Nokia's New Battleground

Finnish smartphone maker Nokia's (NYSE: NOK  ) turnaround is now starting to take shape on the back of its Lumia lineup. The company has bet it all on Microsoft Windows Phone, and while the transition away from Symbian has been long and painful, there's now light at the end of the tunnel. As part of its efforts, the company has picked a new battleground in the smartphone wars: cameras.

Last summer, Nokia acquired the technologies, developers, and intellectual property portfolio of Scalado, a mobile imaging specialist. The move was intended to bolster the camera capabilities of Lumias. In February, Nokia also invested in InVisage Technologies, another camera specialist.

Just this week, Bloomberg reported that Nokia's venture capital subsidiary was investing in Pelican Imaging, a California start-up that is developing a technology that allows a user to change focus after a photo is taken, among other features. The sensors are similar to the Lytro "light field" cameras that made headlines last year.

Nokia's focus on shutterbugs may be a point of differentiation to appeal to Apple (NASDAQ: AAPL  ) users. The Mac maker also places high priority on the iPhone's camera capabilities, even highlighting it in a recent ad filled to the brim with emotional appeal. Steve Jobs had reportedly even met with Lytro CEO Ren Ng to discuss incorporating the camera tech in future iPhones, although nothing materialized out of the talks.

Samsung is also putting its marketing weight behind cameras. The South Korean conglomerate recently launched a dedicated Galaxy Camera point-and-shooter, and has loaded up the Galaxy S4 with a plethora of software features for photo enthusiasts.

Nokia is also pushing the megapixel envelope to the extreme, for better or for worse. It famously launched the 808 PureView last year sporting an insane 41-megapixel sensor.

Nokia 808 PureView. Source: Nokia.

This year, 13 may be the magic megapixel number for the mainstream. Samsung's Galaxy S4 carries that spec, and Apple is expected to follow suit later this year. The megapixel race continues as the myth persists that higher megapixels are always better.

HTC is bucking this trend with its One, which offers "only" a 4-megapixel sensor. The Taiwanese OEM is heading the other way because it can use larger pixels with greater low light sensitivity, and is branding these "UltraPixels." In an era where most average users simply upload shots to Facebook and other sharing sites, which automatically compress images first to preserve bandwidth, HTC's betting 4 megapixels is just fine (and it's probably right).

Will Nokia's big bets on camera tech pay off?

Nokia's been struggling in a world of Apple and Android smartphone dominance. However, the company has banked its future on its next generation of Windows smartphones. Motley Fool analyst Charly Travers has created a new premium report that digs into both the opportunities and risks facing Nokia to help investors decide if the company is a buy or sell. To get started, simply click here now.


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