With the N920 specs released on September 5th and then updated two days later, debate rages over how this product will impact Nokia's (NYSE:NOK) bottom line. In this article I will try and compare that product with the yet unseen iPhone5. This is not so much an exercise in measuring the accuracy of predictions, although come September 12th that will be possible in real time, but rather an attempt to allow OUR expectations to come to light.
I think that shedding light on these expectations will allow investors to ask the right questions with regards to a company's performance, execution and projections.
Apple's (NASDAQ:AAPL) iPhones have yet to take advantage of faster 4g LTE networks. CEO Cook has described the challenge facing device makers hoping to make use of 4g LTE: underwhelming battery life.
Companies providing 4g LTE Networks have already named Nokia's N920 as a LTE ready device. The chip Nokia chooses is Qualcomm's (NASDAQ:QCOM) Snapdragon S4 MSM8960. The Dual-Core Design Nokia chooses suggests Nokia has somehow solved Cook's challenge. Quad-Core processors make more efficient use of battery power, and yet the N920 promises 9 hours of WLAN browsing on a single charge.
I predict that Apple's iPhone5 will make use of this more efficient processor configuration, especially if it is to take advantage of all spectrum of 4g LTE networks. The interesting bit here for investors is that Apple's ability to close the efficiency gap is the basis for Samsung's (OTC:SSNLF) lawsuit as Samsung phones using a quad-core had already been able to take advantage of faster networks.
Notice, Nokia's Dual-Core avoids any infringement. Just how Nokia is able to get so much battery life from a theoretically limited core probably has something to do with its relationship with Microsoft (NASDAQ:MSFT). Hardware/Software optimization might explain Elop's "desperate plunge" into the Microsoft software family.
Camera functions on smartphones exhibit unusual utilization patterns. People that need a better camera in a smartphone are not more likely to use that phone. This makes comparisons of picture quality very subjective and too noisy for consideration when evaluating investment suitability or company strategy.
But before completely abandoning the subject, some points of interest: Display functions of photo and video while on average less power hungry than a smartphone CPU can at times make up to 68% of power consumption. The ability of a smartphone manufacturer to allow for larger and brighter displays while minimizing power consumption will mark clever engineering and innovation.
With the display of the latest iPhone5 likely leaked, it seems that Apple will again be behind other smartphone providers in terms of display resolution. If the latest phone cannot offer better power consumption rates than those offerings, consumers are asked to trade both quality and longevity for the Apple logo.
Near Field Communication (NFC) is a useful and very exploitable feature available today in Android and Nokia products. It allows radio contact between two similar devices that can enable communication between those devices - this includes file sharing. Unfortunately, software code is vulnerable to manipulation and allows potential hacks to occur should NFC enabled devices get close enough to would be hackers.
Apple has yet to adopt NFC features and it is unlikely the iPhone5 will change that. To seamlessly incorporate NFC into an intuitive user experience would likely require Apple to auto-enable any NFC features, a huge security risk.
Nokia is likely to improve the safety of its NFC features with hardware and software changes and again will benefit with its partnership with Microsoft. Nokia phones that are NFC capable today come with the feature disabled. This simple choice makes hacking through NFC very unlikely as a user limits potential NFC interaction.
When considering a potential investment in any company it is important to first define expectations. Nokia is a popular stock among Seeking Alpha readers, both for bashing and promoting. Unfortunately, this rarely leads to fruitful discussion. A potential investor in Nokia is unlikely to be looking for a market leader in the smartphone space, so objections declaring the company's inability to take that crown from Apple seem misguided. Similarly, condemning a provider of useful information about Apple products to "Apple-Fanboy" status is also not productive. Talking about how Apple will fail without providing the reasoning for that claim is equally useless.
I am looking to buy additional Nokia shares because a slight recovery in its business should cause a sharp recovery in the company's stock price. I believe that Nokia's adoption of Windows8 for its phones is a sound strategic strategy.
I will not consider an investment in Apple until it yields 4%, or a stock split occurs. I think it is too difficult for Apple to grow market share, and while I appreciate the company's ability to generate cash, it hasdone nothing with that cash position to generate any interest from me.
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.
Additional disclosure: please see instablog for my full portfolio