Exclusive Update

Nokia's turnaround under CEO Stephen Elop has been long, slow, and painful. It is also closer to the end than the beginning, and Nokia shareholders can stop holding their breath.

That is not to say that significant challenges don't remain. Nokia sold 6.6 million smart device units in Q4, 4.4 million of which were Lumia devices running Microsoft's Windows Phone 8 operating system. Those unit volumes look meager next to industry leaders like the Samsung Galaxy S III or Apple's iPhone, but I view it as a credible starting point for Nokia's first lineup of Windows 8 phones. The challenge for Nokia in 2013 is to gain momentum quarter after quarter so that by the end of the year it's miles ahead of where it is today.

To do so, Nokia is going to have to improve upon its flagship Lumia 920. While well-received by tech reviewers, it gets knocked for its large size and thin app ecosystem. There are already rumors flying about the characteristics of Nokia's next Lumia phones, including moving away from the polycarbonate body to aluminum to make the handset thinner and lighter. There are also suspicions that Nokia will launch a true Pure View Windows 8 phone, a feature that would really distance that handset from the rest of the pack due to Nokia's superior imaging technology. It is inevitable that Nokia will have to release new handsets in 2013 to keep pace with Apple and Samsung. To get its Windows Phone 8 volumes to a much higher level – say 20 million a quarter – Nokia's new phones will have to impress.

Charly Travers is an Associate Advisor with Motley Fool Million Dollar Portfolio. He owns shares of Nokia.