Smartphone sales revenue dropped to €2.4bn (£2.1bn) for the three months to June 30, resulting in a 7% year-on-year fall in total revenue to €9.3bn (£8.2bn).

Overall this resulted in an operating loss of €487m (£429m) during the quarter, compared to a profit of €295m (£260m) in the same period last year.

The average cost of a Nokia phone, both smartphones and basic devices, increased 2% year on year, but dropped 5% from the first quarter to €61 (£53.48). The sequential dip in Nokia’s average selling price (ASP) has been attributed to price cuts of its Symbian-based flagship models, such as the N8 and C7.

The price cuts have been made ahead of the launch of its first Windows Phone-based smartphones scheduled to launch in the final quarter of this year.

Nokia’s Windows Phone strategy is aimed at wrestling back market share from smartphone market leader Apple, which reported a 142% increase in its iPhone sales during the same period yesterday (20 July).

Stephen Elop, Nokia’s CEO, says: “The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2 2011.”

He also said the price adjustments were made to address an inventory build-up that occurred in the first quarter of 2011.

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