Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is rapidly refreshing its product portfolio at the high-end as well as entry level. But competition is at its peak, and is increasing with every passing day. Vendors are launching new smartphones at various price levels. Xperia Z, HTC One, Galaxy S4, upcoming iPhone 5S, Z10, Q10, Q5, new smartphones are just being poured into the market at the fastest pace.

Nokia

That’s the reason Barclays remains underweight on the stock despite new product lineup, which is a clear improvement. Barclays PLC (NYSE:BCS) (LON:BARC) said in its latest research report that though second quarter goals seem achievable, the fierce competition will weigh on mid-term prospects.

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) announced the launch of Lumia 928 on Verizon Wireless and Lumia 925, both of which are expected to complement the mid-range 520 model in the second quarter. But the real challenge for the company will be 2H 2013, as all vendors continue to launch new phones and bolster their market budget. The situation has become so bad that even the strongest players are feeling the margin pressure.

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) witnessed a significant decline in the sales of feature phones during the first quarter. But analysts believe that the launch of new entry-level smartphones and Asha lineup will help slow the decline. Asha needs to combat low cost Android smartphones. Unfortunately, Asha lineup has already lost the battle in China, so now Nokia needs to focus on India and Latin America.

Talking about Nokia Siemens, analysts said that it has strong fundamentals. But the biggest question is, what will happen to the joint venture? Will Siemens exit? Will it go public? If so, what will happen to the cash?

Though most analysts have lowered their 2013/14 estimates for Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) after disappointing first quarter results, Barclays PLC (NYSE:BCS) (LON:BARC) thinks that consensus estimate still remains too high, especially for NSN, Smart Devices and HERE (location & commerce) businesses.

Camera Still A Key Focus For Nokia

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) continues to focus on imaging quality, and its commitment to the camera is reinforced by the recent launch of Lumia 925 which comes with a high quality SmartCam. There is no question Nokia smartphones provide high quality camera experience, but the challenge is to market it effectively and capitalize on this feature.

Analysts said that Nokia’s commitment to Windows Phone platform is the right strategy for the company. It is the best way for Nokia to differentiate from the herd. Additionally, HTC Corp (TPE:2498) has turned its focus once again on Android, so Nokia remains the preferred Windows Phone vendor.

As Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) and Microsoft Corporation (NASDAQ:MSFT) gain market share, they are unlikely to lower their efforts.

2Q Expectations

Barclays expects Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) to ship 7.5 million Lumia devices during the second quarter, a 34 percent increase from the previous quarter. However, smartphone ASP is expected to decline from $191 to $173 due to lower priced Lumia 520. Analysts are confident about the Finnish phone maker’s sell-in of new devices to telecom operators, but sell-through to customers is a big concern given intense competition.

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) shares were at $3.76 at 11:56 AM EDT.