Now that we have all seen Apple's (AAPL) explosive first quarter results, doubling profit to $11.6 billion - what's a competitor to do? With Apple selling 35.1 million iPhones last quarter, it might seem daunting to consider grappling with this juggernaut, but Nokia (NOK) and Microsoft (MSFT) recently laced up their gloves and entered the ring with the much anticipated, Lumia 900. And get this, over the last few weeks, retailers have been selling out of this long-awaited iPhone challenger. The phone is selling at a run rate of approximately 1 million units for Q2 2012. AT&T's online store even temporarily sold out of the Lumia 900 in mid-April. Now that says something.
Recent sales results from AT&T (T) have just started to come in for the new Windows phone which launched on April 8, and believe it or not, retailers are selling out of their current stock while Nokia refills orders as quickly as they can. Nokia reports that demand in the U.S. is outstripping supply and in fact, the company just announced that they would push the UK launch back to May 14 to better fulfill U.S. customer needs.
In Nokia's favor, it's been about 6 months since the last iPhone 4S introduction late last year. That's an eternity when you're an early adopter. Now that everyone has an iPhone, it's time for something fresh. The big question is - will Nokia's new Lumia 900 be fresh enough? Will it even be a blip on the radar for investors currently playing with these tech brands?
Still reeling from a net loss of $2 billion during its first quarter, Nokia is doing everything in its power to forge ahead with something new. Both Nokia and Microsoft might seem a little desperate as they enthusiastically promote the new Lumia 900, yet there's really nothing wrong with being scared into new innovations. Nothing else seems to be working.
Microsoft CEO, Steve Ballmer seems extremely proud of the latest phone offering. Over the course of several recent interviews, he continues to emphasize that his company and its partners have a formidable plan to ensure collective leadership in the smartphone market. He's even gone on to comment that Microsoft's long-term strategic alliance with Nokia will build a global ecosystem that creates opportunities beyond anything that currently exists. Pretty loft goals, so let's dive back into the Lumia 900 to see what's really there.
This might seem trivial, but as smartphones become more and more alike - color matters. Think I'm joking? This can be seen in the last few days as the white and cyan version of the phone have sold out, as opposed to the black. In this scenario, Nokia might be onto something special as they originally launched with cyan and black versions only to follow up with magenta and a gloss white version. Not only do colors matter, but apps definitely count and on this front, Microsoft not only built out a new operating system, they also paid top developers to create and contribute fan-favorite consumer apps for the new system.
Let's talk pricing. The new Window's phone comes in at a highly attainable $99 price point. Add this to the fact that carriers like AT&T, and Verizon (VZ) are getting increasingly uncomfortable with Apple and Google's (GOOG) death grip on the market, and the plot thickens.
Beyond the Apple-Google duopoly, carriers have expressed their concern over the costs to subsidize products like the iPhone. If the Lumia 900 can take a little market share from the others, maybe companies like Apple will lower their subsidy costs, thus increasing profit margins for the AT&Ts of the world. Hoping to amp up marketing efforts around the new Lumia line, Nokia has announced plans to increase its overall advertising spending on the product this quarter. Beyond new advertising pushes, company spokespersons for both AT&T and Verizon continue to get louder regarding their desires to back the new Nokia plus Microsoft offering, opening up a much needed third ecosystem for all to choose from.
So, let's assume for a moment that the new Lumia 900 is even half as strong as some journalists suggest - does this mean pick up some Nokia shares and sell off Apple and Google? No way. But it does merit keeping an eye on as Apple fans never like to see all the carriers getting so emotional over the competition.
Mobile video is huge and the Lumia 900's screen size (4.3 inches vs. 3.5 inches for the iPhone 4S) is a big differentiator. On top of the bigger screen for authentic wide screen viewing (the new normal), the Lumia 900 has an AMOLED display, which is great for color vibrancy and a more dynamic feel for video and pictures. Adding a little more pop for the Nokia Lumia 900 launch, several retailers will be rewarding pre-orders with some Purity in-ear headphones and a Nokia Play 360 wireless speaker for free.
If mobile video is all the rage - then speed kills, and in the race for the fastest network support the Lumia 900 wins. While the iPhone supports 4G and HSPA+, the Lumia 900 supports LTE over AT&T's network, giving users access to the fastest wireless data network in the U.S.
So, while Apple basks in the glory of its recent quarterly results, they best not fall asleep at the wheel. They need to start teasing the iPhone 5 in an official capacity as the Nokia / Microsoft tandem is not going to go away quietly. The iPhone 4S still appears to edge out the latest Lumia 900 on technical specs alone - but you just can't ignore that $99 price tag. The multiple color-ways and simplified user-interface that the latest Windows operating system sports is sure to win its share of fans.
Both Microsoft and Nokia have staked their fortunes on the new lineup of Windows Phones. Microsoft is full speed ahead as they aim to regain market share and pride lost to Apple and Google. Nokia, meanwhile, desperately needs to rebound from four straight quarters of losses and a stock price trading near a 15- year low at $3.75 per share. It's never good strategy to bet against a hungry tiger - so Apple investors, I urge you to be on the lookout for the Finnish beast that may or may not be lurking in the shadows.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
