Nokia's bet on Windows Phone 8: Expert opinions

 
Nokia Lumia 900 launch Nokia organised a high-profile launch for the Lumia 900 in New York in April, but three months later cut the Windows Phone 7 device's price in half

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Nokia and Microsoft co-host a press event in New York this Wednesday where they are expected to unveil devices running the new Windows Phone 8 operating system.

Rumours and reported "leaks" suggest there will be two handsets offered in a range of colours, with at least one featuring Nokia's PureView camera technology and "wireless charging" via a separate base.

It is a critical event for both companies.

Nokia's losses are mounting and in April it surrendered its 14-year position as the world's biggest phone-maker to Samsung, according to researchers at Strategy Analytics.

Smart device diary

5 Sept: Nokia/Microsoft (New York)

Expected to unveil two Windows Phone 8 handsets

5 Sept: Motorola/Verizon (New York)

Android device for the US market

6 Sept: Amazon (Santa Monica)

Kindle Fire 2 tablet and speculation of a "surprise" handset

12 Sept: Apple (San Francisco)

Unveiling of iPhone 5

18 Sept: Motorola (London)

Details of firm's first Intel-powered smartphone

19 Sept: HTC (New York)

Likely to include company's first Windows Phone 8 handset

Add that to announcements of 40,000 job cuts, a plan to shift all handset production to Asia, and the acknowledgement that sales of existing Lumia models have been "mixed", and it makes for a rocky start to Stephen Elop's first two years as the firm's chief executive.

Microsoft's finances are in a healthier state but it knows it has yet to crack the smartphone sector.

A recent study by Canalys suggested Windows Phone had only captured about 3% of the global market between April and June.

That compared to Apple iOS's 16% and Google Android's 68%.

Samsung, HTC and Acer have all announced plans to release Windows Phone 8 models.

But Microsoft's decision to co-host this event and the fact that Mr Elop used to work for the firm means that it is heavily invested in Nokia's success.

Ahead of the announcement, the BBC asked four industry watchers for their views of the challenges and potential opportunities facing Nokia.

Gap in the market?

Ben Wood

Ben Wood is chief of research at CCS Insight, a technology consultancy specialising in mobile devices. He thinks Nokia and Microsoft face a struggle if they are to make Windows Phone the market's third dominant operating system.

This is the single most important product launch under the stewardship of Nokia's chief executive, Stephen Elop.

It must deliver the vision he set out in the now infamous "burning platform" memo in February 2011, when he abandoned Nokia's in-house operating systems in favour of Microsoft's Windows Phone.

Following four initial Lumia phones, the new products will be the first to truly benefit from collaboration between the two companies.

But, given the majority of potential customers in markets like the UK are already using a smartphone, the big question is whether there is space for a third platform. Nokia will need network operators and retailers to push its products hard to get consumers to make that jump.

Success for Microsoft is just as important. CCS Insight estimates that 700 million smartphones will be shipped in 2012, making them the most prolific computing devices on the planet, outstripping PCs.

This is an opportunity where Microsoft cannot fail. The challenge is further complicated by the perception of Windows as functional software for PCs.

For many people, Windows is far removed from the mass-market smartphone experience, which was first shaped in 2007, when Apple launched its iPhone, wrong-footing traditional phone makers and ultimately contributing to Nokia's woes.

However, software alone will not be enough. Nokia needs to produce world-beating hardware designs that tempt buyers away from rival devices like the iPhone and Samsung's Android-powered Galaxy S3.

Success depends on a complex blend of hardware, software and services. Getting that recipe right has so far eluded many of the biggest names in consumer electronics. Nokia's future will depend on it.

Camera technology

Mat Gallagher

Mat Gallagher is deputy editor of Amateur Photographer. The magazine praised Nokia's first PureView-enabled device last month, but Mr Gallagher warns the technology faces a new threat.

Nokia has a history of leading camera technology in mobile phones.

Its 7610 model, back in 2004, featured the first 1 megapixel camera and the N93, in 2006, had a three-times optical zoom.

The firm has said its latest advancement, the PureView system, offers "a new benchmark in imaging" thanks to the combination of a high-resolution sensor and a technique called oversampling.

This involves combining the data from several of the sensor's pixels to create what Nokia calls a "super-pixel". In the case of the first handset to feature this, the Symbian-based Nokia 808, a 41MP sensor was used to create a higher quality 8MP or smaller file.

The results demonstrated better low-light performance and colour. PureView has been a long time in development but the results are impressive and actually rival some high-end DSLR (digital single-lens reflex) cameras for detail.

This technology, if refined and used on a Windows 8 platform, could put Nokia out in front again.

However, with the Samsung Galaxy and Nikon S800c now using Android operating systems the competition could come from the camera market. These compact cameras feature wi-fi to upload images straight to social networking sites and benefit from physically larger sensor sizes and optics than cameraphones can offer.

For a cameraphone to be really successful, it needs to be effortless.

The process from selecting the camera mode to uploading the image should be as quick and easy as possible, and should deliver a great image in any light at the touch of a button. Anyone wanting to fiddle with creative control is more likely to reach for a proper camera.

Takeover talk

Colin Gillis

Colin Gillis is technology analyst at BGC Partners, a New York-based financial services company. He dismisses speculation that Nokia's partnership with Microsoft is destined to end with the Finnish firm consumed by its American partner.

As Microsoft pushes to get its fledgling phone ecosystem to grow, we are frequently asked our view on the possibility of a Microsoft acquisition of its major partner Nokia.

While anything is possible, and there is a reasonable argument to be made for such a tie-up, our take is an acquisition is not likely to happen this year for several reasons.

Nokia is already fully committed to building Windows Phones and one can argue that Microsoft is already enjoying the majority of any benefit it would receive from acquiring Nokia.

The recent US ruling for Apple against Samsung on patent violations should serve to renew interest in the Windows Phone platform from other handset vendors. Several Android handset makers already pay a royalty to Microsoft for its intellectual property.

Hardware products from multiple vendors have historically been Microsoft's business model to get traction across market segments. A purchase of Nokia by Microsoft could alienate its other hardware partners, but we do note that Microsoft is getting more aggressive in this area by building its own tablet.

An acquisition is likely to prove costly, take a long time to close, and would be a distraction at a time when Microsoft management is rolling out critical new flagship products such as Windows 8.

Regarding price, we mention that Nokia's current market cap of $10.8bn (£6.8bn) is more than Microsoft's largest acquisition ever - Skype in 2011 for $8.5bn.

We also mention that the 52-week high for Nokia of $7.38 a share is sharply above its current trading price, suggesting a meaningful premium might be required to gain control.

Patent portfolio

Malik Saadi

Malik Saadi is principal analyst with Informa Telecoms & Media, a London-based consultancy. He says the weight of Nokia's huge patent library should not be underestimated, especially after a jury said Samsung should pay Apple $1.05bn following a US lawsuit.

The industry is speculating about the 7.7% jump in Nokia's share price on the same day that Apple won its legal case against Samsung for patent infringements.

In fact, there are a number of reasons why Nokia could benefit from the conflict between Apple and Samsung and why Nokia's adoption of Windows Phone as primary platform could finally start to pay off.

First, it appears from the Samsung-Apple hearings that Microsoft has signed a cross-licensing agreement, whereby the two companies agreed not to file any legal suit against each other as long as the designs of iPhone and Windows Phone devices could be differentiated.

Nokia benefits directly from this agreement as a privileged partner of Microsoft.

Second, Nokia could benefit from the recent change in Microsoft's Windows 8 strategy.

Microsoft is aiming to promote the unified Tiles-based user experience enabled by Windows 8 across all devices, from PCs to smartphones. Practically speaking, this is the first time Microsoft's mobile division will benefit equally from the corporate marketing budget, which will greatly benefit Nokia, and all the supporters of Windows Phone 8.

Third, Nokia has a rich intellectual property portfolio - it has more than 12,000 patents distributed across all the key technology sectors, including wireless communications, terminal software, imaging, navigation, hardware and services.

Informa believes Nokia's patent portfolio is the most balanced across all industry sectors and it will enable Nokia to lead innovation in the converged world as well as making it more immune to legal attacks by its rivals in the industry.

The BBC's Rory Cellan-Jones looks at what sets the Lumia 920 apart from rivals

 

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  • rate this
    +2

    Comment number 49.

    Here's hoping that Nokia can develop a windows phone with sliding qwerty keyboard (like the N97 mini). I'm not sure if that is technically possible on the windows platform, but I would jump at the chance to buy one.

    Agree with other posts here that Apple iphones seem to be the latest overpriced and hyped up fad.

  • rate this
    0

    Comment number 48.

    Wow! Another phone! The world needs another phone like a submarine needs a cat flap.

  • rate this
    -1

    Comment number 47.

    Two problems with cracking this market. Firstly apps; being the owner of a Nokia Lumia 800 (great phone), the apps are limited and this is a massive influence on what to purchase. Secondly, everyone has a smartphone already so it's only when renewals come up that people can change, unless Microsoft / Nokia are prepared to pay off contracts as well as give new phones away?! It's a big ask...

  • rate this
    -4

    Comment number 46.

    It might actually be a good product, with a great operating system

    Too little too late now IMO

    Samsung is hoovering up the entire market and even Apple is getting desperate at the writing on the wall

  • rate this
    +7

    Comment number 45.

    to #38. Lack of Flash is becoming irrelevant as developers now use HML5 going forward. Most old Flash apps are not on mobile sites and as sites are redesigned for mobile Flash will fade. I also have a Windows 7 phone and its compatibility with work (MS-Office, Skydrive etc.) makes it good for me but of course it’s always horses for courses with no one mobile device being 'the best' for everyone.

  • rate this
    -1

    Comment number 44.

    I am in the business and no one has asked me to support a windows phone yet. I think the system is OK but far too late into the fray.

    Mobile OS, was started by IBM and Palm but what we see today with Apple and Google came from Symbian/Nokia. So that way of operating is embedded into smartphone users, a bold move by M$ but wouldnt want to put money on it working.

  • rate this
    -17

    Comment number 43.

    Like many, I am driven by style. As such, I went off Nokia some years ago when their designs didn't seem to keep up. This article inspired me to go to and look at their latest phones to see what I was missing.

    Amazingly, they still seem to be dated in their design. I am really not at all surprised to learn they are struggling. Mobile phones today need functionality AND style in order to thrive.

  • rate this
    +7

    Comment number 42.

    I read a comment about it having to be easier for developers, well if they knew the facts they would know that it will share the same kernel as windows 8 and apps can easily be ported as it will have the same type of language as iOS etc. all that's needed is a slight change in code so I think WP8 is going to kick off next year! I've tried both iOS and Android and WP is by far better!

  • rate this
    +2

    Comment number 41.

    Apple's closed environment leads to very high quality applications but limited flexibility. Android is the opposite and lets devs do what they like at the expense of many flaky apps and OS instability. Windows is a good balance between the two and are easy to use and very polished. Many of the apps however are cut down versions and this is the area that Microsoft need to encourage investment.

  • rate this
    +2

    Comment number 40.

    @33 Roger, I have to agree with @35 allmyownwords on WP development, but would also add that in my experience Android is an attrocious platform to develop for - there are no set standards to develop towards and the development environment usually involves putting a wrapper through a wrapper through a... you get the idea.

    iOS is probably easiest, but only because WP doesn't shackle its users.

  • rate this
    0

    Comment number 39.

    Post 22. Intel don't seems to have done too badly out of dealing with Microsoft.
    Like any business relationship it is better if your products and services complement each other rather than compete.

  • rate this
    -8

    Comment number 38.

    I've had a WP7 phone since November and do not think Nokia will have much of a success with Microsoft unless they put a flash player on their phones. this was the biggest downfall of WP7. Given the chance I would choose android over WP8 for this reason. the limitations are to great without this extremely important feature. App developers will not be drawn to WP8 and the app market is very limited

  • rate this
    +2

    Comment number 37.

    If W8 doesnt get the sales Nokia needs, will it roll android phones? That would be great for consumers but more humiliation for Nokia, who should have carried on with their own linux based platform in parallel. Others are also doing w8, they have lost exclusivity anyway. They could follow Samsungs multi platform model until their own one matures but Elop has stripped Nokia of its engineers..

  • rate this
    +14

    Comment number 36.

    I've had a Nokia Lumina 800 WIndows Phone since it came out - its brilliant. Makes the iPhone and its UI look very dated now.

    As for Apps, every single app of any note is available to the Windows Phone - all the games, tools, commerce, and social apps are all there. Yes, Apple & Android have MORE apps by count, but how many variants of the same bodily-noise-replicating app do you really need?

  • rate this
    +8

    Comment number 35.

    @ 33 Roger No mobile O/S is as easy to develop for then the Windows Phone and no O/S has better development support and tools already in place - where have you been ?

  • rate this
    -4

    Comment number 34.

    They're needing the "wow" factor. Apple had this with iPhone and Samsung & Android were fast enough to ride the wave.

    If windows Phone 8 and Nokia simply try to do the same thing in a slightly different way then people won't be tempted to switch on the kind of scale they're looking for.

  • rate this
    -10

    Comment number 33.

    I am tasked with delivering a mobile experience to our visitors. I have support for iOS and Android at the top of my list. Windows mobile support is so far down the priorities it doesn't appear on the radar. If they are going to gain market share they are going to have to make it easy for developers like me before actual phone buyers.

  • rate this
    +3

    Comment number 32.

    >I disagree that apple shaped the smart phone market. It was all kicked >off with Blackberry, Sony Ericsson and Palm a few years prior.

    Wrong, IBM started it, then Nokia with their Communicator.

    But Apple brought the smartphone into the mainstream, they were clunky toys for geeks before the iPhone.

  • rate this
    -15

    Comment number 31.

    "Microsoft is aiming to promote the unified Tiles-based user experience enabled by Windows 8 across all devices, from PCs to smartphones."

    When will Microsoft understand that business and professional PC users don't want this and what we really want is an updated version of XP with all the bugs removed. We have had the Vista and Windows 7 disasters and this will just be one more.

  • rate this
    +7

    Comment number 30.

    There's a joke about a guy with an old Nokia phone gets a call which enrages him so he flings his phone at a wall and it smashes into a thousand pieces. The phone was fine, however. My Lumia is similar. When I renew next year, I'll either go back to a dumb phone, or go to WP8 - integration across devices with a consistent interface is tempting prospect.

 

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