Nokia’s new release fails to impress investors
Cecil is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Wednesday was a very important day for both Nokia (NYSE: NOK) and Microsoft (NASDAQ: MSFT). For Nokia, this was the chance for the company to bounce back into the market to regain its lost market share while for Microsoft this was chance for the company to get a market pulse associated with Windows Phone 8.
Nokia unveiled two products, namely: Lumia 920 and Lumia 820.
The Lumia 920 has a large 4.5 inch display which is powered by a 1.5 GHz dual core processor and an innovative wireless charging facility. Another interesting feature in the Lumia 920 is that they have introduced a camera technology called PureView; Nokia claim that this technology will enable users to take high-quality photos which is usually associated with SLR cameras. The Lumia 920 comes with 32 GB storage. According to Jo Harlow, Nokia’s smart device team leader, the new phone has a battery that would be 30% more effective than all its rivals. Nokia has also introduced an improved location platform which enables users to point the phone to a desired location in a city to get relevant information on local shops and restaurants; Jo Harlow dubs this feature as the most intuitive way to explore the world around you.
The Lumia 820 is a slightly smaller phone with a 4.3 inch display; it uses the same 1.5 GHz processor used in the Lumia 920. The phone has an 8 mega pixel Carl Ziess camera and only has 8 GB of storage opposed to the 32 in the Lumia 920.
Now the question is, does this phone have what it takes to create a dent in a market that has been dominated by Apple (NASDAQ: AAPL) and Google’s Android. Of course, you may say that with the Apple-Samsung lawsuit; Microsoft and Nokia do have that light at the end of the tunnel! I too felt that this would be the case, but astonishingly Nokia itself was in for a surprise. As soon as Lumia was unveiled by Nokia, its stock dropped by 16% to $2.36. The volume of trade suggested that investors weren’t genuinely satisfied by the product; the volume of trade was at 200 million (to put that in perspective, that’s about 4 times the daily average)
This should come as a surprise for everyone at Nokia because the previous version of Lumia sold 4 million units in the recent fiscal second quarter, which is about twice the figure for the previous quarter. This means that Lumia definitely had gained some popularity over the last two quarters. But one cannot ignore the fact that these figures are simply too small when compared to Apple’s figures; Apple sold about 26 million units in the last quarter and about 35.1 million units in the quarter prior to that.
Market analyst, Brian White, says that Nokia will regret this launch because it is very close to the launch of Apple’s much awaited iPhone 5 (which is scheduled on September 12th). There are other players who have launched their products too; Motorola released its new Droid RAZR (incidentally on Wednesday) and the response has been unfortunate for Nokia (people came out with a lot more positive response).
William Power, an analyst, feels that although the Lumia 920 is a solid phone when it comes to design, he simply doesn’t feels that the product has that much needed ‘wow’ factor to make consumers move out of Apple.
Though dubbed as the flagship phone for Nokia, I am skeptical about this phone and hence this company. As for Microsoft, they will need to hunt for more hardware partners outside Nokia.
Please note this isn’t conclusive evidence that suggest that Nokia’s Lumia will be a sure failure as we don’t know how the Windows Phone 8 interface will perform. All investors can do is keep their fingers crossed and hope that WP8 will be impressive.
ceciljohn2002 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services recommend Apple and Nokia. 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.If you have questions about this post or the Fool’s blog network, click here for information.