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Once upon a time, Nokia (NOK) was the world's leading manufacturer of mobile phones, with a 41% share of the market. Following the rise of Apple's (AAPL) iPhone and its own slow reaction to the shift in the consumer device landscape, it has since fallen on challenging times.

Today, Nokia is second behind Samsung (OTC:SSNLF) in Mobile Phone sales with a market share of 19.1% -- less than half its peak market share.

To stem the tide of its losses, Nokia brought in a former Microsoft executive, Stephen Elop, who promptly revised Nokia's smartphone strategy by paving the way for the eventual retirement of its venerable Symbian platform, shifted its promising yet fledgling Meego program to R&D and, most importantly, steered Nokia into a strategic alliance with Microsoft.

Unfortunately, for all the hype that surrounded Nokia's decision to build its smartphone strategy around Microsoft's (MSFT) Windows Phone platform, early returns have so far been tepid.

To make matters worse, Nokia's heavily touted Lumia 900 handset, carried exclusively in the U.S. Market by AT&T (T), has seen mixed reviews. Consequently, Nokia continues to see itself playing catch-up to Apple, whose iPhone leads in customer-satisfaction indices and are now carried by an increasing number of U.S. regional carriers.

Yet, despite appearances the strategy to shift to Windows Phone may have already started paying dividends, with the platform now enjoying between 3% to 6% shares in developed markets - apparently due to Nokia's decision to develop handsets for it.

Nokia remains committed to the Windows Phone platform and has indicated that it plans to embark on its maiden foray into the Tablet market with the introduction of a Nokia slate running Windows 8 by June. This is a key development since it should give Nokia a foothold in a fast-growing product segment.

Interestingly, from the moment that Nokia CEO Stephen Elop told its employees that "our platform is burning," it was a known fact that Nokia's once-dominant Symbian mobile operating system would be let out to pasture - yet Nokia continues to release new handsets operating Symbian that are targeted at the lower-end of the mobile market.

From this, it might appear that Nokia is at cross-purposes by continuing to produce handsets for a platform it has publicly vowed to abandon, but I believe that this is part of Nokia's attempt to bridge its markets as its shifts fully to Windows Phone (while producing low-cost handsets running a version of Windows software).

Indeed, Nokia's overall share in Mobile Phone market fell by 4.3% to 19.1% by the end of the 1st Quarter of 2012, while low-cost handset manufacturers like Huawei and ZTE saw their aggregate market share rise by a combined 2.7%. Nokia might not yet be able to challenge Google (GOOG) or Apple at the top-end of the market but it clearly intends to defend its rear guard and preserve its position at the middle- and low-ends by releasing Symbian-based handsets even as it eases itself into the Windows Phone ecosystem.

Given all this, I believe that Nokia, whose shares currently trade at a Book Value multiple of just 0.76 - compared to 4.4 times for the Communications Equipment sectors as a whole - is severely undervalued. If future projections of Windows Phone's market share prove accurate, Nokia's share price can easily double in a year's time and triple in 18 months.

Unlike Research In Motion (RIMM), which was struggling ahead of revealing its future smartphone strategy, Nokia already has a definitive blueprint for its future via the Windows platform and it is introducing innovations such as Nokia Reading in order to round-out the end-user experience and hasten its adoption.

What's more, Nokia's strong supply chain allows it to be profitable even at lower price points. Specifically, its Gross Profit Margin of 29% compares favorably to Apple's 40% when one considers that Apple caters exclusively to the top-end of the market while Nokia caters to all market segments.

Meanwhile, whereas Apple and Android are particularly focused and dominant on the retail market, Nokia remains committed to the Enterprise market with Windows Phone handsets such as the Lumia 610 and 800, which it traditionally catered to with its E-series Symbian handsets.

Nokia has also begun making inroads into the important area of web services with a strategic investment in cloud services firm Intermedia. To be sure, this is a small investment but, because of its commitment to the Windows platform, it can simply piggyback onto the already existing services of Microsoft such as SkyDrive. Nokia is not being left behind on the cloud.

In my view, the biggest risk to Nokia is its ability to deliver quickly - its speed-to-market. By now, we're all aware that Apple releases a new iPad every First Quarter and a new iPhone every 3rd of 4th Quarter. Meanwhile, there seems to be a new Android handset announced every week. In contrast, 13 months passed between the time that Nokia announced its shift to the Windows Phone platform and the time it unveiled the Lumia 900, its Windows Phone handset for the key U.S. Market - and even more time will pass before its available in the huge China market.

Conclusion

I believe that the markets have unfairly battered Nokia as it weathers the pains of shifting to another platform and competitors such as Google and Apple grab the headlines.

In my view, Nokia is deliberately shifting to Windows Phone while protecting its rear-flank with Symbian. In doing so, Nokia is bridging its markets until it can start developing very low-cost Windows Phone handsets for growth markets like China and India.

Ultimately, I believe that investors intrepid enough to buy Nokia at current prices can look forward to tripling their money in two-year's time.

Source: Why Nokia Could Triple By 2015