Formerly dominant cellphone manufacturer Nokia is continuing its downward slide, analysts saying the firm has one last chance to arrest its decline.

Figures just released show Nokia shipped 88.5 million mobile devices in the second quarter, down from 111 million in the same period last year and 108.5 million between January and March.

Sales were down 7.3% from a year ago, leading to a loss of €368 million (NZ$615.9 million).

The big cause for concern is the drop in smartphone sales, which were down 32% to 16.7 million units. By comparison, iPhone shipments were up 142%, to 20.3 million units.

Nokia has been struggling to gain traction in the market, concentrating all its attention in recent months on switching from its own operating system to Microsoft's Windows Phone 7 OS.

When this is completed, Nokia will have one last chance to arrest its fall, CEO Stephen Elop promising the new OS will open up new markets for his company.

The question is, will the Windows phones arrive in time, and will Nokia have the cash reserves to send enough of them into the market?