Nokia Follows Microsoft on the Road to Nowhere

Microsoft (NASDAQ: MSFT  ) hasn't had a lot of success in moving its Surface tablets powered by Windows RT. It's hard to imagine that Nokia (NYSE: NOK  ) will fare any better. Yet sources tell tech blog The Verge that the Finnish handset maker will roll out a Windows RT tablet next month. 

Making a bigger splash in tablets makes sense for Nokia. The market is growing faster than Nokia's smartphone stronghold, and it's not as if the once dominant handset company has made the most of the opportunities in its flagship niche. However, Nokia's decision to accept billions from Microsoft in exchange for supporting Windows as its mobile operating system of choice has proved to be more costly than lucrative. Analysts see Nokia's revenue sliding 19% this year.

Backing Windows RT is a peculiar choice for Nokia. It's been a colossal flop since rolling out late last year as a scaled-back operating system that doesn't run older Windows programs, as the beefed-up Windows 8 Pro does. Tech tracker IDC reported earlier this year that just 200,000 of the 50 million tablets shipped worldwide during this year's first quarter were Windows RT devices. That's 0.4%.

One thing to note is that there will reportedly be a big difference between Nokia's tablet and Microsoft's Surface, and that's wireless carrier connectivity. According to The Verge, Nokia's portable device will be sold through AT&T (NYSE: T  ) in this country with LTE support. Getting wireless carriers on board is a big step, but will it make an already overpriced tablet even more expensive?

Who will even buy this thing?

A big selling point for Windows RT is that it does run a modified version of Microsoft's iconic Office productivity suite. That doesn't happen on iOS and Android devices, though there's naturally no shortage of third-party apps that offer Office compatibility.

The biggest shortcoming for Windows RT is that it lacks developer support, making it ultimately less functional than cheaper Android devices and trendier iPads.

Microsoft's dramatic $150 price cut last month -- shaving the Surface RT to as little as $350 -- may also get in the way of just how much Nokia will be able to charge for these things. There's no point in holding out for carrier subsidies until a market develops for Windows RT, since even AT&T has to know it'll be pushing a product with little chance of gaining traction later this year.

Nokia followed Microsoft's money last year, and look where that got it. Why is it falling into the same trap this time?

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Read/Post Comments (11) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 18, 2013, at 4:52 PM, lee654 wrote:

    Nokia will be the winner with the Tablet ! Long & will buy ! LS

  • Report this Comment On August 18, 2013, at 6:11 PM, qwerty1097 wrote:

    It only makes sense if MS sponsored the whole thing and Nokia has a x86 (Bay Trail) version in the works for later on, in which RT will would serve as hardware test. I really hope they aren't intending on earning any money with RT because that's not gonna happen.

  • Report this Comment On August 18, 2013, at 9:30 PM, techy46 wrote:

    "Backing Windows RT is a peculiar choice for Nokia"

    The big difference is the Nokia WRT phablet will contain a Qualcomm chip set just like their Lumia smart phones and it will have 4G/LTE connectivity. It will also come with an Office 365 trail license. All those improvements may just entice Windows users to have a 6-10" tablet that's also a phone.

  • Report this Comment On August 18, 2013, at 11:52 PM, flybywire54 wrote:

    Nokia has a x86 Windows 8 version in the works , that was leaked as well . Anyway that Microsoft surface rt was a flop does not necessarily mean that the same will happen with a Nokia RT tablet , if price is low enough . Nokia has a good distribution network worldwide , RT has been upgraded , and

    I would go for a smaller 7 or 8" model on Win RT if I was Nokia , those small tablets are selling well , see the mini ipad , and can be manufactured and sold cheaper . Besides that would threaten more effectively Samsung phablets , Note 2 and Note 3 , if the tablet comes with 4GL LTE .

    Lets wait for Nokia official announcement , for now those are rumours

  • Report this Comment On August 19, 2013, at 1:22 AM, symbolset wrote:

    Stephen Elop's problem now is that Nokia's market cap isn't falling fast enough to be useful to Microsoft's strategy of acquiring them in a fire sale. Nokia has too much cash. Nokia is not yet bite-sized.

    A few billion dollars worth of WinRT tablets will solve this problem for him.

  • Report this Comment On August 19, 2013, at 4:04 AM, Lugus wrote:

    "Who will even buy this thing?"

    I will, and so will a growing number of people I know. I have a 925 and absolutely love it! I've had a Samsung SII (when they were new) and my mother and sister have iPhones, and of the three there is no comparison, the 925 is simply better designed, better looking and easier to use. I wish they would make a tablet version with Win8 (NOT WinRT, WinRT is useless). I'd even pre-order it if I could!

    And once the corporate world starts migrating to Win8 (corporate IT always lags new versions by a year or so to wring the most ROI they can out of what they already have), I think you will see high growth in corporate use of windows phones to replace Blackberry.

  • Report this Comment On August 19, 2013, at 5:21 AM, ativoj wrote:

    I will buy it.

  • Report this Comment On August 19, 2013, at 10:48 AM, VRUppugunduri wrote:

    I will buy 4.

  • Report this Comment On August 19, 2013, at 11:09 AM, jayintheatl wrote:

    "Nokia followed Microsoft's money last year, and look where that got it."

    Let's start here. I don't know what this means. Nokia is still not in the perfect shape due to its much earlier loss of cell market share, but it's also shipped an amazing amount of Windows Phones (up 30+% from Q1 to Q2).

    So "look[ing] where that got it" appears to be a lot stronger shape than Nokia was looking a few years ago.

    Now to what SHOULD have been the point of the article, rather than the baseless snarkiness about Nokia's improved market position. Nokia's tablet is different than the Surface RT: it uses the LTE cellular band, and it will be sold through AT&T. Sorry to burst your anti-Nokia/anti-Microsoft bubble, but that's an impressive position to be in: consumers absolutely WILL buy a cellular-ready tablet marketed right through AT&T. They don't care about the sales numbers for the Surface.

    In addition, I believe the Nokia tablet is rumored to be a smaller form factor than the Surface RT, which is another plus for its differentiation.

    I predict the Nokia RT tablet will do quite well. As an iPad owner and a Surface RT owner, I prefer the Surface RT in every way, from aspect ratio to web browsing (with Flash) to email, to Office applications. RT should work exceptionally well on a small tablet with LTE compatibility sold through AT&T.

  • Report this Comment On August 19, 2013, at 1:33 PM, CharlesClarke3rd wrote:

    I love hearing some pro windows fans out there. To the author, you do not know what you are talking about. I know the Olathe School District has a deal with the local Microsoft Store to purchase Surface RT Tablets in bulk. Thats just one specific example. I think what's mostly lacking on the Surface RT is a digitizer pen, which according to some Nokia patent filings, will be included with the Nokia phablet/tablet. This should make it a tough competitor with the Surface RT. I actually just upgraded my 32 gb surface for a 64 gb with touch cover. Its pretty sweet. I discovered some nice video integration with the XBox 360 too. I commented with feedback to an app that they needed 360 integration a while ago and they updated to include it! I can also print from a windows phone to my brother print based a week after I provided feedback to Brother about the apps failings... And update came out right after. Anyways. The Surface RT rocks! And there is great support by thier app developers! Ps - RT marks the end to virus and malware plagueing windows.

  • Report this Comment On August 19, 2013, at 8:30 PM, Skiman1980 wrote:

    Rick needs to use a windows tablet before writing articles

    Hes a noob

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