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Nokia's Biggest Strength Is Its Biggest Problem

Today, Nokia warned that it will lose some market share in the third quarter due to a slowing world economy. It cited "aggressive pricing" as a particularly nettlesome problem. Gee, Nokia, is it possible that your $800 devices -- while amazing -- might be part of the issue?

There's no doubt that Nokia's N Series multimedia computers and E Series business-class smartphones are amazing and apt pieces of hardware. They practically have it all. Massive on-board storage, high-megapixel cameras, live TV, powerful connectivity options, music players, the list goes on and on. But if you want all that power, you're going to have to pay for it.

By and large, Nokia's flagship devices are not subsidized by carriers around the world, and consumers have to pay full retail price for them. In the case of the newly launched N96, that means $800. The N95, predecessor to the N96, still sells for close to $550. Other N Series phones, such as the recently announced N85 and N79, are similarly pricey ($666 and $518, respectively).

The Apple iPhone, in comparison, costs consumers $200 or $300 if they buy it with a contract. Saving a few hundred dollars up front at the retail shop means a lot to some people.

What about Nokia's business phones? The new E71 costs $420 if you buy an unlocked one online. The E66 goes for a bit less. The E90 Communicator still commands a whopping $900 price tag.

These devices stand out among their peers the world over.

Of course, Nokia offers phones at every price point, from super basic, entry-level phones for emerging markets to the midrange feature phone that will satisfy most general users. And therein lays part of the problem.

In these tougher economic times, Nokia's breadth could be helping to hurt it. Those that have reined in their spending are opting for Nokia's less-costly handsets (which probably have lower margins) and putting off purchasing the top-of-the-line products.

Today's guidance did some damage to Nokia's stock, which sunk 11% at one point during the day. Despite the slight contraction it is feeling this quarter, Nokia made sure to mention that it will be up in market share for the year.

With a lot of high-profile phones hitting store shelves in the next couple of months, Nokia had better hope that people are in a spending mood.

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