Nokia Corp.'s bet on Microsoft's Windows Phone was supposed to mark a dramatic turnaround for both companies as they struggled to make an impact in a smartphone market dominated by Apple and Google. Unfortunately for Nokia its transition to the Windows Phone mobile phone system has been stymied by a lack of interest and it looks like the next few years are going to be rough on the Finnish mobile maker as it attempts to promote Windows Phone and at the same time re-establish its brand.

Nokia's first quarter 2012 results shows that smartphone sales declined to 11.9 million from 24.2 million from a year ago and so did mobile phone sales down to 70.8 million from 84.3 million from a year ago. The company also posted a net loss of $1.2 billion while revenue went down 30% from $13.7 billion in 2011. The average selling price of Nokia devices also slid from $86 a year earlier to $67 this year. More troubling is the fact that Nokia expects the same outlook for the second quarter this year saying earnings would be "similar to, or below" those of the first quarter. Looking at those numbers is Nokia's bet on Windows Phone a strategic mistake?

Nokia is convinced that Windows Phone is the future for Nokia's smartphone platform. CEO Stephen Elop says that Windows Phone is slated to be a third ecosystem after Apple's iOS and Google's Android. The only problem is that it's going to take awhile before Windows Phone hits its stride with consumers and in the meantime Nokia will face a rough few years. Analysts are warning that Nokia will continue to be battered through to 2015 unless the company can generate enough interest in its Windows phones.

"There is likely much more downside to come at Nokia," said Pierre Ferragu, a senior analyst with Sanford Bernstein Ltd. "The company is in a much worse situation than we thought when we wrote our long view perspective on the company a few weeks back. We revise our expectations significantly down for the next four years."

Ferragu is expecting more losses for Nokia in 2012 and more cash burn over in the next three years as Nokia losses its Symbian line of feature phones.

"We believe Nokia will lose all its low end smartphone and high end feature phone businesses over the next few years and will be left with barely €9-billion of sales in Device and Services in 2015," he said.

However this doesn't mean that investors should dump Nokia or that the company should swerve from its Windows Phone strategy. Nokia's Lumia phones are better sellers than its Symbian feature phones with a higher average selling price. Nokia also has the cash and the marketing machine in place to get it through the lean years. Microsoft is also heavily invested with a $250 million investment in marketing for the Lumia line.

Nokia is also buoyed by the fact that it produces some of the most aesthetically pleasing phones in the market that also has great hardware performance. Nokia is also one of the most powerful brands in Asia and still has a wide consumer base in emerging markets.

So Nokia is troubled but the company shouldn't be written off completely just yet. Apple and Android may have a lock on the smartphone market but it doesn't mean that the market won't change in the next few years. Nokia still has a chance with Microsoft Windows Phone. It might not be the dominant force in smartphones but Nokia is far from being obsolete.