Nokia Announces Lumia WP8; Likely To Wait For Windows 8 Launch Before Shipping

With Apple (NASDAQ:AAPL) expected to announce the launch of the iPhone 5 and a rumored iPad mini next week, rivals Motorola (now acquired by Google (NASDAQ:GOOG)) and Nokia (NYSE:NOK) have tried to steal the spotlight with their respective product annoucements on September 5th. While Motorola announced an upgrade to its Android-based Droid Razr line, the Nokia-Microsoft (NASDAQ:MSFT) joint event was perhaps the most significant in terms of the impact on the broader mobile industry.

The tech giants who are collaborating on creating a third ecosystem of mobile devices alongside iOS and Android announced the launch of their first Windows Phone 8 devices, the Lumia 920 and the Lumia 820. While the new phones sport quite a few new features that differentiate them from the smartphones in the market such as the Pureview imaging technology and a novel wireless charging concept, Nokia’s stock fell more than 15% on concerns that the phone may not find many takers with the iPhone 5 expected to be launched next week. While the iPhone 5 is expected to be made available for pre-order immediately after launch, the new Lumias will start shipping only in ‘select markets’ later in the year.

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Nokia banking on a big Windows 8 launch

The timing of the market release may have spooked many investors but Nokia’s strategy is to align the Lumia launch with the release of Windows 8 in late-October. With Microsoft looking to carve a niche for itself in the fast-growing mobile market, the software giant is expected to put a lot of marketing muscle behind the combined Windows 8/Windows Phone 8 story and leverage the huge PC user base it has to drive sales during the holiday season and beyond. Hardware partners such as HP, Asus, Acer and Dell are also expected to make the best use of the holiday season to boost PC demand with their respective launches of Windows 8-powered ultrabooks, tablets and PCs. In its own words, Microsoft is preparing to make the Windows 8 launch its “biggest product and services launch” ever. Closely tying the Lumia WP8’s release to the Windows 8 launch could therefore help Nokia benefit from the combined marketing power that will be put behind Windows 8 and Windows Phone 8.

Indeed, with Android and iOS running away with the mobile market, Nokia and Microsoft need to work closely to create even a dent in the near-duopoly. Of the two, Nokia has perhaps the most riding on the success of Windows Phone with the very survival of the company at stake. The initial Lumia smartphones launched on WP7 found favor with many technology enthusiasts and a growing carrier support helped Nokia double its Lumia sales every quarter since their launch late last year. However, this has not been enough to make up for the rapid losses Nokia has been sustaining on the Symbian front.

While increasing carrier partnerships will help increase the market for Windows Phones (Nokia has already signed on AT&T and T-Mobile in the U.S., China Telecom in China and is looking to add Verizon soon), getting people to warm up to the Windows ecosystem is proving increasingly tough considering how well-entrenched Android and iOS have become as mobile ecosystems. The iTunes store and Google Play boast more than 650k and 600k apps, respectively, while there are only 100K available in the Windows Phone Marketplace.

WP8 has essential ingredients for success

It is here that WP8 offers both Nokia and Microsoft their best chance to find a place in the growing mobile market. While building Windows 8 and WP8, Microsoft ensured that they both share the same kernel and therefore inherit the same rich feature set that has made Windows a household name in the PC industry. This will help integrate the two platforms closely, thereby making apps developed for either platform easier to port. Having a huge user base for its Windows PC platform will therefore help Microsoft generate significant support for the new integrated Windows8/WP8 user experience, driving the sales of Windows Phones in general and the Lumia in particular.

What could also help Windows Phone 8 generate more traction in the market, as opposed to earlier versions of the OS, is the increasingly litigious environment in the smartphone industry, courtesy Apple. As strong Android partners such as Samsung and HTC, driven by the Apple verdict, devote more marketing as well as developmental support to Microsoft’s new OS, we could see more Windows Phones reach customers, fueling developers’ interest in the platform. A thriving WP ecosystem will help Nokia benefit from an increase in Lumia sales, as it works closely with Microsoft to bring down costs and tightly integrate hardware with software.

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