Will Nokia's Lumia 1020 Sales Hurt Its Other Models?

Jul.29.13 | About: Nokia Corporation (NOK)

In the last 2.5 years since I have been closely following Nokia (NYSE:NOK), the Nokia Lumia 1020 has created the most buzz and coverage online. No one can ever know what is impacting share price, since the market has so many players, but I strongly believe one of the main reasons NOK has not followed its typical after earnings sell off is because big players are waiting with bated breath to see how the Lumia 1020 will be received by consumers.

To date, the overwhelming majority of comments surrounding the 1020 is very positive. I would say that 99% of the media stories I have read say that this phone is very impressive and Nokia may very well have a winner on its hands despite a less mature operating system and the unavailability of certain popular apps on Android (NASDAQ:GOOG) and iOS (NASDAQ:AAPL).

However, there are always some parties that seem to be able to find the hair in the ointment, no matter how small. What motivates these people to find fault with Nokia is surely related to money. Some writers on SA, which I will not name, still see Nokia's glass more than half-empty. It is my firm belief that by their writing and comments they wish to create doubt in the minds of shareholders so that any other negative news they may read will push them to sell their holdings and put downward pressure on the stock. Some writers have openly admitted that they are making money playing Nokia Ping-Pong, i.e. they are taking advantage of temporary selling pressure to buy dips and sell when the price gets a few pennies higher. Transacting in large amounts of shares in this matter can be very profitable.

Finding no obvious fault in Nokia's super camera phone, the latest doubt that some are pushing is that sales of other Lumia models will be hurt by the release of the Lumia 1020. They try to convince others that Lumia 920 sales at AT&T (NYSE:T) will be impacted because of sales of the 1020. At launch the Lumia 920 sold for $99 with contract while the 1020 is going for $299 with contract. If consumers are willing to spend an extra $200 for the 1020 it is because they realize it can replace a point and shoot camera and video camera thanks to its zoom capabilities. While the 920 is an excellent phone its digital zoom is as useless as any other smartphone. Different customers will be buying the 920 and the 1020. Believing otherwise is like believing Chevrolet Impala (NYSE:GM) sales will be hurt by the release of the Cadillac. If there is any overlap of those two types of customers I would be very surprised.

On the contrary, I believe that the buzz surrounding the Lumia 1020 will create a halo effect that will positively impact sales of the 920. If sales clerks see Nokia in a better light, you can bet that they will speak more positively of all the company's offerings and that enthusiasm will impact customer decisions.

Even though the 920 is already eight months old, it is not being replaced by the 1020. The 920 will be replaced at a later date by a smartphone that has new technological advancements and a totally new OS from Microsoft (NASDAQ:MSFT). Its replacement will nevertheless fit into the same category, price point wise and market wise. All different Nokia Lumia models are clearly identified by a simple numbering system, and despite what some will try to lead readers to believe, Nokia knows what it is doing in addressing different markets. Granted, they have made major mistakes in the past, likely due to arrogance. Nokia has been making, marketing and selling phones since before the iPhones and Galaxies were in Apple's and Samsung's (OTC:SSNLF) eyes. With Stephen Elop at the helm of Nokia, the company has developed a new, more humble image. Mr. Elop has often been quoted as encouraging a new challenger mindset within the company, which is totally incompatible with the arrogance of the past.

I think Nokia has a real winner on its hands with the Lumia 1020. I'm waiting for mine in the mail and I look forward to the resulting stock price appreciation in the near future as marketing campaigns ramp up in the US and elsewhere.

Disclosure: I am long NOK. 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.