Things seem to be picking up for the handset business of Nokia (NYSE:NOK) soon to be acquired by Microsoft (NASDAQ:MSFT). The Lumia line of smartphones and phablets did reasonably well in 2013, but faded a bit in the December quarter, selling a total of about 30 million units for the year.
Source: The Verge
At the Mobile World Congress in 2014, Nokia surprised the world with the announcement of its Nokia X Android OS smartphones. With a look and feel almost identical to the Windows OS Lumia line, the new devices caught many off guard. From an appearance standpoint, the Nokia X (shown to the left) is virtually identical to the Lumia 520 (shown to the right; don't be confused by the image, sizes since both devices have 4" screens).
The Nokia X was launched in China only a week or so ago to rave reviews and high demand. JD.com, the only vendor for the time being, reportedly had pre-orders for 10 million units within a week of launch. If those pre-orders (which are really not much more than indications of interest) turn into sales, the Nokia X will be a blockbuster winner. On March 10, 2014 the Nokia X was released in India with some observers indicating that the price of 8,599 rupees (about $145) was still too high, given the specifications at the low end of the smartphone range.
The Nokia X is priced a bit higher than the Lumia 520 (8,599 rupees versus 7,700 rupees for the Lumia model) despite the superior hardware in the Lumia. The BGR article provides a detailed comparison of specifications and features.
The head to head sales of the two devices will provide an interesting insight into the value of the ecosystem, since the Nokia X selling proposition is that it will run most Android applications as well as support some typical Microsoft features like OneDrive and Skype, while the Lumia smartphones use Windows applications available at the Microsoft Store.
It is early days, but shipments of the Nokia X into India so far in March are about 120,000 units based on data from Zauba - a web site that tracks imports and exports to and from India at a granular level of detail. A screen print of the kind of detail available from Zauba is reproduced below:
A key question is the extent to which the Nokia X might cannibalize the Nokia Lumia line. While we don't have much data, the trend in India where the detail for March is available is encouraging. Lumia imports rose sharply in March year over year, hitting about 20,000 in March 2014 versus less than 5,000 in March 2013 according to the Zauba.com data.
The Nokia X is very likely to shake up the established order somewhat. Windows success in its early days was its user interface, not its underlying code which at the beginning remained DOS with a shell over it. Users may say they care about the operating system, but in reality, they care about the interface and functionality. Most have no clue what the operating system is or does, or their understanding is very limited. While there are hundreds of different varieties of devices, there are very few user interfaces - iOS, different flavors of Android, Chrome, Firefox, BlackBerry (NASDAQ:BBRY), Linux and a handful of others. The move to make the Windows interface the user portal to the Android OS is brilliant and will have boardrooms of smartphone vendors buzzing with debates. The first reaction to a threat is usually to call in the lawyers, and I am sure there will be some of that, but it is not likely to go anywhere.
The competitive landscape is changing quickly. I have a Lumia 1020, and while I really like the Windows interface, I still use my old BlackBerry Bold 9900 since it is reliable, useful, has a keyboard that makes my life a lot easier, has a battery that seems to last forever, and does provide the very few applications I actually use, the most important of which is BBM. When that comes to Windows, I may shift, but my choices will be broader and may include a Windows interface on an Android OS. Who knows?
One thing is certain. The competitive arena will not stand still and the vendors who react, innovate and advance without blinders on their thinking are very likely to prevail. I think the new Microsoft will be among them.
I have no current position in Microsoft, Nokia or BlackBerry. I may take a position at any time.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in MSFT, BBRY over the next 72 hours. 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.