Nokia’s (NYSE:NOK) Lumia series of Windows Phones may have received rave reviews from many, but if there was one thing the fans bemoaned, it was the lack of a dual-core processor. Qualcomm (NASDAQ:QCOM) seems to be on course to fill that gap with its Krait-based dual-core S4 chipset, which as it confirms has been certified for Microsoft’s next generation Windows Phone 8.  With Apple’s (NASDAQ:AAPL) iPhone as well as a horde of popular Google (NASDAQ:GOOG) Android smartphones sporting dual-core (and, in some cases, even quad-core) processors, Nokia will be looking to make the transition to Windows Phone 8 and unveil dual-core Lumias soon.
Our price estimate for Nokia’s stock is $5, more than 50% ahead of the current market price.
Dual-core specs make Lumia more desirable
The Lumia smartphones have done reasonably well so far, garnering rave reviews at the CES 2012 and selling 3 million units in less than five months since its launch. While it would be unfair to compare the sales figures with Apple’s or Samsung’s, considering the relatively poor current position of Windows Phones in the market, we believe that Nokia is generating healthy traction in a near duopolistic smartphone market.
Nokia has launched the Lumia on two of the four largest carriers in the U.S., AT&T and T-Mobile, as well as on Rogers and Telus in Canada. The company CEO, Stephen Elop, has gone on record saying that demand from the U.S. markets is “exceeding expectations.” Further, Nokia is pushing the Lumia hard in China as well, which is expected to surpass the U.S. as the world’s biggest smartphone market by the end of the year.
With a billion strong mobile subscriber base and growing demand for 3G services, China presents a huge opportunity for Nokia. The Lumia 800C has been launched on China Telecom, with cheaper variants and deals with China Unicom and China Mobile on the way. Emerging markets are very important for Nokia as they account for about 40% of the company’s overall value.
With carriers increasingly warming up to the idea of a competitive third mobile ecosystem that can reduce the dominance of Apple and Google in the smartphone market, Nokia is looking to leverage the close integration of its devices with Microsoft to drive its smartphone sales. (see Nokia’s New Year Resolution: Spread Carrier Love and Nokia Faces Big Tests This Year In China And U.S.) Armed with a dual-core Lumia, Nokia as well as its carrier partners will be able to market its device even better as customers increasingly look for high-end specs in flagship smartphones. A more marketable Lumia will help Nokia increase its presence in the developed markets and derive more value from a region that, despite the high-margin opportunity, currently contributes less than 20% to Nokia’s overall value.Notes:
- Qualcomm reminds us that dual-core Windows Phone 8 is coming, CNET, June 5th, 2012 [↩]