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It's tough to be aNokia
The company's latest product launch may have been its worst debut yet. On Wednesday, Nokia unveiled its new Lumia 820 and Lumia 920 smartphones, but that's about all it revealed. When asked about a specific delivery date for the new devices, Nokia CEO Stephen Elop punted the question. Other key details were also absent from the presentation, including pricing and the carriers that will sell the new phones.
This isn't the first time we've watched Nokia drop the ball in terms of execution. Flash back to April, when the Finnish company released its highly anticipated Lumia 900 phone in the United States. The device had a bug that unexpectedly dropped high-speed data connections. The glitch was particularly embarrassing for Nokia, considering it spent months promoting the phone with a marketing campaign it called "Smartphone Beta Test," meant to ridicule the tactics of rival smartphone manufacturers, namely Apple and Google.
While the Lumia 900 setback was more of an ego-bruiser, Nokia's latest launch disappointment carries significantly more weight. Once the largest cell-phone maker in the world, Nokia's U.S. market share faded to just 2% during the second quarter, according to research firm IDC. However, we knew it would be a slow climb for Nokia as the group transitioned from its Symbian operating system to Microsoft's
The big picture
I don't believe a turnaround is out of the question for Nokia, despite its botched product launch. The lack of details surrounding new products was probably more at fault for the stock drop than the phones themselves. More than that, it was important that Nokia unveil its Lumia 920 and 820 devices ahead of Apple's iPhone 5 launch, which is scheduled for later this month.
If you've remained on the sidelines up to this point, it's probably a good idea to stay there. While I don't think this is a nail in the coffin for Nokia, it also isn't a buying opportunity.
The partnership with Microsoft is also key, as it should help Nokia achieve market penetration in the smartphone business. Again, this isn't something that will happen overnight. It may take years for Nokia to rebound from its recent lows, though it's not impossible. In fact, Nokia's position looks much less dire next to Research In Motion
Unlike Nokia, which made the wise decision to switch from its own platform to Microsoft's system, RIM continues to rely on its outdated BlackBerry platform. According to comScore, RIM's share of the smartphone market nosedived from 11.6% in April to 9.5% in July of this year.
The Canadian company also faces the challenge of a weak media ecosystem, whereas Nokia's products are now linked to Windows' growing network of apps. For RIM, I think it's only a matter of time until BlackBerry fades into irrelevance.
A slow recovery
Nokia still has a fighting chance. However, unless it wants to share RIM's fate, management needs to find a way to differentiate its phones from other brands that are building on the Windows platform. We now know the upcoming Lumia 920 and Lumia 820 devices will boast features such as wireless charging, advanced touchscreen technologies, and an updated Windows operating system. This is undoubtedly a step in the right direction, even as new competition floods the market.
Speaking of competitors,Amazon.com
Nokia has been dumping big bucks into this transition to PC phones, but as these products hit the market, I suspect we'll see the company's cash position begin to stabilize. Nevertheless, Nokia faces many challenges on the road to recovery. If you've remained on the sidelines up to this point, it's probably a good idea to stay there.
But despite its rough road ahead, Nokia does have one saving grace -- its software partner Microsoft. Since the beginning of their partnership, Microsoft's gone above and beyond to help keep Nokia in the game, as the two are now joined at the hip in the mobile market. However, unlike Nokia, Microsoft has a stronger core business from which it can launch its entry to the smartphone market, which could make it a more attractive option for investors interested in the booming smartphone space. The Fool touches on all angles of the Microsoft investment thesis in its new premium research report, in which its Nokia partnership plays a prominent role. You can pick up the report today.