In a recent ad for the Nokia (NYSE: NOK ) Lumia 920, the current flagship Microsoft (NASDAQ: MSFT ) Windows Phone, the two partners take aim at both Samsung and Apple. The 60-second spot is reminiscent of the ads that helped make Samsung the top producer of Google (NASDAQ: GOOG ) Android smartphones and the iPhone's top contender in the space. In 2012, Samsung figured out that even if your device has legitimately competitive features, unless people give it a chance, it won't much matter. With the Lumia 920 in a very similar position, Nokia's trying to take a page from the Samsung playbook and get in the running.
Source: Nokia.
Similarly situated
Below is a list of common elements between where Samsung was when it rolled out the Galaxy S III and where the Nokia Lumia line is today:
Popular with reviewers: Just as Samsung had gained traction inside the tech world with the Galaxy S III, the Lumia 920 was the Engadget Reader's Choice Smartphone of the Year for 2012. This type of support usually means that the device has the technology chops to compete. Without a significant platform from which to spread the word, however, the device will never reach its potential. Enter the advertisers.
A significant technology partner: Just as Samsung was stuck with Google, Nokia is stuck with Microsoft for the operating system. These relationships have both benefits and weaknesses for the hardware manufacturers. While Android and Google's native applications are becoming increasingly popular with users -- especially in the U.S. -- there is a reason that Samsung is developing its own OS. For Nokia, the partnership rescued it from its own failing smartphone OS, and gives it the potential to leverage Microsoft's huge business presence. Again, this is all dependent on users giving the device a chance.
A differentiated product: If you take for granted that those who have come before have set the standard to beat, the Lumia knows who it must beat. Just as the Samsung ads took aim at the iPhone by pointing out all of the technology advantages it possessed, the Lumia is attacking both the iPhone and Galaxy as the established players on the block. The Lumia possesses some critical points of differentiation, but unless consumers see the device as different and worth checking out, it won't necessarily matter.
Great tag lines: Where Samsung really scored was in simplifying its message with a single tag line: "The next big there is already here." Microsoft and Nokia are heading down this same path with their catch phrase: "Don't fight. Switch." If the message can work its way into the American psyche, the Lumia has the chance to become a real contender.
There are differences
While Microsoft and Nokia may be borrowing from Samsung's playbook, there are some important differences between its efforts and those of the Galaxy-maker. First, Windows is a far less established OS for smartphones than Android was at the time that the Galaxy S III rocketed to the front of the pack. For that matter, because Samsung had good competition from HTC and Google's own Motorola, the platform received hype beyond the Samsung offerings. Furthermore, Android was the only real alternative to iOS, so Samsung was benefiting from this critical battle.
The Lumia is the flagship Windows Phone and is still fighting for legitimacy. While Nokia has gotten a foothold in the smartphone arena, it does not have the same tacit acceptance that Android lent to the Galaxy line. With this in mind, however, Microsoft has demonstrated for decades its ability to leverage the ideas of its competitors and do it even better. Both Nokia and Microsoft look attractive at current levels and are worth considering for your portfolio. Microsoft, in particular, continues to establish itself and deserves an allocation.
It's been a frustrating path for Microsoft investors, who've watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.
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