While the first round of Nokia Lumia handsets running Windows Phone 7 looks solid, their fate will likely rest in the hands of Android.
Nokia officially unveiled its first Windows Phone devices on Wednesday at Nokia World in London. The "Lumia" handsets look just as you'd expect from the company that was formerly the world's top phone maker — thin, balanced, and elegant — but there are more questions than ever about whether they will make a dent in the smartphone market. The key to Nokia's success will likely have more to do with Android than Windows Phone 7.
"Today is just the beginning of our new adventure,” Nokia CEO Stephen Elop said. “We will upgrade an ordinary moment into an exciting one."
Elop, a former Microsoft executive, has wagered Nokia's entire turnaround on the company's switch to exclusively run its phones on Microsoft's Windows Phone 7 platform. While Elop and Nokia reportedly got $1 billion from Microsoft in the deal, the Windows Phone platform looked a little better in the spring than it does now.
Consumers haven't responded to Windows Phone 7. Wireless carriers aren't pushing it. Hardware makers aren't using it to build their top devices. Even Steve Ballmer admitted last month that WP7 sales have been disappointing. Meanwhile, Nokia has been in a free-fall since it announced in February that it was ending its Symbian devices and switching to WP7. The company's channel partners rebelled against the WP7 move and some of them eventually decided to boycott Nokia devices altogether.
Can Nokia win back the loyalty of its retail partners? Will the Nokia-Microsoft pair-up combined with the Mango 7.5 update give Windows Phone 7 the shot in the arm that it needs?
Gartner and IDC have already predicted that the Nokia adoption will give Windows Phone 7 a 20% share of the smartphone market by 2015. However, that was before Nokia's retail partners started defecting and WP7 sales bombed.
As I've said before, Nokia makes great hardware and Windows Phone 7 has plenty of promise. The Lumia smartphones look like a solid start for the partnership. And, the wireless carriers are now looking for a third player to keep Android and Apple from controlling all of their device options.
But, even with all of that in their favor, Nokia is in for an uphill battle trying to win overs consumers and professionals to their Windows Phone devices. Android is already capturing both the technophile/tinkerer crowd that is Microsoft's bread-and-butter and the low-end feature phone converts that are Nokia's sweet spot. And, Nokia can pretty much write off the business executives and creative types, since iPhone already has most of them locked up.
Sure, there are going to be a lot more people entering the smartphone market in the years ahead, but with Android offering a ton of devices at different price points and on virtually every carrier and Apple now offering the free iPhone 3GS and the $99 iPhone 4, it's tough to see WP7 winning over many customers in those battles.
The only thing that could change that is if Android angst starts to spread. Many Android users have become frustrated with the inconsistent user experience, battery life issues, and lack of software updates from carriers and phone makers. The frustration doesn't appear to have resulted in large numbers of users leaving the platform yet, but if Google and its Android partners don't get it together then it could create an opening for Nokia and Windows Phone 7.
The other factor to watch is Google's acquisition of Motorola. If Google begins favoring and promoting its own Motorola-made devices as the cream of the Android crop then it could push HTC and Samsung to use Windows Phone 7 to build and market their top devices.
For Nokia and Windows Phone 7 to make a major impact on the smartphone market, it's probably going to require an Android stumble. We'll have to see how many of the first-generation Android users who are about to come off their first contract are annoyed enough to switch to another platform, and if they are, will they pick Windows Phone 7?
There could have been an enterprise opportunity as well, with RIM now losing enterprise confidence and WP7 offering nice Microsoft Office and SharePoint integration, but Microsoft has almost exclusively pointed WP7 toward consumers, so only the most loyal Microsoft shops are going to get excited about enterprise deployments of Windows Phone devices.