Nokia, the world's biggest mobile phone maker has suffered a whacking $1.36 billion loss - its first loss in more than a decade - with sales plummeting 20%. Nokia has a smart phone problem with Apple's iPhone and Research in Motion's Blackberry eating into its market share. "Apple and RIM are really starting to eat into Nokia's lead in smartphones," said Jan Dworsky, an analyst at Handelsbanken Capital Markets in Stockholm told the New York Times. To try and win back customers, Nokia had to cut the price of its phones by 14%.

Nokia plans to launch four new touchscreen phones in the fourth quarter but analysts have told The Guardian that they might drive volume but not value because they'll be cheaply priced. In other words, don't expect the new phones to return Nokia to profitability.

Marguerite Reardon at CNET News says that while Nokia is still holding its own in the handset business, it's losing market share in a growing part of the industry and that could hurt the company in the long run. "The bad news for Nokia is that competition is only expected to intensify as device makers introduce a slew of new products using the new Google Android operating system Other products, such as the Palm Pre, are also likely to gain more traction over the next several months as they strike deals with more wireless operators,'' Reardon writes.

It wasn't that long ago that Nokia was the dominant player and its loss tells us how quickly this part of the phone industry is growing and changing. But that in itself suggests that Apple and Research in Motion might not be dominant for much longer with reports that technology analysts Gartner have warned that the Google Android mobile platform will topple Apple's iPhone system and push it into fourth position within the next three years.

Watch this space! The fourth quarter will bring four new touchscreen-enabled Nokia phones...