Can Nokia's Lumia take on Apple and Google?

January 10, 2012: 8:59 AM ET

The troubled Finnish phone maker is taking the wraps off a new Windows-powered phone it hopes will give Apple and Google something to worry about.

LumiaFORTUNE -- On Monday Nokia unveiled the Lumia 900, its latest attempt to take on the iPhone and Android smartphones. The Windows Phone-running device has all the makings of a popular smartphone -- sleek hardware design including a large 4.3-inch screen, a major carrier partner in AT&T and super-fast network capabilities known as LTE.

But that doesn't mean it's a slam dunk for Nokia (NOK). The market is already flooded with devices that do all of the above. And despite Nokia and Microsoft's (MSFT) best efforts, both companies still have an insignificant piece of the U.S. smartphone pie, which belongs to Google (GOOG) and Apple (AAPL). To take on the competition, the duo will have to prove that their partnership can result in a truly different -- and better -- mobile experience for consumers. that's easier said than done.

"Differentiation matters," Stephen Elop, CEO of Nokia, told Fortune in an interview following the company's announcement on Monday. "Many of those other devices -- if you squint your eyes a little bit -- are blurring over because they're all the same experience. They all have the same static collection of applications that don't do much when you just look at it."

Nokia chose to partner with Microsoft because it didn't want to become just another Android phone manufacturer. But while the Lumia 900 is a good-looking piece of hardware and Microsoft's "tile-centric" user interface has gotten good reviews, it's hard to see how that alone can be enough of a differentiator for Microsoft and Nokia. Even exclusive application partnerships with brands like ESPN and Sesame Street Workshop are unlikely to help give the Lumia 900 an edge, because many developers still feel there's no compelling reason to create apps for Nokia's Windows phone devices. At least not yet.

At the company's press conference on Monday, Elop called the Lumia 900 a "beachhead" in the war of ecosystems. It's clear Nokia realizes it's no longer about coming out with one "iPhone killer" -- it's about coming out with a killer ecosystem that encompasses hardware, applications, a dedicated developer base and more. It's also clear that Nokia and Microsoft realize that they will have to fight with all their might to become a viable "third platform."

Microsoft has already said it will give developers a slightly bigger cut of app revenue than Google and Apple do. And since February, Nokia has moved as fast as possible to churn out new Lumia smartphones that run Windows Phone.

To be sure, there is room for a third ecosystem, especially with the weakening of Research in Motion's (RIMM) hold on the enterprise. Nokia devices could take advantage of Microsoft's success in the office to try and appeal to IT departments as an alternative to both BlackBerries and the "bring your own device" trend.

"The Windows Phone environment on Lumia devices has many of the capabilities required in a business setting," Elop told Fortune. "Microsoft provides much of the software that businesses use for office productivity like Microsoft Office."

But even Elop admitted there was still plenty of work for Nokia to do as it tries to crack the U.S. market yet again. The Lumia 900 will be out "in the coming months," although it's still not clear exactly when and (for how much) it will sell, let alone whether it can help Nokia in its battle against iOS and Android.

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About This Author
Michal Lev-Ram
Michal Lev-Ram
Writer, Fortune

Based in Silicon Valley, Michal Lev-Ram covers enterprise and mobile technologies for FORTUNE. Prior to joining FORTUNE, she wrote for CNNMoney, Fast Company, Popular Science and other business and technology publications. She was also a staff writer at Business 2.0 and holds a B.A. in journalism from San Francisco State University.

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