Can Nokia Profit From Wireless Mobile Phone Charging?

| About: Nokia Corporation (NOK)

Standing out from the competition remains a challenge for many mobile phone manufacturers, as most smartphone models have text and video capability as well as music and web connectivity. But Nokia (NYSE:NOK) may have found a way to stand out by providing wireless phone charging capabilities for the recently released Lumia 820 and 920 smartphones. And even though wireless phone charging is not new technology, this technology hasn't caught on with the majority of mobile phone consumers. Nokia is hoping to change that.

Currently, two types of wireless phone charging exist - resonance charging and magnetic charging. Resonance charging works when a mobile phone is placed next to a charging source (charging pad/plate, computer, or other electronic device). Magnetic charging requires the phone to be placed directly on the pad. Both reduce the need for adapters and USB cables typically needed to draw electricity from an outlet.

Wireless charging not only reduces the need for additional wires, but also conserves electricity and allows people to charge phones from any location (a good option for business travelers in airports or in areas without readily available electrical outlets). But persuading consumers to change the way they charge their mobile phones will be a challenge going forward, however, as it's often difficult to introduce a new way of doing things.

To take advantage of magnetic wireless charging, consumers have to purchase a charging pad/plate - this is one more piece of equipment to carry (consumers may see this as a burden and opt for traditional cable charging instead) - or find retail stores, hotels, or office settings that provide pads for charging purposes.

But for consumers that like new gadgets, carrying a charging pad/plate may not seem like a big deal - in fact, it could become a status symbol or a trendy new accessory. The long-term acceptance of wireless charging by consumers will determine the overall success of Nokia's attempt to distinguish itself from the competition.

By providing wireless charging capabilities in its new phones, Nokia hopes to appeal to various types of consumers (from those looking to conserve energy to those that enjoy using new electronic gadgets). The company has already struck promotional deals with Virgin Atlantic airlines, and the Coffee Bean and Tea Leaf chain to provide customers with charging pads while waiting for flights or when enjoying a cup of coffee. Nokia also offered Yahoo! employees' free smartphones with charging pads/plates as a way to market the new phones. With these types of promotional deals, Nokia has set itself up to become the 'go to' manufacturer of wireless devices with wireless phone charging capabilities.

With stiff competition from other mobile phone manufacturers including Apple (NASDAQ:AAPL), Nokia really needs a way to stand out to show consumers and investors its value in the marketplace. With less-than-stellar 2012 second quarter results, most notably a 5% decrease in net sales from the first quarter, Nokia also needs to prove it can still provide value and innovative products and services in the mobile device market. Nokia did report an increase in shipping volume of Lumia devices - 4 million units shipped during the second quarter. This demonstrates active consumer interest in the phones.

In addition to convincing consumers of the many benefits of wireless charging, Nokia may have another problem - some segments of the market don't seem all that interested in manufacturing devices with similar capabilities. Apple, for example, has chosen not to provide wireless charging capabilities for the latest iPhone 5. Added bulk and production costs may be the reasons Apple decided not to take the gamble on this feature. It is also rumored that the company has plans to provide alternative charging methods of its own for future iPhone models.

However, some mobile phone manufacturers including LG and Samsung have included wireless charging capabilities in newer phone models. Other telecom companies including Research in Motion (RIMM), which manufacturers BlackBerry smartphones and Sony Ericcson, owned by Sony (NYSE:SNE), provide wireless charging capabilities on various phone models. This may signal growing acceptance of this technology by major mobile phone manufacturers. But until consumers demand or expect wireless phone charging features, Nokia may have invested time and money for little in return.

But with increased demand comes increased competition, which could leave Nokia without a unique selling feature. This leaves the company in an awkward position. While increased demand could provide a quick increase in sales, as soon as other companies offer wireless charging, Nokia may start to see a decline in sales or stagnant growth. After all, the company took a risk in promoting Windows Phone and didn't get the return it thought it would - iPhone and Android, the OS run by Google (NASDAQ:GOOG), still lead the market.

Only time will tell if wireless charging will really take off to become the next 'it' feature in mobile phones - or if it will be left behind in favor of more traditional charging methods. Promoting a new feature that many other companies haven't yet embraced could become another risky venture for Nokia that doesn't quite pay off. On the other hand, the company may be on the forefront of this technology which could help the company stand out from the rest. In the end, all it will take is a few business travelers, tech bloggers, and some slick advertising to make wireless charging seem cool and appealing to everyday consumers.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.