Nokia reported smaller-than-expected losses for the third quarter on Thursday but warned that there were tricky times ahead Image Credit: Supplied

I have a tried and tested method of predicting which mobile phone maker is about to fall on hard times. I just have look in my pocket.

A few years ago, I used Motorola. Then I switched to Palm. Both began having trouble shortly after. Whether this was just a coincidence or the result of some mystic pocket lint, today both companies are struggling to survive and develop something that will put them back on top. Now I carry Nokia, and it looks like the Finnish phone maker is on the same path to trouble.

It's too bad. Nokia's phones, unlike Motorola or Palm, have never been bad. The E71 I have been using for the past two years is a champ. I can surf the web, check email and take decent pictures. More importantly, it's a survivor. I'm hard on my phones, and while the E71 has kissed the pavement more times than I can count, it has nothing more than a few scratches.

However, over the last two years, Nokia has failed to really make any serious improvements to their handsets, despite competition from Apple's iPhone. The N97 was just a remake for the E71, but with a sliding keyboard. The N900 was a mess.

While it allowed Nokia to claim it too had touchscreen phone, it was difficult to use and came with only a few applications. It was months before users could even access the Ovi store (Nokia's application store), and even now the selection is atrocious.

The folks at Nokia offered me a chance to try out the X6, their latest phone, for 6 months. Maybe I should have given Nokia the benefit of the doubt and said yes, but I declined partly out of fear of what I was tying myself to.

What will finally put the nail in the Nokia coffin is Google's Android-power phones. We had two in the newsroom last week. Adam Flinter, one of our editors, has the Nexus One and is certainly happy with it. The guys over at Acer also sent me the Liquid to test out.

The Liquid is one of the coolest phones I've seen in a while. It's fast, responsive and lightweight. It's easy to use. It has a digital keyboard that even works well with someone with sausage fingers (like me.) There are thousands of applications ready for the phone through the Android application market, and most of them are free. I am already starting to battle for the "Mayorship" of some Dubai hotspots thank to Foursquare's mobile application. Nokia doesn't have that. In fact, the Liquid has everything I would have expected Nokia to have today.

Applications dilemma

The applications question is the hardest to figure out. Apple is on the march to 200,000 applications, while Android crossed the 20,000 mark in December. Nokia, which has been in the mobile phone business longer than either, has only assembled a pitiful handful of applications. Nowhere I looked could I find the number of available applications — a bad sign for sure — and when I went looking at the Ovi.com store, I was only able to find about 100 applications. One poll of software developers showed that most were focused on Apple and Android, not Nokia's Symbian OS.

Nokia's inability to keep up is showing on its bottom line, too. In 2007, the same year the iPhone launched, Nokia's revenues peaked at 51 billion euros. That revenue dropped to 40.99 billion in 2009.

The worst thing for Nokia is that the market is only going to get more competitive. Acer's Liquid is selling for only Dh1,999. The Nokia X6 is retailing for Dh1,938. Nokia is going to have to find a some way to attract new customers, because, as of now, they have neither the innovative products, applications, nor price points — and certainly not the "cool" factor — to compete with Google and Apple.