Nokia eked out a decent third quarter based on strong feature phone sales, helping the company beat analyst expectations. Nokia’s revenue fell 13 percent to 8.98 billion euros (US .3 billion) with handset shipments decreasing by 3 percent to 106.6 million units, (89.9 million feature phones and 16.8m smartphones) a more gentle decline than analysts had predicted. It managed a diluted earnings per share of 0.03 euros, beating out analysts expectations of a 0.01 euro loss.

The news has sparked some excitement around Nokia’s stock, which is up on the hopes that the company is managing its transition well and may be turning a corner. But the real challenge awaits as Nokia prepares to unveil its first Windows Phone devices next week at Nokia World, beginning to show how its big bet on Microsoft’s mobile operating system will play out. That’s where Nokia will need to make its stand because it can’t rely on feature phones, which will only become more like smartphones over time.

Smartphone penetration continues to grow and feature phones are increasingly going to be left behind. The average selling price of low-end phones plummeted 20 percent year over year, dropping Nokia’s operating margins to 2.4 percent compared to 11.3 percent a year earlier. The future for Nokia is in smartphones, a market it used to lead with its Symbian devices, which have fallen behind Android and iPhone devices in popularity with many consumers. Nokia’s smartphone sales fell to 16.8 million units in the third quarter, down 38 percent year over year and up just 1 percent sequentially from the second quarter. A lot will rest on what Nokia can conjure up and how interesting it can make its phones, which will be competing against devices from other Windows Phone makers.

Nokia’s CEO Stephen Elop said Nokia will bring its first WP7 devices to specific countries later this year before a systematic increase in markets and launch partners in 2012. That means that this coming quarter is also not likely to reflect a big showing in WP7 devices, or smartphones overall, unless Nokia creates an absolute home run that can move units in a big way despite a limited roll-out in select countries.

The big test will be next year as it ramps up distribution of Windows Phones. But the pressure is on for Nokia to demonstrate that it made the right bet on Windows Phone and that it has some pretty stunning hardware to show for it. The handsets will need to be markedly better than anything its got in its stable including the N9, a very compelling device that launched with Nokia and Intel’s MeeGo OS. Positive reviews of the N9 have prompted many to wonder why Nokia essentially discarded MeeGo in favor of Windows Phone 7, something Elop will have to answer by showing just how much Nokia can do with Microsoft’s platform.

I still have some reservations about Nokia and Windows Phone. There’s no guarantee that Nokia feature phone and existing smartphone users will automatically move up to a Nokia WP device, just because of the brand name. The two companies will need to bring their A-game and show that any device they collaborate on can stand up to the iPhone 4S, with its new operating system and new Android 4.0-based devices. As we’ve noted, Mango is a big software update that puts Windows Phone in a great position to compete, but some of those improvements are starting to get lost in the frenzy around iOS 5 and Android Ice Cream Sandwich.

The stakes are extremely high for Nokia, which has bet the farm on Windows Phone. All eyes will be on the company next week and it’s got a great shot at showing how far its come in this rocky transition. But it’s going to have to rise to the challenge because the market is only accelerating toward smartphones and Nokia knows it can’t bank on feature phones to bail it out in upcoming quarters.

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This week was packed with news on the mobile front, so it was easy to miss a few stories here and there. Here’s some of the other stuff that happened in the wide world of wireless for the week of September 26, 2011:

• Last week we heard the rumor that Sprint would be launching the BlackBerry Curve 9350 on October 2nd, and we’ve finally received the official confirmation. The device will be hitting stores tomorrow for with a two-year contract. [PhoneArena]
• The Motorola Photon WiMAX, referred to as the Photon 4G in the US, is now making its way to Japan as KDDI announced the launch of the device this past Monday. [Motorola]
• Verizon Wireless launched the Pantech Jest 2 this week, which is a feature phone with a full slide-out QWERTY keyboard. [Verizon Wireless]
• The Samsung Galaxy Y is now listed as “coming soon” on O2′s website, which makes it the second carrier to announce upcoming availability in the UK. The actual date of release, however, is still unofficial. [O2]
• Softbank (Japan) looks ready to land the ZTE Lord V882, which appears to be an Android device running on Gingerbread, and comes packed with a 1GHz CPU, 512MB of RAM, 3.8-inch LCD at WVGA resolution and a 5MP camera. [LandofDroid]
• NTT DoCoMo and Orange have teamed up to offer the Sharp AQUOS SH80F, which features dual 8MP stereoscopic cameras and claims to be the world’s first Android device capable of converting 2D content into 3D in real time. It’ll first be launched in France on October 6th and will follow to other European and Asian countries shortly after. [Softpedia]
• Maybe Microsoft Canada just assumed nobody actually reads terms and conditions, because the company outed the names of a few upcoming Windows Phones in the T&C for a developer contest: the Nokia Sabre and a duo of Samsungs named the Yukon and Wembley. The Nokia Searay was also named in the list, indicating the Sabre is a second device running on Mango. [Nokia HDBlog (translated)]
• In preparation for its Windows Phone debut, Nokia is also rumored to be featuring a new voice navigation system with 3D maps, according to some leaked marketing materials. [WinRumors]
• Here’s a rendering of the HTC EVO Design 4G, also known as the Kingdom or Hero S. [Pocketnow]
• Samsung may have a midrange device coming soon to AT&T’s lineup as a complement to the Galaxy S II. We’ve already seen the I857 pass through the FCC and show up in a leaked roadmap, and now it appears to have been dubbed the Doubletime, according to uncovered Cellebrite records. [Pocketnow]
• Also appearing in Cellebrite records are the HTC Vigor (PH98100), Motorola Droid HD (XT912), and the Samsung Nexus Prime (SCH-i515). [Droid-Life]

Mobile Miscellany: week of September 26, 2011 originally appeared on Engadget on Sat, 01 Oct 2011 11:01:00 EDT. Please see our terms for use of feeds.

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Today, AT&T officially announced the dirt-cheap Huawei Impulse 4G, an Android 2.2-running smartphone aimed at those of you clinging to your feature phones. It’s got a price tag with a two-year service agreement, which is as low as a month for 200 megabytes of data. You’ll probably spend more than that on coffee this week, making the Impulse 4G a great entry-level rig for someone who wants a smartphone and doesn’t anticipate quickly becoming a data hog.

Wired Top Stories

Consumers waiting for a Facebook phone will see one as early as tomorrow, July 17. But it won’t come from Facebook, itself. Instead, the Cha Cha smartphone with a dedicated Facebook button HTC showed off in February finally arrives on AT&T’s network as the aptly named HTC Status. The Google Android handset has meager hardware specifications when compared to higher-end handsets, but makes it easy to share photos, videos, songs, websites and more on Facebook with the touch of a button.

The HTC Status pairs a small, 2.6-inch, 480×320 resolution touchscreen with a hardware keyboard for fast typing. The 600 MHz processor and 512 MB of memory won’t set any speed records, however, the Status does include two video cameras,Wi-Fi, Bluetooth, 3G connectivity, and GPS, so it’s not lacking any major features.

At this price, it’s sure to appeal to the crowd that uses a feature phone to access Facebook, email and the web. My only concern would be if Facebook makes major changes to its service, what happens to this Facebook phone? HTC and AT&T could have to create a software update in that case, and very little in the wireless industry happens fast.

Actually, a new wireless product is pretty quick: the camera on the myTouch 4G Slide. This Android 2.3.4 handset is expected out by the end of the month for 9.99 and T-Mobile sent me one for review. Yes, the 1.2 dual-core processor keeps this phone moving along quickly, but I may be more impressed by the 8 megapixel camera.

A new BurstMode feature captures five photos in immediate succession; perfect for sporting events or any other action-packed scenario. The camera also has a “zero shutter lag” function that speeds up the photo-taking process. A wide aperture (f/2.2) helps for low light conditions and the smartphone supports wide, panoramic picture-taking through an option called SweepShot.

On the tablet front, no new Android slates appeared this week, but an old favorite resurfaced: the Nook Color eReader. No, that’s not a typo: at 9, the Nook Color is becoming a favorite of many who want an inexpensive Android tablet that’s still a capable little device.

It’s relatively easy enough for anyone who’s tech-savvy to root the color eReader and install custom Android software on the Nook Color. But some enterprising folks have made the process as simple as inserting a microSD memory card into the Nook Color and powering it on. The card can be purchased for as low as and comes pre-installed with software both for use as an Android tablet or as a standard Nook Color ebook reader.

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Aaron gets his hands on the Samsung Mythic, available at AT&T. Is it just another touchscreen feature phone, or is it worthy of separation from the pack? We’ll find out. More Videos: www.phonedog.com Win Free Phones: www.phonedog.com

These are the first photos of Microsoft’s Project Pink phones, snatched from deep within the bowels of the Microsoft/Verizon industrio-complex —not the Turtle, but the larger, Sidekick-like Pure. This doesn’t look like Windows Phone 7, so what is it?

The shots come just hours after a leaked advertising campaign for the Turtle outed Verizon as a carrier for the Pink Turtle, without so much as a mention of the Pure.

Our tipster confirms the Pure is also headed to Verizon, but doesn’t have a release date. (Though it’s hard to imagine the release date would fall too far out of line with the Turtle, which is expected to hit stores at the end of April. Business Week‘s claim that the release will be May or June of this year supports this.) Anyway, this thing: It’s strange! It’s got a paneled interface, with fixed squares for everything from music (with Zune typography) and email to RSS feeds and what looks like a unified social networking hub. As hinted earlier, the aesthetic is similar Windows Phone 7, but the software is distinctly not Windows Phone 7. This looks like Windows Phone 7: Feature Phone edition.
Our source got a few seconds to use the Pure, and said it was intuitive, “better than Android,” and decorated with Windows Phone 7-style animations throughout. That said, the app situation still doesn’t add up. There’s apparently an download screen for new apps, but it’s not populated with anything yet. This could mean two things: Either the Pink phones will tap into the Windows Phone 7 marketplace somehow, which would be great (but also doesn’t make sense), or they’ll have apps like the Zune has apps—which is to say, only sort of, and only from selected partners.

The more we see, the more the Pure and Turtle look like they’re stacking up to be Zune-ified followups to the Sidekick. It’s an interesting move, but who does Microsoft think they’re going to sell this thing to? Tweens?

Update: Firmware Leak

We’ve got our hands on leaked Pink firmware, and we’ve dumped all the icons and photos we could extract. Sadly, there’s not way to run this right now, but we can see a lot of what’s shown above, like the homescreen application icons, in full resolution. There are also traces of Zune, as well as Facebook, Twitter, Yahoo, and Windows Live. There are some shots (discovered by someone else who’s got the firmware) that show a lockscreen dialer, but these are likely placeholders of some sort. Also tucked away in the firmware are default wallpapers for both phones, in their rumored resolutions. Finally, we’ve got a shot from the Turtle’s unremarkable camera, which appears to have flash.

(Filenames included in the gallery, because they’re pretty descriptive.)

Here’s what we can glean from the dump so far:

• The carrier is definitely Verizon, though there are references in the firmware to AT&T and T-Mobile in the US (which are probably placeholders, since the rest of the evidence points to CDMA radios as standard for these phones.) There are also references to a wide range of foreign carriers in the UK, mainland Europe and Asia, but again, most of these carriers don’t support what looks like the initial version of the handset’s CDMA hardware, as far as I can tell.

• The OS is based on Windows CE, like the Zune and Windows Phone 7. This doesn’t mean a ton to users, but the guy who passed us the firmware sums up what that means under the hood:

Everything is programed in .NET a lot like 7 is. It does not say it inside the files where I have seen, but It is coded in XAMl and is in the structure that CE 7 is supposed to be structured, it is my belief that it will be based off CE 7, and it will have a lot of tie in to Windows Live as well.

• Turtle and Pure codenames are used in the firmware, but that doesn’t mean that those’ll be the shipping names for the product. There are also codenames for the “Pride” and “Lion” handsets, which appear to just be the international versions of the Turtle and Pure, respectively.

• The Turtle’s screen is 320×240, while the Pure’s is 480×320—the same as the iPhone.

• There are reference to something called “The Loop,” which sounds like some kind of central social networking hub.

We’re powering through the firmware dump now, so we’ll post more as we get it. [Special thanks to our tipsters, and Conflipper]