Here's a Twist: Microsoft and Nokia Will Beat Apple to the Phablet Market

As so often happens in mobile computing, leaks, rumors, and assorted scuttlebutt make "surprise" unveilings of new devices at widely anticipated events more a confirmation than a revelation. So when Nokia (NYSE: NOK  ) announced its intention to introduce several new products at its annual Nokia World event on Oct. 22, it naturally let slip several pictures of possible device introductions, including photos of a new phablet. Apple (NASDAQ: AAPL  ) ? It's still months away, if it decides to go there at all.

What do Nokia World, phablets, and rumors have to do with Microsoft (NASDAQ: MSFT  ) ? As it turns out, a lot. As most Fools have probably heard, Microsoft is expected to close its $7.2 billion deal for Nokia's devices and services unit early next year . Any new mobile product roll out by Nokia is of interest to Microsoft and its shareholders.

The update
At first glance, the Windows Phone OS update doesn't seem to overwhelm; it's basically a few tweaks here and there. But upon closer examination, these tweaks open the door to what is expected to be a $46 billion market this year, doubling by 2016. The move to phablets has begun, and Microsoft is ready to grab its piece of the expanding pie.

There are three key features of the Windows Phone update specific to phablets. The first is support for 1080p HD resolution, a must-have feature for phablet users obsessed with razor-sharp images for streaming movies, playing games, and day-to-day smartphone usage.

The new Windows Phone OS supports quad-core processors, meaning Qualcomm's newest Snapdragon 800 processor, another step in the right direction for Nokia and Microsoft. All Windows phone devices have been powered exclusively by Qualcomm chips, so this addition is adding the latest and greatest to the mix.

The final significant upgrade is the most necessary, and the most obvious: Windows Phone will now function as it should on phablets with a screen size up to 7 inches. According to Microsoft, the new Windows Phone allows phablet users to view double the number of tiles they were able to see before the upgrade, see more emails without scrolling, and access pictures and all the other goodies the growing number of phablet users want.

And just think, all this a week before Nokia World -- what a coincidence.

The possibilities
The phablet market is clearly a huge opportunity, and getting bigger. But unlike mobile computing in general, a market Microsoft was admittedly very slow in entering, there's still room to make a sizable dent. Samsung owns phablets right now, though there are a few other players trying to make an impression -- but most of those phablets are of the 5-inch variety, give or take a quarter of an inch.

No word -- other than rumors, of course -- on how big Nokia's "surprising" new phablet will be; larger is better for most users, however, so support for a screen up to 7 inches, as Microsoft claims its updated Windows Phone has, should position it well for future device iterations.

Should the expected happen and Nokia unveil a phablet next week running the new Windows Phone OS, it would upstage mobile industry darling Apple by months, if the rumors pan out. Word has it Apple has a phablet or two in the works, but it will be 2014 before iFans can get a hold of one, if in fact Apple is willing and able to alter its manufacturing processes to accommodate the bigger screen.

But a true Apple phablet may or may not appear at all, if "sources familiar with the matter" are to be believed. Said "sources" have intimated that Apple intends to find what it thinks is a happy medium between a phablet and a tradition smartphone: an iPhone with a 4.8 inch screen, up from the four-inch screen most iFans are accustomed to. For Microsoft and Nokia, nothing would be better than Apple opting out of the phablet wars; just one less thing to contend with.

Microsoft and Nokia out-innovating Apple in a market that could grow to 350 million units in just a few years? Now there's one for the books. Phablets are a tremendous opportunity, and while Nokia and Microsoft may not be driving the train, at least they won't be riding in the caboose hits this time around.

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