Lumia 1020: A flash point for Nokia?

This is what a lot of Nokia fans have been clamoring for, but is a legitimate zoom lens enough to jump-start sales?

The Lumia 1020 by Nokia. Sarah Tew/CNET

Nokia hopes its comeback story comes into focus with a little help from its 41-megapixel camera-packing Lumia 1020.

The former Finnish mobile devices giant was at it again on Thursday with the debut of its latest smartphone, which rocks the souped-up zoom-lens camera that impressed critics a year ago at Mobile World Congress. For some, this is the real PureView camera that should have been bolted on to last year's Lumia 920 flagship phone.

Even as the Lumia 1020 comes packed to the gills with features and advanced hardware, it's unclear whether this will be the smartphone to finally reverse Nokia's fortunes. Its continued struggles despite a drastically improved line-up of products underscore the broader difficulties facing all of the vendors in getting support from carriers and interest from consumers. More specifically, there remains a lot of work to revitalize Nokia's brand and educate consumers on Windows Phone.

Still, the Lumia 1020 launch represents a big moment for Nokia and Microsoft, which both desperately need a home run for the Windows Phone platform. For Nokia, the Lumia 1020 is testament that its innovation streak is alive and kicking, and a successful launch would prove its relevancy among smartphone vendors.

"The device is about re-establishing Nokia as an innovator in the devices market," said Gartner analyst Carolina Milanesi.

Microsoft, meanwhile, is more dependent than ever on Nokia's success with other key partners such as Samsung and HTC showing only marginal interest in the Windows Phone operating system as they focus on their Android products.

However, this isn't likely a make-or-break moment for either company, even in the United States. Over the past year and a half, Nokia and Microsoft have gone through the launch of a few key products, from the debut of flagship Lumia 800, to the first U.S. Nokia phone in the Lumia 900, and the low-light camera-packing Lumia 920.

Each launch was pegged as a critical point for both companies, but none of them were ultimately life-or-death moments. Each phone did well enough to keep Nokia afloat and the carriers interested, but none were considered blockbuster successes.

The Lumia 1020 comes with a number of accessories. Sarah Tew/CNET

In the meantime, Nokia has been busy fleshing out its product portfolio. In addition to the Lumia 1020, the company has spent the last few weeks bulking up its higher end offerings, initially with the Lumia 928 for Verizon Wireless, a thinner, slightly upgraded version of the Lumia 920, and the Lumia 925, an aluminum-clad version for T-Mobile in the U.S. and other carriers around the world. It previously unveiled a slate of lower end Lumia phones to attack the emerging markets.

Nokia's aggressive push with Lumia has helped prop up sales of Windows Phone. Windows Phone represented 5.6 percent of the U.S. market in the three months ending in April, up 1.8 percentage points from a year ago, according to a study by Kantar Worldpanel Comtech.

The results haven't yet been borne out in Nokia's results, which posted a loss and decline in revenue in the first quarter. In North America, Nokia saw a slight uptick in revenue but unit sales fell from a year ago. The company posts its second-quarter results on July 18.

While the Lumia 1020 won't figure into the latest results, it could play a big role in Nokia's results in the back half.

One whopping camera
The Lumia 1020's 41-megapixel camera represents an elegant solution to the dilemma of offering an optical zoom capability without a bulky, physical lens. While the PureView camera juts out slightly from the Lumia 1020's body, it is no where near as cumbersome as the recently unveiled Galaxy S4 Zoom, which does include an actual zoom lens.

Unlike most phone launches, which often delve into specifications such processor speeds, Elop kept the presentation focused on all the tricks and features enabled by the monster camera.

"We're all looking forward to bringing people the next chapter in smartphone imaging," he said.

The only real criticism was the $299 price tag on the Lumia 1020, which puts it $100 above most top-tier smartphones.

Sarah Tew/CNET

Analysts, meanwhile, praised the device.

"You can see how much software innovation is going on inside this product -- that also positions Nokia in a better place than many of its competitors who still do technology for the sake of it, but are unable to package it in a way that improves the users experience," Milanesi said.

"At a time when macro-level innovation has seemed to be lacking in smartphones, Nokia's Lumia 1020 demonstrates that there is still considerable scope to drive forward the user experience in core smartphone capabilities," said Ovum analyst Tony Cripps.

Unfortunately, only a fraction of the people in the U.S. will be able to purchase the phone.

AT&T a "crummy partner?"
The question-and-answer session of the press conference ended abruptly after Elop answered a pointed question about how he would work to improve the treatment it has endured under AT&T, going so far as calling the carrier a "crummy partner."

It made for an awkward moment, as AT&T Mobilty CEO Ralph de la Vega had just gotten off the stage a few minutes earlier, and was sitting in the front row. Rather than blame AT&T, Elop said that the burden of generating awareness for Windows Phone rested with Nokia, and reiterated that he was pleased with the company's relationship with the carrier.

"It's not an AT&T problem, it's a Nokia problem," Elop said in an interview with CNET. He added that he was pleased with the support that AT&T has given it "every step of the way," and promised a more unified campaign from Nokia, AT&T, and Microsoft.

Nokia CEO Stephen Elop stands in front of a photo with himself and AT&T Mobility CEO Ralph de la Vega. Sarah Tew/CNET

AT&T, meanwhile, told CNET that the Lumia 1020 would be its flagship device for the critical back-to-school season , which the company said was the second-biggest period for smartphone sales in the year, right behind the holiday season.

Jeff Bradley, senior vice president of devices for AT&T, called the question a "cheap shot" and said AT&T would have a larger campaign for the Lumia 1020 than its previous efforts.

Regardless, AT&T has been a tough place for most vendors. That's largely because Apple dominates smartphone sales at AT&T. In the first quarter, 4.8 million of the total 6 million smartphones sold consisted of iPhones. AT&T's results in the second quarter will likely change slightly to include a stronger mix from Samsung and its Galaxy S4.

Nokia has made some progress in branching out to other carriers, but the support has been minimal. Verizon Wireless tweeted out its announcement of the Lumia 928, which was essentially a tweaked version of the Lumia 920 that had been on the market for months at Big Red's rival.

T-Mobile, meanwhile, has the slimmer and metallic Lumia 925, but it didn't get much of a mention at the carrier's splashy press conference yesterday. The company largely focused on its new early upgrade plan and the progress of its 4G LTE network.

Elop told CNET that he felt it was smarter to partner with a single carrier on a single device in order to get the most advertising bang for the buck. As a challenger in the industry, he had limits on where to place bets and how to maximize resources.

Windows Phone still a hurdle
While the 41-megapixel camera may wow shutterbugs and tech enthusiasts, the Windows Phone operating system gives some consumers pause when considering the Lumia 1020.

The operating system, which employs live tiles, is wholly different from the standard grid of icons found on Apple's iPhone or Android devices. Some critics have called it a fresh take on a smartphone, but consumers have been slow to embrace it.

"It's a Windows Phone challenge," Elop conceded when asked about less-than-stellar sales. "There's tremendous responsiblity to help everyone understand what that third alternative stands for."

One of the challenges that Nokia faces is getting the phone in people's hands to try out. Elop said he is working to get more carrier sales representatives trained and using a Lumia device, which he said will help convince consumers to give the operating system a shot.

Elop touted the Lumia line's higher net promoter score, or a measure of how willing a person is to recommend a product. He believes the score will help Nokia build its momentum.

The number of apps continues to be an issue, as it is for all burgeoning operating systems. Elop said the Windows Phone Marketplace boasts 165,000 apps, which still pales in comparison to the nearly 1 million apps available each on Google Play and the App Store.

More importantly, Nokia needs to get past the fact that Microsoft isn't the attractive brand it used to be. Moreover, the tepid reception to Windows 8 desktop and tablet software, which also uses live tiles, hasn't done much to drive the appeal.

"There is more work that needs to be done to establish Windows Phone as a sexy choice," Milanesi said.

 

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