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)), Amazon (NASDAQ:AMZN) and Nokia (NYSE:NOK) are vying to steal the thunder with their respective product launches this week. While Motorola and Amazon are expected to announce upgrades to their respective Android-based Droid Razr and Kindle lines, the Nokia-Microsoft (NASDAQ:MSFT) joint event is perhaps the most significant in terms of the impact on the broader mobile industry.
The tech giants are collaborating on creating a third ecosystem of mobile devices alongside iOS and Android, and are expected to launch their first Lumia smartphones based on the new Windows Phone 8 OS on September 5th. With Android and iOS running away with the mobile market, WP8 offers both Nokia and Microsoft their best chance to carve a niche for themselves in the rapidly growing market.
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Nokia needs WP8 to work out
Having bet on the Microsoft partnership completely and with the company’s very survival at stake, Nokia has perhaps the most riding on the success of Windows Phone. 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 was not enough to make up for the rapid losses Nokia has been sustaining on the Symbian front. The first half of 2012 saw Nokia’s revenues from emerging markets fall almost 35% y-o-y as the proliferation of cheap Android-based smartphones manufactured by Asian rivals ate into the volumes of its S40 based feature phones. As a result, it even lost its position at the top of the handset market to Samsung.
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), but 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 of more than 650k and 600k apps, respectively, while there are only 100K available in the Windows Phone Marketplace.
WP8 has essential ingredients for success
The newly launched Windows Phone 8 could therefore be a watershed moment for both the partners since the OS is built around many of the same core components as Windows 8. Not only does that help WP8 inherit the rich feature set of Windows 8 such as support for multi-core processors making future Lumia devices faster and sleeker, but also integrates the two platforms closely, making apps developed for either platform easier to port and increasing the user base for app developers. Having a huge user base for its Windows PC platform will 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. The recent $1 billion patent win that Apple scored over Samsung may prompt big-time Android partners to look for alternate mobile ecosystems in order to diversify and avoid frequent costly lawsuits. In the court battle with Samsung, Apple used a Lumia as an example to show how a smartphone could be designed differently from an iPhone.
As 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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