Nokia takes up challenger mantle with Windows Phone

LONDON--The irony is rich and textured: Nokia (NYSE:NOK), the world's largest handset maker by volume, is positioning itself as a challenger. That is the clear message I'm taking in here at the Nokia World conference, where Nokia CEO Stephen Elop unveiled the company's first smartphones running Microsoft's (NASDAQ:MSFT) Windows Phone platform.

I'm heartened that Nokia seems to have undergone a change in sensibility while working with Microsoft--mainly because it had to. This challenger mentality, and the knowledge that the company's future is riding on Windows Phone, means that Nokia has become shrewder, more aggressive and more focused on what its priorities are, which include working more closely with carriers. All of that should benefit Nokia, if it can execute on its plan to bring a wide range of Windows Phone devices to market next year.

Nokia plans to release its first Windows Phone devices, the Lumia 800 and 710, in Europe in November, in Asia by year-end, and more devices in China in the first half of 2012. Devices specific for the U.S. market will arrive early next year, and will likely include CDMA and LTE variants (Verizon Wireless (NYSE:VZ), are you listening?). On the one hand, this seems terrible--Nokia is missing the holiday shopping season in North America--while on the other, it reflects Nokia's challenger mentality. Elop & Co. see themselves now as scrappy underdogs with a lot on the line, and they are, given how Nokia's smartphone sales are falling. The company can't afford a flop, certainly not in the U.S. market.

Nokia world dancing

Click here for a slideshow of the events at this year's Nokia World conference.

"The fact that they are launching into known markets where they still have lots of consumer mindshare and capital with consumers, I think is a good thing," CCS Insight analyst John Jackson told me. "Ideally more is more at this stage. And you are going to miss Q4 in some significant markets like North America, but you can't bring products to the market if they are not well executed. That would be the kiss of death for Nokia at this point. Good for them being disciplined enough not to do it."

Chris Weber, Nokia's North America chief, told me that the company is focused on a much more carrier-centric model for the U.S. than it has in the past, and is working in concert with carriers' timetables to deliver carrier-specific devices. Additionally, he said, it takes time to develop an LTE device and ensure it meets carrier standards. I think it's better for Nokia to make a big splash in the U.S. rather than trot out what it's making for the rest of the world, which was its strategy for years (along with selling devices unsubsidized, unlocked devices, which worked out terribly).

Again, I think this reflects a challenger mentality at Nokia. For years it reigned supreme in both emerging markets and smartphones and could dictate to the market what its strategy would be--ignoring local market factors like the subsidized phone model in the U.S. Those days are long gone and Nokia recognizes it. Now the market has dictated Nokia's strategy.

I'm still skeptical that Nokia can pull this off. A marketing campaign based around "Amazing everyday" is one thing, but getting carrier retail sales representatives to hawk Windows Phone--and then Nokia's Windows Phone devices--over iOS and Android is another. That said, Nokia's transformation into a challenger heartens me. The company has lined up 31 retail and carrier partners so far for Windows Phone. It's leaner, smarter and no longer complacent.

Nokia is the challenger. Let Round 1 begin. --Phil

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