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
    -1

    Comment number 69.

    The phone market is saturated as it is, Hopefully Windows 8 will go the same way as Vista did straight down the plug hole, closed OS's have had their day in the sun.....

  • rate this
    +3

    Comment number 68.

    I'm a big fan of Windows Phone and MS are playing the long game here by quietly moving into the market with a clean and efficent mobile OS that will then compliment it's tablet and PC software.

    What continues to amuse me though, is how after only a few seconds using my Windows phone, every (without exception thusfar) iPhone or Android user has been impressed and suprised at its simplicity.

  • rate this
    -5

    Comment number 67.

    Nokia for years let their ego dictate strategy.

    They stuck with symbian while everyone else moved on.

    Their new windows phones are nice. Work well.

    But why would I swap from Android? I mean, the Nokia app market is tiny.

    From being market leaders to also-rans.

  • rate this
    +4

    Comment number 66.

    I, for one, can't wait to see the new technology from this. For the past 5 years, the technology pages have been flooded with iPhones, more iPhones, iPads and more iPads, basically the iAnything. The consumer world for gadgets has been so twisted that people see it as a status to buy a iPhone but most of them do not even know how to use it properly. It is good for a change! Go Nokia!

  • rate this
    +3

    Comment number 65.

    @59. MilesTegg

    Rectangular with rounded corners I believe, man are they in trouble!!

  • rate this
    +3

    Comment number 64.

    #52: on the phone this is unfounded bias. On PCs if you keep your security software up to date you should not get a virius. I have not had one on my PC in over 5 years.

    #56 I agree business sector is key. W8 needs to provide seamless synching with MS servers for email, calendar, contacts etc - as if your office PC was in your pocket. Neither iOS nor Android can do that perfectly

  • rate this
    +3

    Comment number 63.

    55. The Bloke
    Mobiles etc are great, and it's hard to imagine how we got by without them,
    +++
    Quite easily believe it or not.

  • rate this
    -1

    Comment number 62.

    So boring! another overpriced "must have" gadget, which in all honesty will do nothing for nokia's flagging sales.

  • rate this
    0

    Comment number 61.

    The last person I know who went and bought a smartphone bought a Samsung because it was cheapest. I don't think "wow factor" came into the decision at all.

  • rate this
    +1

    Comment number 60.

    Let us be thankful we have commerce. Buy more. Buy more now. Buy. And be happy.

  • rate this
    +2

    Comment number 59.

    I'm betting that Apple will have a patent on it somehow. What shape is it going to be ?

  • rate this
    0

    Comment number 58.

    I just can't believe Nokia didn't see this coming many many years ago.

    How much the OS was playing a factor in mobile phones and that means the American giants would move into this territory teamed with far east hardware makers

  • rate this
    +4

    Comment number 57.

    I am excited about today's announcement, and sincerely hope Nokia can help secure WP as a third solid option in the smartphone market. What they offer is fresh & new.

    Those using Apple's ios have a static home screen made up of rounded, bevelled, drop shadowed, glossy pictures that never change or do anything. Windows phone home screen is a living breathing portal to the internet/world around me.

  • rate this
    +9

    Comment number 56.

    I have a feeling that the Win 8/Nokia phone will kill off Blackberry. Blackberry only came to dominance because MS didn't wake up to the idea of mobile. Thats the sector MS want. Start with business, then Nokia can role out cheap third world versions to claw back their core audience.

  • rate this
    +3

    Comment number 55.

    I wonder if it isn't time for a re-think on smartphones.

    Mobiles etc are great, and it's hard to imagine how we got by without them, even though they've only been widespread for barely 10-15 years.

    But I've started to think that a basic mobile, a tablet and compact camera make much more sense than a features-laden but still physically tiny smartphone.

  • rate this
    0

    Comment number 54.

    With the iPhone 5 on the horizon things are going to get very interesting.

    Enough of that, off do to something considerably more interesting.

    Freshly painted wall -check.

    Chair facing wall - check.

    Drying time 5 hours - check.

  • rate this
    +1

    Comment number 53.

    @TrevorL It is possible. There have been WP7 phones already with sliding keyboards. See the LG Quantum for example.

  • rate this
    -17

    Comment number 52.

    I think Windows 8 phones will be more vulnerable to security ,virus and spam issue .Android and iOS platforms are more secure than Windows .It will be a tough to beat them in user experience too.

  • rate this
    0

    Comment number 51.

    What on earth did we do in the days before mobile phones?

  • rate this
    0

    Comment number 50.

    unless the phone is priced less than £50.00 I will not be purchasing one,
    it can have the worlds most up-to-date bells hooters and buzzers but it is still just a phone,
    get the price right down and you will get the patronage

 

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