Does iPhone 4 Dash Nokia's High-End Hopes?
The newest iPhone doesn't significantly raise the bar for Nokia, which gives the Finnish phone maker a chance to catch up with its fruity rival from California, according to some analysts.
Rather, it's Apple's ability to conjure up new mobile experiences (ones that users clearly want) that Nokia, and others, are struggling to match. (See Microsoft Muted, Not Maimed, by Apple .)
That's why Richard Windsor, senior analyst at Nomura International , believes the key to turning around Nokia's smartphone fortunes is the next version of the Symbian Ltd. operating system, Symbian 4.
With an emphasis on the user experience, the new version of the OS promises a whole new touch-based user interface and enhanced applications. (See Nokia's Not Giving Up on Symbian, Gadget Watch: Nokia Has Symbian 3 Phone, and Symbian: It's Really Free, Baby.)
"Apple has not moved the goal post too much. [iPhone 4] does actually give [Nokia] a greater chance to catch up," Windsor tells Light Reading Mobile. "Everything depends on the Symbian 4 software release."
Symbian 4 is scheduled to start shipping early next year, which will be a critical time for Nokia's smartphone future, according to Windsor. "The company is in danger of missing the boat if they don't catch up next year," he says.
But wait, there's the N8
While Nomura's Windsor looks for Nokia to get the user interface right with Symbian 4, CCS Insight analyst Ben Wood points to Nokia's new N8 device, which is based on Symbian 3, as evidence of the Finnish company's potential in the high-end market.
"Don't underestimate the N8," warns Wood. "Our view is that product will do well."
But perhaps not in North America, which is "a different story," notes Wood. "Nokia has really lost its way in North America," he believes.
New devices such as the N8, or Sprint Corp. (NYSE: S)'s EVO and many other Android phones, show how Apple is not quite so far out in front in terms of mobile device innovation anymore. And this will work in Nokia's favor.
"We believe Apple's rivals are closing the gap on them," says Wood. "It's getting harder and harder for Apple to keep their unique advantage."
Looking at the eight cornerstone new features on the iPhone 4, for example, he says, "There weren't many where you thought, 'Wow!'"
And when it comes to video chat, Nokia actually beat Apple to the punch there -- the feature is available on the N900 device. (See Smartphone Showdown: Nokia Ships N900.)
And then there's Android
Android can't be ignored in the context of Nokia's smartphone efforts. There is a chance that Nokia could gain a competitive advantage if the Android market splinters as mobile device makers seek to differentiate their products, according to Nomura's Windsor.
"Should Android fragment into an archipelago of non-compatible systems, that would be good for Nokia," said Windsor, speaking at the recent Open Mobile Summit in London. "If it doesn't do so and continues to gain momentum, it will make Nokia's life all the harder to try to break back into this space."
Can Nokia do it?
Nokia remains the world's largest mobile phone company in terms of units sold. In 2009, Nokia says it sold 432 million devices worldwide, which is more than its top three competitors combined. But the company has lost market share in the high-end smartphone market, which analysts perceive as having the most value, thanks to Apple, BlackBerry , and the many makers of devices based on Google (Nasdaq: GOOG)'s Android. (See RIM, Apple Increase Market Share in Q1, Gadget Watch: Android & RIM Strike Back, iPhone Sales Soar, and Nokia: Device Volumes up 10% in 2010.)
There is a whiff of improvement in the air, though: Nokia claims its estimated share of the smartphone market in the first quarter this year was 41 percent, up from 38 percent in the same quarter last year, and up from 40 percent in the fourth quarter of 2009.
Nokia CEO Olli-Pekka Kallasvuo is well aware of what his company needs to do. "We are working hard to reclaim leadership in high-end smartphones and mobile computers," he said, addressing shareholders at the annual general meeting last month. "It is critical that we improve the customer experience with the usability of both our devices and our services."
That all sounds good. But whether Nokia can do that or not will depend on the quality of the Symbian 4 release and take-up of the N8 devices, as well as the company's ability to attract application developers and create compelling services.
— Michelle Donegan, European Editor, Light Reading Mobile