As I said in my last Nokia article, Nokia (NOK) has hope. Enough hope that I expected it to hold $3.20 and it did, since it's now trading at $3.48. Nokia's hope comes both from the growth of its Lumia range, and the fact that its other divisions, namely the Siemens-Nokia joint-venture, plus its cash meant that the "Devices and Services" segment came for free.
Things might be getting better
Since Nokia is so reliant on its Lumia smartphones doing well, it's good news that the latest numbers from Kantar Worldpanel ComTech show Windows Phone 8 gaining market share rather quickly in the U.S.
Kantar now shows Windows Phone at 5.6% of the market for the 3 months ending in April 2013, up from 3.8% for the same period last year and 4.1% for the 3 months ending in February. Since Nokia represents the overwhelming majority of Windows Phone sales, this is the same as saying that Nokia is finally gaining overall share in the smartphone wars.
Sure, Windows Phone is still far from the 41.4% taken by iOS or 51.7% taken by Android, but at least it's growing faster than the market. As a term of comparison, BlackBerry (BBRY) is shown at a measly 0.7% of the U.S. market by Kantar.
The large risk looming
Things seem never to be easy for Nokia, though. While the Lumia range seems to be getting better prospects right now, at the same time a new risk is emerging slowly. Rumors keep surfacing that Microsoft (MSFT) is moving towards a greater emphasis on devices.
First Microsoft launched the Surface tablet, which it might follow with a new generation including a smaller-sized tablet. Then, of course, it also launched the Xbox One as expected. But the wildcard is that within this renewed emphasis on devices there might be an intention to serve the market with a Microsoft smartphone, obviously running Windows Phone. With Nokia being the largest Windows Phone maker by far, any such move would quickly run the risk of cannibalizing its business or worse (or worse because if Microsoft had enough success it might lead it to try and close the mobile OS).
Closing the OS or at least disadvantaging other purveyors is not so far-fetched in a world where Apple (AAPL) enjoys so much success and revenues plus profits, especially when the other main competitor, Google (GOOG), now also carries the capability to produce hardware itself, through Motorola.
Anyway, what's more relevant is that the chance of Microsoft becoming competitive with its licensees is real, and upon any announcement, it would lead to selling pressure on Nokia. It's a bit of a pity for that to happen when the stars now seem to be aligning favorably for Nokia.
Nokia received decent support from its infrastructure division as well as its cash hoard, giving it more time to grow its crucial Lumia smartphone segment. The latest numbers from Kantar seem to show that Nokia is having some success in doing just that, even if there's still a significant road ahead to match iOS and Android. If these were the only recent news, then they'd be broadly positive for Nokia.
However, at the same time there are rumors that Microsoft is getting ready to expand its involvement in producing devices, and those rumors imply Microsoft might end up launching its own smartphone, which would be very negative for Nokia.
All in all, I'd still classify the developments as positive for Nokia, though attention must be kept on Microsoft's moves.