Nokia plans to release its first Windows Phone smartphones close to the end of 2011. It's a huge bet for the Finnish phone maker, which abandoned its homegrown operating systems in favor of Microsoft's platform. Failure to seize the minds of consumers and businesses will mean further market-share declines, and a greatly reduced chance of ever retaking the initiative from aggressive competitors such as Apple's iPhone and Google's Android.
Nokia has unveiled the N9, a high-end smartphone running the MeeGo operating system, but even that device seems more a demonstration of the company's technical savvy than something expected to succeed in the marketplace on its own terms.
"Earlier this year, we outlined a comprehensive strategy to change our course," Nokia CEO Stephen Elop wrote in a June 20 statement accompanying the N9's debut. "Innovation is at the heart of our strategy, and today we took important steps to demonstrate a new pace of innovation at Nokia. It's the beginning of a new era for Nokia."
In the meantime, Elop's decision to abandon Nokia's homegrown platforms in favor of Windows Phone has left some analysts nonplussed.
"We would continue to avoid the stock as Symbian smartphone sales are falling off faster than expected and we are skeptical that new Windows Phone (WP) models will be able to replace lost profits," Stephen Patel, an analyst with Gleacher & Co., wrote in a May 31 research note. "Our checks suggest mixed carrier support for Nokia's transition to WP."
So how does Nokia go about releasing a Windows Phone line that succeeds in the marketplace, and helps reverse perceptions of the company as merrily burning to its foundations?
If the N9 was meant to be a demonstration of Nokia's hardware prowess, the company may have succeeded. Early reviews of the device were largely positive, with many citing its sleek look (courtesy of the 3.9-inch, curved active-matrix organic LED screen and backing engineered from a single piece of polycarbonate) an 8-megapixel camera, and features such as NFC (near-field communication), which will allow users to share photos and other information by tapping another NFC-enabled smartphone.
When Nokia smartphones loaded with Windows Phone make their marketplace debut, they'll be facing competition, not only from the likes of the iPhone and Google Android devices, but also other manufacturers' Windows Phone offerings. Thanks to Microsoft's stringent hardware requirements (such as a 1GHz processor), these devices will be of similar quality. Nokia will have to introduce something that stands out from that crowd, possibly through a combination of elegant design and killer features like NFC. Simply producing another touch-screen slab won't do the trick.
This one should probably be a given, but it deserves mentioning anyway: All Nokia smartphones need to hit the market running Windows Phone "Mango," the wide-ranging update that will supposedly add some 500 new elements to the platform. Mango's user-facing features include a redesigned Xbox Live Hub, home-screen tiles capable of displaying up-to-the-minute information on friends and contacts, and visual voice mail.
According to comScore, Nokia fails to place in the Top 5 rankings of either U.S. OEMs or smartphone platforms. In the OEM scenario, it ranks behind Samsung, LG, Motorola and others. In platforms, it lags even Palm, which now is owned by Hewlett-Packard. If Nokia wants an added (and necessary) booster in its quest for worldwide adoption, it needs to figure out a way to get its Windows Phone devices on the store shelves of U.S. carriers and associated retailers.
"Lower price of the devices will be the crucial perquisite for the expansion of [Windows Phone] models," Stela Bokun, senior analyst with Pyramid Research, wrote in a May 9 note. "Nokia knows it and Microsoft knows it, and I am sure they will act on it quickly."
To be fair, Bokun's model, while optimistic about Nokia's ultimate penetration with Windows Phone, also depends on a slowing in Android's growth, with Apple's iOS and Research In Motion's BlackBerry franchises suffering the collateral damage of Google's duking it out with Microsoft. That's a lot of variables to digest, but that one point about lower prices seems particularly noteworthy: Unless Microsoft and Nokia find a way to sell quality smartphones on the cheap, they'll never be able to push back against the tide of Google Android devices.