Helsinki: Nokia reported better than expected first-quarter profits on Thursday but its global market share dropped to below 30 per cent for the first time in over a decade as the world's top cellphone maker continued to lose ground to rivals.

The Finnish company has faced stiff competition in recent years in the high-end sector, particularly from Apple's iPhone, Android-based handsets and Research in Motion's BlackBerry.

Nokia sold 24 million smartphones in the period, 13 per cent more than in 2010, but its market share for the devices plunged to 24 per cent from 39 per cent a year earlier, according to Strategy Analytics market research.

The company's overall global market share also fell to 29 per cent, its lowest level since the late 1990s. A year ago its total market share was 33 per cent and 31 per cent in the previous quarter.

Nokia sold 108.5 million devices in the first quarter, above the Strategy Analytics estimate of 105 million, and the average selling price of its handsets continued its growth to €65, from €62 a year earlier, indicating it is selling more top, expensive models. "Volumes were better than expected and pricing was stronger," said Neil Mawston, an analyst at Strategy Analytics. "But it's clear that competition is still tough."

Mawston said Nokia can expect "bumpy revenues and profits for the next couple of quarters," as its recently announced linkup with Microsoft comes onstream. CEO Stephen Elop said Nokia has now signed a "definitive" deal with Microsoft Corp. to develop software for smartphones "and that product design and engineering work was "well under way".

Nokia said the tsunami and earthquake in Japan had disrupted the supply of some components linked to Japanese suppliers and would impact its results in the second quarter.

Facing fierce competition, Nokia has lost its position as the industry's innovative leader and the company's stock dipped to a 13-year low of ¤5.60 in March. At the end of last year its Symbian platform was surpassed by Android as the world's No. 1 smartphone software.

Windows phone soon

Nokia CEO Stephen Elop did not say when the Nokia Windows phone would be launched. But he said that "devices that take advantage of the Windows phone platform will be shipping in volumes in 2012, and there is pressure.

"In recognition of the unique nature of Nokia's agreement with Microsoft and the contributions that Nokia is providing, Nokia will receive payments measured in the billions of dollars," Nokia said.

Describing the first quarter as "remarkable", Elop said the company will face "a more challenging second quarter", as it goes through a restructuring period with Microsoft.