Nokia's Future in Jeopardy After PR Gaffe

Nokia (NYSE: NOK) has gotten itself into a bit of trouble after producing a misleading video to promote the company's newest phone, the Lumia 920.

On August 29, the Windows Phone supporter released a teaser video to hype an upcoming press event that was scheduled for September 5. In the video, a young woman rides a bike through a shipyard. As she smiles and flirts with the camera, a few words appear on screen: "Things are about to change on 5 September 2012."

This message led many to believe that Nokia was planning to unveil a new smartphone featuring its popular PureView technology, which contains a 41-megapixel sensor and allows users to zoom digitally (up to three times for photos, four times for video) without diminishing the quality of the image.

Nokia confirmed this assumption at its press conference with Microsoft (NASDAQ: MSFT) last week. During the event, Nokia unveiled the Lumia 920 -- a new Windows Phone 8 device that features a plethora of unique technologies. In addition to the PureView camera, the Lumia 920 features wireless charging, new augmented reality features and a touch screen that can be used while wearing gloves.

Nokia did not, however, clarify that the promotional video was not filmed with its smartphone. Nokia allowed the popular assumption to continue as it attempted to promote its newest products.

After the Lumia 920 was unveiled, Nokia released another video. This one featured a side-by-side comparison of images taken with the device's new stabilization technology turned on and turned off.

According to The Wall Street Journal, Nokia is now apologizing for not acknowledging that it did not use the PureView camera to film either video.

"While there was no intention to mislead, the failure to add a disclaimer to the video was obviously a mistake, and we apologize for the misunderstanding it did cause," Nokia said in a statement.

This controversy comes at a critical time for the company, which continues to lose market share to Samsung and Apple (NASDAQ: AAPL). Once the largest manufacturer of cellular devices, Nokia has been struggling in the face of increased competition, weakening consumer interest, and a lack of support from AT&T (NYSE: T).

In recent months, Nokia has had to adjust the volume of stock options to keep senior executives from leaving. At the same time, the Lumia maker sold off a significant number of assets that it said it no longer needed.

In August, Nokia rejected reports that it would swap Windows Phone for Android. Instead of switching operating systems, the company spent the summer announcing new partnerships with a number of large corporations, including Groupon (NASDAQ: GRPN) and Zynga (NASDAQ: ZNGA).

Three weeks ago, a new report showed that Nokia commanded 59 percent of the Windows Phone market. One month prior, Nokia announced that in the first three quarters of their existence, the company shipped 10.9 million Lumia devices -- more than double the 5.4 million first-generation iPhones that Apple shipped during its first three quarters in 2007.

Despite these milestones, Nokia continues to trail its competitors. This new controversy is unlikely to help that situation.

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