Seeing is NOT Always Believing
Somnath is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Seeing is not always believing. Although we generally tend to believe whatever we see from a mobile giant.
The Finnish phone company, Nokia (NYSE: NOK) unveiled the footage while announcing its new Lumia 920 and 820 smartphones recently. It was intended to show off the new optical image stabilization feature, and was seemingly presented as if it was shot with a Lumia 920.
The clip showed a young man and women riding bikes on a waterfront. But a reflection seen in a window showed that the footage was not shot with a Lumia, but a large camera set up in a white van, with a lighting rig.
The mistake was spotted by technology blog Pocket Now after the announcement, and Nokia eventually offered an apology.
The company said: "In an effort to demonstrate the benefits of optical image stabilization (which eliminates blurry images and improves pictures shot in low light conditions), we produced a video that simulates what we will be able to deliver with OIS.”
“In our enthusiasm, we showed poor judgment by neglecting to include a disclaimer that the video was not shot using a Lumia 920,” said Doug Dawson, head of media relations at Nokia, in a statement. “It was an error and we apologize for the confusion created.” "We are looking forward to bringing the Lumia 920, with PureView optical image stabilization to select markets later this year."
The company also posted a video which it said demonstrated the real difference between its new camera and existing technology.
For Nokia, a company that is struggling to get its mojo back in a phone market dominated by Apple and Samsung, the botched video presentation was a downer. And it helped add to the general perception that Nokia’s event was lackluster. On the day it unveiled new Lumias, its stock dropped 16 percent. That could be because Nokia failed to disclose a release date or price for its new phone, meaning people can’t even choose to preorder it before the next iPhone takes the spotlight. The stock has since recovered somewhat.
The past week was a window of opportunity for Nokia to get the media buzzing about a smartphone that was different, and perhaps even better than the iPhone or a Samsung phone. But instead, people are talking about Nokia’s misleading video and its sagging stock.
Even Motorola's (NYSE: MMI) shares have moved north with its launch of RAZR series. Though the recent acquisition of MMI by Google made them reduce around 4,000 jobs at Motorola Mobility and will close or consolidate about one-third of its 90 locations. The cuts represent around 20% of Motorola Mobility’s 20,000 employees, and 7% of Google’s work force. Two-thirds of the jobs reduced will take place outside of the U.S. We need to keep a close look at the future developments at MMI.
On the other side, the predictability of iPhone launch is a huge letdown since Apple (NASDAQ: AAPL) is always expected to surprise the market. Unlike most of its competitors, a product launch is very important to Apple because of its limited product line; more than half of its revenues come from a single product. The Unites States is Apple's biggest and most reliable market. More than 39% of Apple's total revenues are generated from the U.S. Therefore, the Nokia Lumia will have to face a lot of competition from Apple in U.S. markets, and any hoping of dominating in the market are unrealistic.
If we excuse the misleading video, Lumia is definitely a technologically superior phone compared to its alternatives, and can be a credit to Microsoft's and Nokia's share prices. Nokia is currently trading at $2.98, with patents worth at least $2.30/share, and has a very good phone on the market. Therefore, Nokia has a lot of upside potential. More welcome news for Nokia investors is Verizon signing up for the Lumia series. AT&T and T-Mobile are already selling the Lumia series in the United States. An average iPhone 5 launch has improved the chances of Nokia's Lumia-fueled turnaround. Therefore, I strongly believe Nokia is undervalued, and would maintain a buy rating on Nokia. I am also expecting strong sales volume for iPhone 5 and am bullish on Apple, however, with Nokia being a turnaround story, there are higher profit margins available to investors.
SomnathGuha has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple. 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.
