buzz, Nokia's marketing department needs to focus first on the smartphone consumer base that would benefit most from a Windows Phone -- active social networking/media users. If Nokia manages to entice a large base of Facebook (NASDAQ:FB), Twitter, and LinkedIn (NYSE:LNKD) users, it may develop the hype it needs to bring its phones back into the mainstream. But that's just a speculation at this point. As of now, I would still stay away from the stock.

Source: How Nokia Can Regain Its Competitive Edge