Early reports indicate that the Nokia Microsoft is paying dividends, with nearly half of all second-generation Windows Phone 7 handsets sold being by the Finnish handset manufacturer.

Unpacking the WP7 marketshare

The report comes courtesy of WMPoweruser, who used data gleaned from OccasionalGamer’s game collection. On Nokia, they write: ‘Even at this early stage the company already has 45 percent of the second generation handset market, with most of that being the Nokia Lumia 800 and some the more recently introduced Nokia Lumia 710.’ Next in line? HTC with 40 percent market share, but that is down quite drastically from the 55 percent market share the company had prior to Nokia’s arrival.’

How much is the base growing?

The fact that Nokia has managed to race to almost half of all sales of the second-generation handsets so quickly is notable, but there are a few important qualifiers to consider. If that growth is at the expense of other WP7 handset vendors, as opposed to growing the whole sales base of WP7 handsets, than this is not an ideal situation for the Nokia Microsoft partnership.

Why? Well, Microsoft wants to compete with Android and iOS, and for that to happen, the company’s mobile OS has to grow in volume. What each vendor has of a non- or slow-growing base of WP7 handsets is, for all intents, immaterial. Nokia, on the other hand, wants to compete with the likes of Apple, Samsung and HTC, and for that to happen, need consumer acceptance of Windows Phone 7 and overall sales of that mobile OS platform to explode.

What will follow?

Windows Phone 7 say that they ‘suspect if market acceptance for Windows Phone 7 increases it may be because it becomes strongly associated with Nokia, which may mean this percentage could easily increase to 60-70% or more,’ while some users comment that the market will grow because of Nokia, but other OEMs will become attracted to WP7 as a result. Whichever it is, the Nokia Microsoft partnership has very quickly become mission critical – as many suspected it would – if WP7 is to succeed in the long run.

Deutsche Bank has lent its voice to the growing chorus of industry voices that have predicted how well the Nokia Lumia line of Windows Phone 7 handsets have performed. The firm predicts that the Finnish mobile phones giant will sell 2 million Nokia Windows Phone 7 handsets in Q4 2011, roundly beating analyst expectations in the process.

Differing opinions

Deutsche Bank’s estimates for Nokia’s sales trajectory are in stark contrasts with those of Pacific Crest analyst James Faucette, who just last week issued a note to investors, saying Nokia Lumia sales had gotten off to a slow a start. ‘We had expected that the company could ship as many as 2 million units into the six targeted markets for the holidays; however, we now believe that those shipments are likely to be less than 1 million for the quarter,’ he wrote at the time. In fact, he estimated that the company would only sell 500,000 phones – a mere 25 percent of the initial estimates.

If anything, contrasting Deutsche Bank’s expectation that Nokia Windows Phone 7 sales would meet estimates with Pacific Crest’s conservative outlook shows the pitfalls of being too reliant on analysts for sales outlooks.

So much hangs in the balance

The Nokia Windows Phone 7 handsets have huge bearings on Nokia’s future, Microsoft’s future, and the overall makeup of the smartphone industry. If the handset clicks with consumers, Nokia, who for over a decade led the mobile phones industry almost unchallenged, have a chance of returning some glory to the beleaguered firm. For Microsoft, whose WP7 mobile OS has had sputtering sales, the Nokia Lumia phones could be just the momentum the company needs to put its handsets in the hands of customers who currently ignore it in favour of iOS and Android.

The Nokia Windows Phone 7 handsets that are under pressure to save both Nokia’s handset business and Microsoft’s mobile OS platform have gotten off to a slow start, if a recent report by an analyst is anything to go by. Pacific Crest analyst James Faucette has slashed his estimations of how many of the handsets could sell by 75 per cent.

A quarter of what was initially expected

In a note to clients, Faucette writes that [via Forbes]: ‘We believe that shipments of Nokia’s new Windows Phone 7 products have been lower than we had previously anticipated.’ He continued, saying: ‘We had expected that the company could ship as many as 2 million units into the six targeted markets for the holidays; however, we now believe that those shipments are likely to be less than 1 million for the quarter.’

Faucette believes that Nokia’s handsets could sell as few as 500,000 units, a mere 25 per cent of the total initially predicted.

Some perspective

On one level, the poor performance predicted by Pacific Crest analyst James Faucette could be seen as cause for concern for Nokia, and on another level, it could be nothing. Remember, the two million units figure was his estimate, and not Nokia’s. What’s more the Nokia Windows Phone 7 handsets are new to market and represent a comeback for the Finnish mobile phones giant – and something of an ‘arrival’ for Microsoft’s WP7 mobile OS – and so slow sales in the early going aren’t necessarily a bad thing.

Nevertheless, you can bet that both Microsoft and Nokia are keeping a nervous eye on Nokia Windows Phone 7 sales. Both companies need this to come off, and the longer it takes to gain momentum, the more anxious both parties will be, justified or unjustified.

In an interview with the New York Times, Nokia CEO Stephen Elop outlined his company’s plan to make a comeback in the mobile devices market where it has fallen behind rivals like Apple and handset manufacturers making devices for the Android platform. He says the key to recovery is to capitalise on users making the transition from feature phones to smartphones, leveraging its relationship with Microsoft, and to leverage unique Nokia software like its location and mapping technology.

Differentiation is key

Stephen Elop told Steve Lohr of the New York Times that ‘There is tremendous opportunity for differentiation’. The first big difference is the mobile OS Nokia’s next generation of handsets will run on, and that’s Windows Phone 7. Though the operating system has been critically praised – we really like it – it’s struggled to get traction. This effectively means few customers have come across it, as opposed to Android and iOS. The opportunity for Nokia is to drive the mobile OS platform into more customers’ hands, surprising them with how different the OS is from what Apple and Google offer.

Smartphones aren’t phones

The next part of the Nokia comeback plan is to build a strong ecosystem around the platform. Where the company will look to differentiate itself from some of its competitors is in investing in the application ecosystem Nokia Windows Phone 7 handsets run on themselves. Elop previously hinted at something similar with regards to his company’s comeback plans in the US specifically.

Showing keen insight, Nokia CEO Stephen Elop looks at mobile handsets as more than just phones, but rather platforms primarily for other uses, including phones. He says: ‘These devices are essentially a platform of sensors,’ adding that ‘The Navteq location data is one of the best assets we have. Fully integrating that technology into our smartphones is a major area of investment for us and a real area of differentiation.’ Whether it will be enough to close the gap, given the incredible momentum iOS and Android have remains to be seen. At least, in Elop’s case, a comeback plan is well articulated. Whether it succeeds is another matter altogether.

In the Wake of the Nokia Lumia reveals, various tech writers and industry analysts have chimed in on whether it will be enough to save the Finnish mobile phones giant. Peter Bright of Ars Technica argues that beyond resurrecting the ailing company, it will also be a massive kick in the backside for the Windows Phone 7 mobile OS platform. He attributes this belief to Nokia’s strong carrier relationships.

The logic

Bright’s argument is simply this: smartphones need carriers to push them if they are to succeed. Microsoft has bad carrier relationships. Nokia has great carrier relationships. Nokia will open doors for Microsoft as a result.

Bright writes: ‘Microsoft has relatively weak relationships with the carriers. The carriers don’t buy product from Microsoft. They may be selling Windows Phone devices, but those are all sourced from Samsung, HTC, and LG. That’s where the strongest relationship is.’

He continues: ‘Nokia, however, has very strong carrier relationships. The company sells hundreds of millions of phones a year, and has fostered close working relationships with network operators around the globe (with the exception of the US).’

Marketing blitz

Moreover the Nokia Windows Phone 7 push is expected to be the biggest in the mobile phone giant’s history. Remember, of course, that the Finnish manufacturer has bet the farm on WP7, and is expected to make a huge marketing push in its own capacity to make the platform succeed.

As such, Nokia has already pronounced that they have managed to get more phones into the hands of sales associates at mobile carriers so as to familiarise them with the devices and to get them to like it. Additionally, many flashy promotions campaigns are expected over the coming months to drive home the statement that the Nokia WP7 handsets have arrived. The rumoured marketing budget of £80m is evidence enough.

At this point, the only difference maker will be the customers. Either you will buy the Nokia Windows Phone 7 handsets or you will not. The fact that visibility will shoot through the roof will certainly help, but it’d be insufficient in its own right.

At Nokia World 11, the Finnish mobile device giant unveiled its first Windows Phone 7 handsets. The company unveiled a pair of devices, named the Lumia 800 and the Lumia 710.

Lumia 800 – the N9 with Windows OS

The Nokia Lumia 800 – formerly codenamed SeaRay – retains the form factor of the stillborn yet extremely well-received Nokia N9, only this time replacing the MeeGo mobile OS with WP7. This, the top of the range Nokia Windows Phone 7 handset, ticks every single box one would want from a high end smartphone. It has an 8-megapixel camera that is based on Carl Zeiss optics, it’s powered by a 1.4GHz processor and it has a nicely sized 3.7-inch AMOLED ClearBlack curved display. It has native storage of 16GB as well as 25GB of SkyDrive cloud storage that will be used for music and pictures – not too dissimilar from Apple’s iCloud solution.

Other native features are Nokia Drive, the company’s heralded turn-by-turn software, as well as Nokia Music. It’s not cheap, though, currently available on pre-order for €420 unsubsidised, with a November release date earmarked for the United Kingdom.

The Nokia Lumia 710

The company unveiled a second Nokia Windows Phone 7 handset at Nokia World 11, called the Lumia 710. It’s less powerful than the 800 – as Nokia’s new naming strategy implies. The handset, previously codenamed the ‘Sabre’, also has a 1.4GHz processor and a 3.7-inch ClearBlack Display. It has less onboard storage, topping out at 8GB, and it has a 5-megapixel camera capable of recording 720p HD video.

The Lumia 710 will arrive before the end of the year with a retail price of €270 unsubsidised.

Is it enough?

Nokia’s ability to build amazing hardware has never been questioned. And with the rock solid Windows Phone 7 mobile OS powering it, the company could have a pair of handsets that perfectly marry great hardware with a great mobile OS platform. This should spell victory, with should being the operative word, of course. Neither Microsoft nor Nokia are winning in the smartphone category at present (unless you count the Big M’s impressive patent licensing campaign as victory). Whether the two companies together will do the trick remains to be seen.

I, for one, have so far been hugely impressed by the Nokia Windows Phone 7 handsets coming out of Nokia World 11.

The ink has hardly dried, and the chatter is still continuing about the just unveiled Nokia Windows Phone 7 handsets, yet the Finnish mobile phones giant is already talking up what it will do with Windows Phone Apollo, what many presume will be called Windows Phone 8. The firm says only then will you see the company truly differentiate itself from the other WP7 handset manufacturers.

Apollo will be a new dawn

Niklas Savander, who is Nokia’s executive VP of Markets, told TechRadar that with Mango, Nokia followed certain rules and limitations, but all of that will fall away come Windows Phone Apollo. ‘When you look within the Windows Phone ecosystem and compare how the Lumia performs, there we have a contractual agreement with Microsoft for a certain amount of engineering which we can use for differentiation,’ he explained.
He continued, saying: ‘We made the decision to go to Windows Phone when Mango was pretty much done, so we were able to impact some elements of it but you’ll really see the fruits of what we can do with Microsoft when the Apollo version of Windows Phone comes out.’

Not overly limited

Savander did explain, though, that the company still had some room to do their own thing on Windows Phone 7, citing things like the company’s turn-by-turn service, Nokia Drive. He explained that: ‘The areas we can drive are design, navigation, imaging, and then there are many things we can do around how the product reaches the consumer, when it comes to distribution.’

In essence, the company has ‘contractual “wiggle-room”’, an unsurprising revelation given how much money Microsoft put up to get Nokia Windows Phone 7 handsets manufactured in the first place, and how big a decision it was for Nokia to abandon its own mobile OS operations.

There is no launch date for Windows Phone Apollo, but I imagine next year this time is a high possibility, given annual release timetables have fast become the standard for smartphone operating systems. We’ll see what comes of it all.

With Nokia World 11 happening tomorrow, and the Finnish mobile phone giant expected to unveil its first Windows Phone 7 handset(s), the company finds itself at a crossroads. Is there reason to believe Nokia will turn up at the party, or is WP7 too little too late?

Optimism

I, for one, am rather optimistic about the Nokia Windows Phone 7 handset(s) that will be unveiled at Nokia World 11 tomorrow, if the brilliant albeit stillborn Nokia N9 is anything to go by. The company is undisputedly one of the greatest handset manufacturers in the world from a hardware perspective, yet on the software front – arguably the big time for smartphones – they have been lacking. WP7 is a brilliant operating system that, at this point, is very underappreciated. Combine the two and, well, you see what could happen, yes?

How bad things really are

The problem is, optimism for the Nokia Windows Phone 7 handsets aside, things are really bad at the Finnish handset manufacturer. The Wall Street Journal in a piece entitled ‘It’s Crunch Time For Nokia’ analyses why it is mission critical for the company to deliver now. While Christopher Lawton’s lengthy piece is required reading if all things Nokia interest you, there was a brief passage in it that summed up how bad things have become for the Finnish mobile phone giant in recent months.

Lawton writes: ‘Nokia has lost around 66% of its market value since Apple launched the iPhone in 2007. The company issued a profit warning in May, after cheaper Android smartphones cut into its sales in Europe, and it has announced more than 10,000 job cuts to stay afloat.

Despite a booming market, with overall shipments up 65%, Nokia shipped nearly a third fewer smartphones globally in the second quarter than it did a year earlier, according to IDC. It also fell to third place in shipments, behind Apple and Samsung.’ Ouch.

If a comeback is, indeed, on the cards, it will be one hell of a comeback story. Nokia World 11 could be step one.

The heavy round of Nokia layoffs have yet to pass, with the company announcing that it would be reducing its headcount by 3500 odd people. The Finnish mobile phones giant says that this decisions comes at a time where it will ‘continue to align its workforce and operations,’ with the job cuts to take effect before the close of 2012.

Hard decisions

2,200 of the Nokia jobs lost in this round of Nokia layoffs will occur as a result of the closure of a factory Nokia owns in Romania. The other 1,300 job cuts will be in the firm’s Location & Commerce unit.

In a statement accompanying the announcement of the layoffs, Nokia CEO Stephen Elop said: ‘We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger.’ Even then, though, Elop admits that the company ‘must take painful, yet necessary, steps to align our workforce and operations with our path forward.’

Reshaping for the future

While it is unfortunate to see these Nokia layoffs, the company has to reshape its business if it is ever to return to the highs of the past. One part of that strategy has been to reorganise the corporation, through executive shuffle, shutting down struggling divisions and laying off excess staf. A secondary part of that strategy has been reshaping its product business, abandoning internal smartphone software initiatives, and instead partnering with Microsoft to build the next generation of handsets on Microsoft’s Windows Phone 7 operating system.

Nevertheless, writing about the Nokia layoffs, or even the other Nokia jobs still hanging in the balance is unpleasant, especially for those people who will lose their jobs. Hopefully they all land on their feet, and Nokia, as an organisation, is able to reshape itself to return to hyper competitive levels.

The Nokia N9 Meego phone, which came out of nowhere and was met with wide critical acclaim for being surprisingly brilliant, has begun shipping. Although the phone is running on a mobile OS that is all but dead-in-the-water and will have a surprisingly limited release, many look to it as a precursor for what the company’s Windows Phone 7 handsets will deliver.

Why folks are excited

Even though the N9’s strange rollout plans on a mobile OS that’s running on a lifeline, there remains much to like here. The high-end handset features NFC technology and has a thin design housed in a polycarbonate shell. Aesthetically, it is nothing short of gorgeous.

Technically, it’s the business, too, available in 16GB and 64GB models, it has a 3.9-inch display, with an 8mp camera that reaffirms why Nokia has a reputation as manufacturer of the best smartphone cameras in the business. The Nokia N9 Meego handset has a suggested retail price of €480 before any carrier subsidies.

Sorry America and UK

Two key markets that will not getting the Nokia N9 Meego handset is the US and the UK. From a United Kingdom perspective, the decision seems very strange, since Britain has historically been one of the Finnish mobile giant’s strongest territories. Word is carriers aren’t backing it, but you can still import it or potentially get it on a Pay-As-You-Go package.

From an American perspective, this is both surprising and unsurprising – surprising since the US serves as a smartphone tastemaker, but unsurprising in that the US has never been one of Nokia’s stronger market.

At the time the company revealed it would not bring the smartphone to the land of the stars and the stripes, Nokia told AllThingsD that: ‘Nokia takes a market by market approach to product rollout, and each country makes its own decisions about which products to introduce from those available. Decisions are based on an assessment of existing and upcoming products that make up Nokia’s extensive product portfolio and the best way in which to address local market opportunities.’