Nokia’s Entry Into the Tablet Space Is Only Good News for Microsoft

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I keep on saying that the consumer electronics space is very radical and dynamic in nature. Strange things happen here: Enemies become friends and friends become enemies. No friendship is permanent here and neither is rivalry. After facing a number of tough years, the Finnish phone maker Nokia (NYSE: NOK) found a way to make its entry into the highly competitive smartphone space, and Microsoft (NASDAQ: MSFT) was Nokia’s partner in this.

Both Nokia and Microsoft had their personal reasons to seek this partnership. Nokia wanted to, and still wants to, gain back its lost position in the space, and Microsoft was in need of someone who can carry its offering into the market. Beaten down badly by Apple, Samsung and Google, Nokia needed a new platform, as it didn’t want to go with the Android OS and become just another player in that ecosystem. And thus the WP8-Lumia came into the market.

And now there is a new twist in the Nokia-Microsoft partnership story as allies turn into rivals with the launch of new tablet devices from Nokia. According to the rumor mill, the Finnish phone maker is looking at launching its own range of tablets by early 2013 at the Mobile World Congress, and these will be in a direct line of competition with Microsoft’s Surface RT tablets. Nokia had plans of entering the tablet space earlier also. But, when Microsoft decided to launch the Surface with the latest Windows, Nokia decided to focus on smartphones.

Similar to the Surface, Nokia’s Windows RT tablets will sport a HDMI and two USB ports. However, the display on Nokia’s tablet will be a 10.1-inch display, in comparison to the Surface’s 10.6-inch display. The noteworthy point here is, first of all, Nokia’s devices will also boast a cellular connectivity and AT&T (NYSE: T) will be carrying it first in the US. Secondly, Nokia’s devices will also get a cover that will act like a stand and a keyboard as seen with the Surface, but it will be battery equipped. The cover will have a battery inside it which will provide additional power to the tablet once it runs out, pushing up the total battery operation time to well over 10 hours.

Industry experts and analysts are expecting the devices from Nokia to cause damage to Microsoft’s sales, which is not that high to start with. Even I believe in terms of competition Nokia has certain advantages over Microsoft. First of all, MSFT is basically a software company and is getting the Surface tablets made by third-party manufacturers. In contrast, Nokia itself has been a very successful phone manufacturer with proven expertise. Though Nokia’s market position deteriorated in the past, that was never because the phones manufactured by it were of poor quality. Rather, the handsets were always of great standards and the problem was caused by the obsolete Symbian OS. Consumers can expect similary quality products from Nokia when it comes to tablets.

Secondly, if Nokia prices its devices lower than the Surface, which I think will actually be the case, consumers will surely flock towards the company’s offerings. They will get the same OS experience along with guaranteed good quality devices at a lower price. Moreover, people are getting to know more about Windows powered tablets, and with each day even the OS is getting better as more and more updates are available; even the number of apps for the platform is increasing. Nokia also has plans to slowly move to Windows 8 powered tablets from the RT platform, and I believe that has a much higher chance at success.

Now, coming to the point of Nokia’s tablets damaging Microsoft’s sales. I don’t think Nokia’s entry into the space is a bad news for Microsoft. In fact, the Windows maker has known this was going to happen for a long time now. Nokia will be just like any other tablet manufacturer that has the license to use the Windows platform. If anything, Nokia will only add to the popularity of the platform, making it a stronger competition against the iOS and the Android. As Nokia also joins the league, Microsoft’s offering's scope will increase even more and take the company one step closer to its goal of making its mark on the connected devices space.

analyse360degree has no positions in the stocks mentioned above. The Motley Fool owns shares of Microsoft. Motley Fool newsletter services recommend Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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