Windows Phone to revive Nokia this year, says analyst

Focusing on Microsoft's mobile OS will help Nokia raise earnings and keep its market share steady this year, says an analyst with Credit Suisse.

Nokia's Lumia line.
Nokia's Lumia line. Nicole Lee/CNET

Microsoft's Windows Phone will be the linchpin to drive a recovery for Nokia throughout 2012, says Credit Suisse analyst Kulbinder Garcha.

In an investor's note out yesterday, Garcha said that Nokia's focus on Windows Phone as its core OS will boost earnings and steady the company's market share.

Nokia has been the top handset seller for years. But its share of the smartphone market has slumped over the past year from around 33 percent to just 14 percent, trailing Apple and Samsung by a huge margin.

A boost from Windows Phone will help Nokia hang onto a solid 13 percent of the smartphone market over the longer haul, according to Garcha. To back up his positive forecast, the analyst pointed to three factors in Nokia's favor.

First, the company's initial Lumia phones are being priced aggressively and sensibly. Second, Garcha sees good support for the Windows Phone and Nokia team-up based on a recent survey. And third, the quality of Windows Phone combined with Nokia's brand, distribution channels, and scale will drive business.

Referring to a recent survey by Credit Suisse, Garcha noted that 85 percent of the 27 key executives polled at major carriers feel the need for a third major platform behind Apple and Android. And a full 77 percent of them believe it will be Windows Phone/Nokia.

The analyst also predicts a crossover point in Nokia's smartphone business by this year's third quarter when Windows Phone starts to outsell Symbian.

Hedging their bets on Windows Phone, Nokia and Microsoft will reportedly sink around $200 million to promote their new phone lineup . The Lumia 800 and 900 are both expected to make an appearance at next week's CES in Las Vegas.

Still, Nokia faces a tough road .

More than a year after its release, Windows Phone 7 remains stuck with little more than 1 percent of the smartphone market, according to most reports. Nokia also has to strengthen its hold in Europe but at the same time focus on North America, a region where it's historically been very weak.

So, no matter how strong are its new smartphones and marketing efforts, Nokia may find it a struggle just to hang onto third place.

 

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