Nokia (NOK) Enters the Tablet Race
Last week, Nokia (NOK: Charts, News) confirmed its upcoming tablet computer, designed through its existing partnership with Microsoft (MSFT: Charts, News). The announcement coincides with Apple's (AAPL: Charts, News) upcoming iPad 3 release, which has loomed large in technology and financial headlines recently.
t's no secret that Nokia, the largest mobile handset maker in the world, has had a terrible four years. Shares of the once dominant Finnish company have crashed from nearly $40 in 2008 down to a humbling $5 per share. The company stood idly by in 2007 when Apple's iPhone captured the hearts of the public. It then stood by complacently again in 2008 when the first Google (GOOG: Charts, News) Android phone emerged as a second threat, backed by rival handset makers Motorola, Samsung, Sony Ericsson and HTC. Nokia proudly continued using its aging OS, Symbian, and refused to join its industry peers in supporting Android, despite investor and analyst warnings. Inevitably, the company was cut off from the rest of the mobile world. By the time Nokia finally introduced its Ovi Store in May 2009, Apple and Google had already given iPhone and Android users millions of mobile applications in their respective App and Play (Market) Stores. In 2011, the damage to Nokia was massive - the company reported a net loss of $1.5 billion for the year due to its failure to evolve its products.
Since then, Nokia has been tossed aside with battered peer Research in Motion by investors, who now consider the two companies the washed-up bargain bin stocks of the mobile world. Stephen Elop, the new CEO and first foreigner to head the Finnish firm, did little to reassure investor confidence when he forged a mobile alliance with this former employer, Microsoft (MSFT: Charts, News), and announced that Nokia's smartphone line would be exclusively based on Windows Phone 7, a distant fourth place operating system.
Elop also finally halted development of Nokia's Symbian operating system, a move that caused the resignation of several key Nokia executives. The company's latest attempt at capturing the smartphone market with the Windows-based Lumia is still struggling to make a dent in an increasingly saturated market.
With all the negativity weighing on the company, it's easy to overlook Nokia's strengths. Nokia has always excelled at form design, engineering and durability. Microsoft, like Nokia, has been largely overlooked by investors as well, but the company still excels at creating usable software. 85% of all personal computing devices still use a Windows-based operating system.
This combination - of standardized hardware and quality software - can actually puncture a gaping hole in Google's defenses. Google's Android operating system, while popular, has been harshly criticized by developers for its fragmented hardware - due to multiple hardware vendors - and poorly managed Play Store. Apple's Tim Cook took aim at this weakness during the iPad 3 announcement, showing that most Android tablet applications were merely smartphone ones stretched onto a larger screen - which results in ugly, impractical applications that don't take advantage of a tablet interface.
A true creative marriage of Nokia and Microsoft's capabilities, both hardware and software optimized, could create a user experience that would be superior to Google's fragmented applications and rival Apple's polished ones. Most industry watchers expect Nokia to full integrate its Ovi store into Microsoft's "Live" sites for a smoother and more cohesive experience, to rival Apple's iTunes Store. If all of these things happen, then Nokia's Windows tablet could stoke the interest of consumers exhausted by Apple's product refreshes and Google's confusing and fragmented product line.
Meanwhile, Nokia has to struggle to shake off its image of as a low-end "dumbphone" maker. While its lower end offerings still make up a considerable percentage of the company's revenue, Jolaine Boyd, the head of Nokia's marketing, acknowledged the need for the company to recapture the high-end market's interest from Apple. "The battle to rebuild the standing of Nokia in the mind of consumers will be a long one," stated Boyd. "We need to change consumer perception and we have to get things right."
Other News About NOK
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Will the Windows 8 tablet finally steal market share from Apple?
Nokia Lumia 800 launches in Australia alongside interactive augmented reality stunt
Nokia pulls out all the stops in its latest PR stunt. Other Stocks in the News
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Research in Motion rallies on rumors, again.
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