Cheaper Windows phones key to Nokia's turnaround

But the first phone will cost more than people feel comfortable spending, according to an analyst

Nokia CEO Stephen Elop used his keynote at the Open Mobile Summit in London Thursday to explain, again, why the company chose the Windows Phone OS for its smartphones and insisted during a question-and-answer session that, despite persistent rumors to the contrary, the company is not for sale.

In the last couple of weeks speculation has surfaced that either Microsoft or Samsung is planning to acquire Nokia, whose share price has been falling. But the rumors are baseless and the company is not for sale, Elop said, when asked about it during the Q&A session following his talk.

During his keynote, Elop reiterated that there is room for a third OS alongside Apple's iOS and Google's Android. He compared the two platforms to boxes, saying that Apple's is closed and Google's has flaps that, for now, are open. While it is unclear if Android will remain that way, it is quite clear that Google will be the one to make that decision, Elop said.

Nokia's priority is to compete with those OSes and not with Windows Phone-based smartphones from other vendors, he said. Therefore, Nokia is collaborating with Samsung "on various things related to Windows Phone," he said.

Microsoft's deal with Nokia allows the software giant to use Nokia technology in Windows Phone. But when Microsoft presented Mango, its next version of the OS, such technology was not mentioned. Nokia jumped into the Windows Phone environment late in Mango's development cycle, which means that there will be far more Nokia differentiation in subsequent releases, according to Elop. However, even the first products will have unique Nokia features, he said.

Low sales of Windows Phone devices have made it challenging for Nokia to convince some in the industry that pairing with Microsoft was the best idea. But poor sales are partly because other phone makers are doing their best work on Android and Nokia is focusing its efforts on building the best possible Windows Phone, Elop said.

Nokia still hasn't given a date for when the first phone will arrive, but has hinted at the fourth quarter.

Nokia faces an uphill battle, though. To succeed, it has to price Windows Phone-based products between US$200 and $300 since that sector is growing and Apple already owns the high end of the market, said Richard Windsor, global technology specialist at Nomura Securities, who gave a separate presentation at the conference.

Nokia's first Windows Phone devices will be expensive and cheaper models won't arrive until next year, Windsor said.

That is a problem because time is also of the essence. Many potential customers have not decided which smartphone to buy, but when they do that is the OS they will stick with, he said.

"It is not too late for Nokia, but time is running out," said Windsor.

Send news tips and comments to mikael_ricknas@idg.com

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Mikael Ricknäs

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