Are Camera’s the Epicenter of Smartphones?

Gayron is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

What is the first thing we usually look at before purchasing a smartphone? Is it the features, specifications, hardware, or software that intrigues us before purchasing these technology filled devices? I guess it would be different depending on the needs of the person purchasing the smartphone.

Well for one smartphone manufacturer the camera seems to be the focal point of its device with 41-megapixels. Is Nokia (NYSE: NOK) setting out to out do the iPhone 5 by Apple (NASDAQ: AAPL) and the Galaxy S4 Zoom by Samsung (NASDAQOTH: SNNLF) with the Lumia 1020?

The iPhone 5 only has an 8-megapixel iSight Camera, and Samsung’s S4 Zoom only has 16-megapixels. The Lumia 1020 is more than five times as effective as the iPhone 5’s camera, and more than two times as effective as the S4 Zoom’s camera. Almost everyone likes to take pictures but the thrill of the Lumia 1020 is more for photographers than for anyone else. With the camera being the epicenter of this smartphone, will it boost Nokia’s market share?

The character’s characteristics

Nokia’s Lumia 1020 has the most sophisticated camera ever put into a smartphone because of its photography first approach. It has 41-megapixels with a 1/1.5 inch sensor with a pixel size of 1.12 microns and Carl Zeiss optics. It also has 3 times high resolution lossless zooming and pixel oversampling to decrease noise. It is also equipped with a 4.5 inch (1280×768 pixels) Pure Motion HD+ AMOLED clear black display.

The Lumia 1020 has a Pro Camera app with the ability to modify shutter speed, white balance, focus, and ISO. All of these accommodations let the photographer capture immaculate pictures in distinct lighting positions. The camera includes the Nokia’s image stabilization technology, and has the ability to take pictures in a “dual capture” mode, that allows for image capture in various resolutions at the same time.

 

Source: Nokia, July 12, 2013

Apple’s iPhone 5 has an 8-megapixel camera with a pixel size of about 1.4 microns and Samsung’s S4 Zoom has16-megapixels 1/2.3 CMOS sensor with a pixel size of 1.34 microns and a 10 times optical zoom. The S4 Zoom also has a 4.3 inch (960x540 pixels) qHD Super AMOLED display. Both the Lumia 1020 and the S4 Zoom has a bigger display than Apple’s 4 inch (1136x640 pixels) LED-backlit IPS LCD display.

Unlike the iPhone 5, Nokia offers a Camera Grip shell, which the S4 Zoom is built with. The camera grip shell has a tripod-mount support, physical camera button, and an extra battery, converting the smartphone into a perfect camera supplant. I think this smartphone could be a beginner camera for an aspiring photographer.

Nokia’s poor choice

As for the operating system, or OS, the Lumia 1020 operates on the Windows Phone 8 OS. I think this was a terrible choice on the behalf of Nokia because the Android OS is by far better than the Windows Phone 8 OS. When it comes to apps, Windows is far behind Apple’s apps and Android’s apps. To see how many apps Apple and Android have, let’s take a look at Time’s figures for apps in application store.

 

Source: Time.com, July 12, 2013

Both Apple and Android claim to have around 800,000 plus apps in their app stores, I honestly thought Apple had more than this. Another reason this is a poor choice is because of Windows Phone lagging in market share, which is shown in the graph from NetMarketShare below.

 

Source: NetMarketShare, July 12, 2013

Apple’s iOS is in the lead with 58% of the market share, Android follows with 25%, and Windows only has a meager 1% market share. This alone should have told Nokia that many people prefer the Android’s OS over the Windows OS. I don’t think giving the consumers what they want is a bad idea especially, when it comes to technology. This will probably hurt Nokia’s smartphone even with the spectacular camera feature.

Sink or swim

The Nokia’s Lumia 1020 will be available on July 26 at AT&T stores for $299. Its price for the Lumia 1020 is already higher than the iPhone 5 available for $199. As stated earlier the Lumia 1020 is a photographer’s dream phone, but is it that for everyone else? I hope that Nokia is not putting all its bets on this smartphone gaining it more market share. Let’s take a look at Gartner’s Worldwide Mobile Phone sales to end users by vendor in the first-quarter of 2013.

Worldwide Mobile Phone Sales to End Users by Vendor in the first quarter of 2013 (Thousands of Units)

 

Source: Gartner, July 12, 2013

This table shows Samsung in the lead with 23.6% market share, Nokia in second place with 14.8% market share, and Apple in third with 9% of the mobile phone market share. Samsung and Apple are up 2.5% and 1.2%, respectively from the first quarter of 2012, while Nokia fell 4.9%. Now, looking at this would make you think Nokia is beating Apple, but this is just the overall market share of all mobile phones and not just smartphones as the next table will show.

 

Source: Gartner, July 12, 2013

This table shows Samsung beating Apple and Nokia, where Nokia, obviously, did not make it on this table. Samsung still at the top of the list with 30.8% market share, up 3.2% from the first quarter of 2012. Apple still in second with 18.2% market share, down 4.3% from the first quarter of 2012.

The Foolish bottom line

The 41-megapixel camera is a brilliant idea and made cameras the epicenter of smartphones. Nokia expects its smartphone to be the bailout it needs but choosing the Windows OS was not the brightest idea. Already starting off on the wrong foot, it probably will not gain any market share.

Investors should be aware of the mistakes Nokia has made with the Lumia 1020, which could have given the iPhone and Galaxy brands a run for the money. Nokia is banking on the success of its Lumia 1020 and if it fails to succeed, selling might be an option. This could be the end for Nokia if the Lumia 1020 fails.

The S4 Zoom is a visual disaster as far as smartphones go; the Zoom is basically a phone on the back of a camera. A camera that can make calls is probably not what consumers want and Samsung should have known this by now. The S4 Zoom will have the Android OS, which is better than going with the Windows OS like Nokia.

Will this hurt Samsung like the Lumia 1020 may hurt Nokia? I doubt it. Samsung is not relying on the success of the S4 Zoom like Nokia is banking on the Lumia 1020. Whether the camera phone sells or not will not be devastating to Samsung at all. The S4 Zoom could not hurt Samsung’s market share if it does not sell.

Apple seems to know what rocks the techy side of its customers. The iOS is a brand that is only for Apple products by Apple. This alone keeps Apple’s iPhones ahead of the rest of the smartphone industry. The innovation that goes into Apple’s iPhones is what keeps competitors like Nokia searching for new ideas. Apple has already previewed what its next iOS update will feature, and so far, the iOS is stunning. A new iPhone or an iWatch, who knows what will come first with Apple, but it would be nice to be on the winning side.

If the iPhone were to fail, Apple would be devastated because of its dependency on the iPhone. The iPhone is the only smartphone Apple has on the market unlike Samsung and Nokia with multiple phones. I do not believe that Apple would die off if the iPhone fails, but market share would dwindle dramatically. If Nokia fails both Apple and Samsung could benefit a bit by gaining Nokia’s customers and market share.

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Gayron Wainwright has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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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