Nokia to Apple: 'Yes, We Can!'
Palwasha is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The 4th of September marked the day of the highest trade volume for Nokia (NYSE: NOK) since June last year. The Finnish company finally revealed its next generation smartphone Lumia 920, descendant of Lumia 900, that is being touted as the next big competitor of the soon-to-be-released iPhone 5, after Samsung's Galaxy SIII. Does it live up to consumers' satisfaction? That can only be ascertained once the phone is out in the market. But does it live up to investors' expectations? That's another story.
The court's ruling in favor of Apple (NASDAQ: AAPL) in its lawsuit against Samsung has brought Apple back in serious action. It's not like it had gone anywhere but the great threat, that the Galaxy SIII posed, likely looms no more. In this environment, when Samsung is stepping back into the shadows and Blackberry maker Research in Motion (NASDAQ: BBRY) is nowhere in sight, it may be the right time for Nokia to make a comeback. You'll see tons of positive headlines for Lumia 920 on numerous tech review websites--PC World, Tech World, Tech Crunch and The Verge, to name a few. Alas! There's one teeny-weeny problem. Media analysts and finance websites love Apple way more than Nokia. A lot of tech junkies may be loving the phone, but open the Wall Street Journal and you'll find them dissing every form of technology in support of Apple.
Is Lumia Comparable to iPhone?
Speaking strictly in technology terms, yes, it is (see comparison below). But if you want to compare the brand images the two carry, then it would be unfair (I'll get to that in a bit).
The new Lumia is a real beauty. It has a high definition PureView camera that absords 5x-10x more light than an ordinary 8MP camera and is comparable to a DSLR. It supports a pixel density of 331 ppi, against iPhone 4s' 326 ppi--that beats iPhone's retina display. It has a slick 4.5 inch screen, opposed to iPhone 4s's 3.5 inches and the expected 4 inch iPhone 5. It is taller and wider than the iPhone 4s. The upcoming iPhone 5 is expected to be of a larger size than its predecessor and will likely be thinner than Lumia 920. Apple scores a point for a thinner phone in the making. Otherwise, as of now, compared to all the iPhones, the Nokia phone is more durable, got a better display, the best camera on a smartphone in the market, got wireless charging--the fatboy, way longer talktime, bigger LCD screen, free Nokia Music with over 150 playlists and a 'create' option that lets you create your own playlist from millions of tracks, mapping capabilities (point your camera at a building and the Nokia City Lens tells you what place it is) and it comes in colors other than white and black.
The technology is definitely comparable, if not superior (which it is but Apple fanboys don't like hearing that). The only department that Nokia is weak in is its brand imaging. I've time and again reiterated the importance of branding in my writings. Invading Apple's stronghold is deemed impossible by the majority. This is not because it IS but because it has been portrayed that way. Apple is advantaged by the fact that it has been amongst the very first to step into the smartphones market. Over time it has developed an ecosystem of its own. Apple focused on what others ignored-the entertainment factor. With their apps, itunes, iCloud and Siri, they have created a world of their own. Others are late to this idea, but better late than never.
Nokia's Yes-We-Can Attitude
Apple has the first mover advantage that it shares with Google's (NASDAQ: GOOG) android. They are the pioneers of smartphone ecosystems with their respective operating systems and App worlds. Both companies boast strong revenues in a fierce competition with each other.
In such a setting, Nokia decided to give up its Symbian OS and switch to Microsoft's (NASDAQ: MSFT) Windows 8 OS, which is the third ecosystem in the making now that Blackberry OS has taken the backseat. Samsung and HTC have also confirmed that they'll next be making Windows 8 phones. So it's only a matter of time. Microsoft was up after Lumia's showcasing. Just like Android helps Samsung boast a 25.6% market share against Apple's 16.3%, Nokia may stand a chance to win with a new OS. At least, unlike RIM's management, Nokia's management fully realizes that timing is critical. At least we've got some competition against Apple which is pushing for a monopoly with its lawsuits. At least, consumers will not be disadvantaged at the hands of Apple's fierce pricing when there'll be other better smartphones to choose from. And at least, we should give Nokia an ovation for its daring move to launch their phone only a week before Apple's, and face all the criticism in the world.
Myth Busted: Apple Doesn't Have a Better Technology
We know that the older Lumia 900 had a superior technology and more expensive component parts than an iPhone 4s, yet it sold for a price less than an iPhone. Even today, Nokia is the world leader when it comes to units of devices sold. Nokia continues to be the largest mobile phone vendor in the world.
The future of technology at Nokia looks even brighter. The 'Quantum Chip' that Nokia has created alongside Toshiba will help it build the next most secure mobile device in the coming 3-5 years--which was once Blackberry maker RIM's monopoly. The quantum chips can solve complex problems even faster supercomputers. The technology will help secure mobile phones and computers against hacking attempts. Now that's HEAVY!
Putting it in Antti Niskane's words who's a research leader at Nokia Research Centre in Cambridge: “....Security of personal data, the ability for a device to sense the world around it and the ability to quickly interpret this information all offer future benefits for mobile device users.”
So when Jim Cramer calls iPhone 5 as the de facto winner even before it's out, it's an insult to the tech savvy. As of the latest quarter, Nokia has about $12.4 billion in cash and short term investments, long term D/E of only 0.38 and current ratio of 1.31. The company is financially strong.
Comparing Apple and oranges (Nokia, HTC) is nonsensical. The stock may not give the company a valuation as big as Apple which is, at present, the largest company in the world in terms of market cap. But that doesn't necessarily mean Nokia is altogether a bad investment. It still leads the international market with its cheaper phones and is also building on its smartphone segment. Unlike Apple which is the jack of all trades (tablets, phones, music players and now TVs), Nokia has its complete focus on its mobile devices business. The company has been around for more than two decades and is here to stay. I believe it deserves due recognition and investors' faith.
PalwashaS has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Google, 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.