Will Jolla Make Waves in the Smartphone Industry?

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Jolla Oy is an independent smartphone maker from Finland that was founded by a number of former Nokia engineers and MeeGo enthusiasts. The company just launched its first handset running a brand new Linux-based operating system known as Sailfish.

Could Jolla crash the Apple (NASDAQ: AAPL  ) and Google (NASDAQ: GOOGL  ) mobile duopoly, or will it just be a flash in the pan?

The gist
The new phone hit Finnish stores last Thursday. The company said it has received preorders from more than 130 countries and plans to start selling the device in the rest of Europe as well as in China in 2014. The phone sells for €399 (around $540), including sales taxes.

Long story short, the Sailfish OS is basically the reincarnation of the MeeGo operating software. MeeGo is the open-source platform that Nokia abandoned when it decided to team up with Microsoft.

The good news for potential buyers who wish for a fresh user experience but don't want to say goodbye to all those cool Google apps is that Jolla got its hands on the 85,000 Android apps that sold through Yandex, a Russian rival to Google. The Jolla handset can run the apps, and Sailfish is capable of being loaded onto any existing Android device. Jolla has had a hard time getting software developers on board so far, but this kind of grab-and-go compatibility could turn consumers' heads.

As far as the device is concerned, apart from the "other half" feature – a user-changeable smart back cover – there is nothing we haven't seen before. "It's not an iPhone or Samsung Galaxy killer," said Neil Mawston from Strategy Analytics. Nevertheless, consumers will start looking for new alternatives at some point. Could Jolla make a dent in such a mature industry?

David vs Goliath: who's going to win this time?
Jolla has a solid product, and it's marketing it as a "gotta have" gadget. More importantly, it's taking it one step at a time. Could this be a recipe for success?

Marc Dillon, a co-founder of the company and head of the Sailfish development, would be happy with 1 million sold devices over the first year. Unfortunately, Mikael Rautanen, an analyst at equity research company Inderes, stresses that in order for the Jolla phone to make some waves it needs to cross the 2 million threshold.

Jolla has decided to stay away from the U.S. market for the time being as it is a tough market for existing players, let alone for an outsider. It's aiming to cash in on some national pride from Finnish consumers and then hopes to establish a foothold in the enormous Chinese market.

Its Android compatibility is definitely a carrot for consumers and a red flag for Google and Apple. The Jolla staff is also looking into compatibility with Mozilla's Firefox OS APIs in an attempt to offer even greater flexibility and more openness than Apple does. If Nokia and BlackBerry had embraced a similar approach, wouldn't they have gained some valuable time? Even with this, however, Jolla is still likely to face challenges while trying to grab a piece of the mobile ecosystem.

Google's dominance in the OS space is definitely a tough nut to crack. Now that Google is hunting for budget buyers with its low-cost Moto G handset, things could get even tougher. That's not to mention the Intel and Samsung (NASDAQOTH: SSNLF  )  backed Tizen, another open-source software platform under development, which could also provide consumers with Android and iOs compatibility through an application compatibility layer (ACL). Given the fact that Samsung claims the lion's share of total Android shipments, can Jolla really be the wind of change that will reshape the current market landscape?

Final thought
It looks as if Jolla hopes to become "the Google of devices" by betting on ecosystem flexibility. "I see that Sailfish will be used on lots of different devices from other manufacturers as well," Marc Dillon has pointed out.

It's too soon to tell whether Jolla and the catchy story behind it – the spiritual heritage of Nokia, the once world-class cell phone manufacturer – are enough to make some jaws drop. One thing's for sure, though: While Apple and Google have too many irons in the fire, underdogs are striving to steal their thunder.

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