Nokia And The Wow Factor

| About: Nokia Corporation (NOK)

On Wednesday September 5, Nokia (NYSE:NOK) announced its new smartphone to the public. All the analysts agreed: the phone is good, maybe even great.

The stock price tumbled 16%.

Yet, the Lumia phone's bold design was pretty well received. It looks good, feels good and comes with a choice of bright colors that differentiates it from all the grey phones out there.

The new device also comes with interesting, innovative features. It has a wireless charger. It has an impressive 8 megapixel camera that automatically compensates for shaky hands and which is extremely sensitive to light. This camera takes the quality of pictures in dim or bright light to a totally new level, which the Facebook generation will appreciate.

The Lumia has a curved screen that allows for daylight viewing by adjusting the amount of light. It has the fastest LCD display ever installed on a smartphone and a touch screen so sensitive it can be used with gloves. A feature called City Lens allows one to read restaurant reviews just by pointing at the establishment. All this on top of an upgraded offline GPS system and a navigation system Nokia is already famous for.

As someone wrote elsewhere, all these features would have impressed analysts if the device had a fruit as its logo.

But this being Nokia, a company analysts love to hate, the wow factor was kept in check. Instead, investors focused on the company's failure to provide a release date. They dumped the stock.

So, why did Nokia's management rush it while they were not in a position to announce an actual release date and a list of carriers that will partner with them? Is the market right that management is just inept?

Let me venture another explanation.

Nokia was looking for the wow factor. It did not get it. But they may have taken the wow factor away from the iPhone5 and that is significant.

Next week, we may find out that Nokia actually got its communication policy right by putting Apple on the defensive.

Whatever the merits of the Lumia 920, launching it after the new iPhone would have reduced it to a me-too product. Apple would have remained the standard that Nokia is trying to emulate. A good effort, but probably not good enough to challenge the real thing.

Now, that narrative has been turned upside down. The roles are reversed. Next week, the new iPhone will now be compared to the Lumia, not the other way around. The pressure is on Apple. Can they once again come up with something that wows analysts? Maybe, but Nokia just made the task more difficult. If, on the other hand, the iPhone5 is not materially different from the Lumia 920, consumers may start questioning the rationale for paying a huge premium.

With the right pricing strategy and the help of the carriers eager to promote alternatives to the duopoly of Samsung and Apple, Nokia may have finally found the right product to become a player again in the smartphone business.

The proof will be in this year's Christmas pudding.

Disclosure: I am long NOK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

About this article:

Tagged: , , , Communication Equipment, Finland
Want to share your opinion on this article? Add a comment.
Disagree with this article? .
To report a factual error in this article, click here