The Windows Phone may be the best but it isn’t helping Nokia

Chances are if you’re reading this article that you and most of the people you know have a smartphone. If you put them all in a room and asked them to put their smartphones on a table, you’ll likely see various Android devices mixed in with (depending on who you have as friends and family) approximately the same number of iPhones.

What you probably won’t see are many (any?) Windows Phones.

When it comes to speed, performance, and UI, many would agree that the Windows Phone is equal to or greater than its competitors. Microsoft put their money where their mouth was recently at their various stores and at CES 2012 with their #smokedbywindowsphone campaign by offering $100 to those who could beat them doing everyday activities like posting images to Facebook or finding local restaurants.

It hasn’t translated into the types of sales they or their partners at Nokia have been expecting. In their filing of their 2011 Annual Report to the SEC, Nokia identified their relationship with Microsoft as a “risk factor” going forward due to the inability of the hardware/software combination to gain traction. Despite strong sales, Nokia still showed a $1.4 billion loss.

“If we are not successful in the smartphone market,” Nokia reported, “our business would become more dependent on sales in the feature phone market, which is, especially at lower price points, an increasingly commoditized and intensely competitive market, with substantially lower growth potential, prices and profitability compared to the smartphone market.”

The biggest challenge they face is in getting developers to build more apps. The Android and iPhone markets for apps have a huge head start and are pacing much faster than Windows Phone apps despite strides the company has made to improve it. Future releases will spark sales as will added marketing, but will it be enough to make the product relevant and keep Nokia from switching gears?