I have been decidedly anti-Windows RT for a long time. While I'd like to think that Windows RT's sole reason for existence was to push Intel (NASDAQ:INTC) and AMD (NYSE:AMD) to develop strong low power offerings to realize the firm's vision of converging tablets and traditional notebook PCs, Microsoft's (NASDAQ:MSFT) insistence that Windows RT is here to stay despite strong offerings from both Intel and AMD in this space somewhat belies this notion.
Anyway, so it seems that Nokia (NYSE:NOK), Microsoft's best friend in the world, is dropping plans for a Windows RT tablet and is instead doing the smart thing and releasing a full Windows 8 tablet, likely based on Intel's upcoming "Bay Trail" platform. I believe that this could be Nokia's shot at not only becoming relevant in the tablet market, but it could propel the firm to a market leader in this space.
Why Windows RT Makes No Sense
Windows RT - the OS, not the underlying runtime engine for the Metro UI - plain sucks. Contrary to popular belief, not everybody wants to replace a full Windows PC with a much more limited mobile OS. People like to print to their printers, use their traditional USB peripherals, run desktop applications, play their classic video games, and essentially have the best of both worlds. The unique advantage that Windows 8 has over any other platform is that in the "Metro" mode, it's a very competent tablet-oriented OS, but when real work needs to be done, a quick tap gets you into the full desktop.
Windows RT - that is, Microsoft's attempt at an OS to help push ARM's (NASDAQ:ARMH) "world domination" strategy - utterly fails because it has no competitive advantages once you strip out everything that makes it Windows. Why should any OEM be interested in forking over a licensing fee to Microsoft for an app ecosystem that will take many years to become as rich as that found on Android when Google's (NASDAQ:GOOG) Android is free? With Windows 8, the tables turn, and nothing can beat the rich existing application ecosystem available for the traditional Windows desktop. This is, in my view, enough of a perk to keep people waiting for the more touch-friendly applications to appear.
Quite bluntly: if the full version of Windows 8 is available, then why would anybody want a tablet that is both slower and less functional? They don't, and that's why sales of tablets with Intel's Atom continue to mop the floor with those of even Microsoft's highly advertised Surface RT. People seem to love the Surface Pro, but wish that it were thin like the Surface RT - and that's what Nokia can - and will - provide.
Nokia Can Do Amazing Things With Windows 8
While the company's turnaround continues to be sluggish at best as its entire future seems to rest on Windows Phone 8, I believe that an entry into full Windows 8 tablets could be wonderful for the company. While margins on commodity tablet hardware aren't exactly stellar, there is a credible business case for building a brand for yourself in the consumer electronics space. Further, given Nokia's extensive software R&D efforts, I see plenty of opportunity for the company to differentiate itself by including solid, custom pre-installed apps (rather than the crap-ware that comes with most Windows PCs).
More to the point: the "traditional" PC business is going to die, and nearly everything in the mainstream computing space will be either ultra-thin touch-enabled laptops, convertibles, and plain tablets. Nokia could, in a move that mirror's Lenovo's (OTCPK:LNVGY) meteoric rise, become a premier Windows "PC" vendor by way of helping to enable a broad shift to thin and light full Windows 8 tablets of all shapes and sizes.
Kudos to Nokia for not boarding the S.S. Failboat RT, and for jumping on board the Windows 8 train. While I remain curious as to what kind of tablet device Nokia will put out, I at least know that it will stand a fighting chance with the flood of other full Windows 8 tablets that are coming to market in Q4 2013.
Disclosure: I am long INTC, AMD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.