The Tangled Future of Nokia

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The Tangled Future of Nokia

Nokia this week unveiled the Lumia 920 and 820, its first Windows 8 devices, setting the stage for a showdown against iPhone and Android in a one-two punch to cleave market share.

Just over a year and a half ago, Nokia trailed its competitors, retreated, regrouped and launched a partnership with Microsoft to make Windows its primary operating system. Since then, things have gone according to plan, but not without pain and difficulty.

Nokia’s first Lumia releases garnered solid reviews, but the devices failed to loosen Apple and Google’s stranglehold over the smartphone market. The partnership is under intense pressure to make bigger strides, and the new Lumia phones are expected to exceed past numbers, which is within its reach.

What Happened: The Lumia 920 includes unique features, such as a high-end “PureView” 8.7-megapixel camera with light sensing and “floating” lens technology to produce clearer photos and videos — even with shaky hands and a high-definition 4.5-inch touch screen with “PureMotion HD” to automatically adjust color in sunlight so it doesn’t look washed out. In addition, there’s navigation software without the need of Internet access, a wireless charging pad so you can just lay it on the table and the largest battery to date installed on a Nokia phone.

Pricing and carrier details have yet to be announced, but first reviews have been positive, with the company hinting at an affordable price and release later this year.

The introduction comes on the heels of a report that Windows will surpass BlackBerry in market share by November, and become the third most popular platform in the U.S. In a two-horse race, the company is a little more than an “also ran,” but it does at least put it in the race, which is where Nokia desperately needs to be.

What Really Happened: If the Lumia phones can generate enough consumer appeal — and analysts think they have what it takes to snare this important “mindshare” element — it’ll give the phone-maker a ticket to the big dance and a chance to battle back into relevancy.

Samsung stole a bit of Nokia’s thunder last week, announcing the Ativ S, a Windows Phone 8-powered device, at its Unpacked event in Berlin. The surprising move was a big boost for Microsoft, but at its partner Nokia’s cost.

From a platform perspective, it’s in Nokia’s best interest for consumers to resonate its phones with Windows, in hopes of standing out by leveraging its brand and former strengths in hardware and innovation. However, the more rivals that release Windows phones, the more Nokia’s attention is lost in the noise.

But Nokia is in a tough spot; it needs these rival Windows devices. Handcuffed to Microsoft, Nokia’s success rests in the future of Windows, and in the battle of platforms, the number of developers creating apps for the operating system is a hurdle Windows has yet to overcome — a feat only Apple and Google have succeeded at, while HP and RIM failed.

To increase the stakes, cloud services are taking hold, so the platform, or platforms, with market dominance stands to leverage their software, giving consumers a more robust online experience, and allowing them to connect across all devices — whether smartphones, tablets, laptops and gaming systems — to share music and movie libraries under one unified operating system.

What’s Next: Microsoft laid the foundation with Windows Phone 7, and after some delays, will launch its successor, along with a new PC operating system and tablet, heading into the holidays. As usual, consumers are key here — but Nokia will need to woo more them than with a well-received smartphone that fits into an increasingly familiar platform. It will take a synchronized effort not just with Nokia, but across all of Microsoft’s partners, across all their hardware launches, to push the new version of Windows to gain wider acceptance and a stronger foothold within the app developer community. Developers only create apps they can monetize, and that means consumers using devices that run the platform.

Microsoft will help the push by releasing its own tablet, and for Nokia, it seems the next logical step as well. But still, even if Nokia hits it out of the park with its Lumia phones, the phone-maker faces an uphill challenge. The company is gaining key ground, and its Lumia line is selling better than expected in the U.S., validating the switch from low-end handsets to flagship smartphones, but the competition is fierce. The company will have to line up significant carrier support to carry its phones in the U.S. Carriers helped push the Lumia’s earlier iterations and the new devices’ high-end features and strong value may keep it on carrier rosters, but in the end, consumer dollars will decide what stays on shelves.

In terms of rivals, Android and Apple’s iOS are in an entirely different class of popularity, and catching up is a daunting task. IOS continues to dominate with 50 percent market share, followed by Android snagging nearly 40 percent, leaving crumbs for a competent third-place contender. Still, where there is room to wriggle, there is hope, and Microsoft is beating RIM in snapping up the scraps, which may give Nokia some ground to stand on and develop from.

Nokia and Windows may find opportunity, as well, as Android finds itself challenged in the legal arena. In the midst of patent battles against Apple, Android makers like Samsung are scrambling to find alternatives and loosen its dependence on the platform. Android and iOS platforms dominate, but in the fast-paced world of tech, hurdles like a patent dispute, increased security concerns, the inability to pivot to a new innovation or a big gamble that doesn’t pay off, can quickly turn alliances and fortunes.

The Takeaway: In order to make a run, Nokia needs consumer enthusiasm to give it a solid jump off the starting blocks. Nokia is doing its part with the distinctive and newly debuted Lumia devices. Their impressive hardware is innovative and Windows, which is no stranger to legal action, is fortified for litigation at a time when Apple and Android are slugging it out in courtrooms around the globe.

The added marketing blitz from its yet-to-be announced carrier partners will also play a key role in Nokia’s rebound puzzle. AT&T stepped up this year to push the Lumia 900, underscoring what big bucks can do for a phone. Nokia seems to be making all the right moves in its crucial mission to attract consumer mindshare, as CEO Stephen Elop said his goal is simply “to be different.” If Nokia can do that, and have good luck with Microsoft, market share will follow.

Sure, Nokia needs a lot of factors to fall into place to really propel it ahead, but if market conditions shift and the company avoids missteps, the Lumia 920 may be the turning point in the company’s history.

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