Nokia again faces make-or-break point with new Lumia phones

commentary The company needs its upcoming Lumia phones to be a smash to stay relevant in the smartphone game. Sound familiar?

Nokia CEO Stephen Elop has some serious work ahead of him.
Nokia CEO Stephen Elop, unveils the first Lumia phones at Nokia World last year, has some serious work ahead of him. Stephen Shankland/CNET

commentary You can call it the "Nokia comeback story," take two.

That will likely be the theme again as Nokia and Microsoft host an event in New York on Wednesday to unveil the latest Lumia smartphones, now running on Windows Phone 8. Leaks of the purported phones have already appeared, and CNET will be there to cover the official announcement.

There is an overwhelming sense of deja vu in discussing Nokia's prospects. Last year's debut of the Lumia 800 and Lumia 710 -- the company's first Windows Phone handsets -- was supposed to be the flailing company's turning point. Supposedly further accelerating the comeback was the LTE-enabled Lumia 900, which got the benefit of a splashy launch this past January at the Consumer Electronics Show, and a big push by AT&T when it hit store shelves in April.

As a result, there was a torrent of stories depicting this past year as Nokia's last stand, including one from this reporter . This year would make or break the company.

But then a funny thing happened. The Lumia phones did OK -- they weren't exactly smash hits, yet they didn't completely flop either. Rather, the Lumia line did just well enough to keep Nokia in the game, though the company remained a niche player and a shadow of its former dominant self.

Which brings us back to Wednesday, when Nokia gets yet another possible last and best shot at a turnaround, with its new Windows Phones.

"I think it's crucial that Nokia gets this next round of phones right,..." said Jan Dawson, an analyst at research firm Ovum. "Nokia has to demonstrate that it can provide the very best hardware and software for Windows Phone of any vendor out there."

There's certainly been a wave of optimism hitting Nokia and Microsoft in recent weeks. Apple's lopsided legal victory over Samsung Electronics and, by extension, the entire Android community, has Microsoft feeling pretty good . Nokia's stock in recent days has rallied on the belief that a legal stumble with Android could benefit its products.

Nokia and its executives see the small, but growing, sales of Lumia phones as a sign of progress and remain undeterred in their optimism for a comeback. The company sold 600,000 phones in North America, a figure that's largely made up of Lumia devices.

The company, however, is still in a dire financial situation that could quickly get much, much worse if its phones don't start resonating more with consumers. In the last quarter, it posted a loss of $1.7 billion (1.4 billion euros) and warned that the following quarter wouldn't be much better.

The buzz will begin building with Windows Phone 8, which has the benefit of working more tightly with the Windows 8 tablet and PC operating system. Both are expected to launch in October.

With Windows Phone 8, Nokia is free from some of the limitations that were in effect with Windows Phone 7.5, including specific hardware requirements. Nokia, which has had a solid history of design innovation, has a chance to really stand apart.

Between Microsoft putting its full resources behind the Windows brand, and other Android makers possibly taking a closer look at Windows Phone, the platform certainly has a healthy share of momentum behind it.

Samsung, perhaps the stoutest Android partner, last week unveiled its line of Windows Phone 8 devices at the IFA conference in Berlin under its new Ativ brand.

Samsung may have beaten Nokia to the punch in debuting its Windows Phone 8 devices first, but Nokia could have a more substantial announcement in the works, including potential details on a launch date and carrier partners -- something Samsung didn't provide.

Still, there's a reason that Samsung continues to rely on Android for the lion's share of its profit and revenue. The Galaxy S III is a blockbuster hit; can you actually name its prior Windows Phone products? Even worse, the company's announcement could be overshadowed by the announcement of the next iPhone by Apple. The invitation is expected to arrive over the next few days with an event believed to be slated for next week. With the iPhone poised to dominate the headlines over the next few weeks, it's unclear whether there will be enough room in the spotlight for Nokia.

So the big challenge for Nokia and Windows Phone is getting consumers to actually try the devices. For better or worse, the operating system looks and works differently than Android or iOS. Nokia and Microsoft have been positioning these phones as an alternative option for first-time smartphone buyers and an easier experience.

But the fact is consumers have been conditioned to see smartphones in a certain way thanks to the popularity of the iPhone and various Android handsets. It'll be up to Nokia and Microsoft to break those preconceived notions.

They start in earnest Wednesday.

 

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