With a Windows 8 Tablet, Nokia Must Tread Lightly as It Takes on iPad

by Anthony John Agnello | March 12, 2012 2:34 pm

With a Windows 8 Tablet, Nokia Must Tread Lightly as It Takes on iPad

Best of luck getting your hands on one of Apple’s (NASDAQ:AAPL[1]) shiny new iPads when they hit the market this Friday. The third-generation 4G-ready tablet is apparently in even higher demand than its predecessors.

Two years after the original iPad’s debut, it seems that consumer demand has yet to reach fever pitch when it comes to the device. As of Sunday, Apple had sold out of preorder allotments of the new iPad. Retail shops will have some for the intrepid customers who camp out the night before, but most will have to wait past the new iPad’s release date.

It’s in this environment that Nokia’s (NYSE:NOK[2]) tablet plans are taking shape. A Nokia tablet running Microsoft’s (NASDAQ:MSFT[3]) Windows, this machine could be faster, shinier, and more powerful than Apple’s iPad and it wouldn’t matter a lick. What hope does Finland’s fallen powerhouse have?

Here’s the word: According to Digitimes (via smart analysis at Venture Beat), Nokia is building a 10-inch tablet that will use Microsoft’s Windows 8 operating system and run on an ARM-based processor, not unlike the custom ARM-based Apple A5X processor that powers the iPad. Compal (PINK:CMPFF[4]) will manufacture the Nokia tablet in time for it to hit shelves by the end of the year. This plan makes sense in light of everything Nokia and Microsoft are working on at the moment.

A steep challenge for the Nokia-Microsoft alliance

Windows 8 is the centerpiece of Microsoft’s mobile plans with both fans and tablets. Nokia, of course, is the foundation of Microsoft’s attempt to become a mobile superpower. For its part, Nokia has put most of its mobile eggs in Microsoft’s basket, and Nokia CEO Stephen Elop has hinted for months that his company plans to enter the tablet race.

“There’s a new tablet opportunity coming. We see the opportunity,” said Elop in November.

When images leaked last year of a rumored Nokia Windows tablet, Elop insisted that whatever his company released had to be “uniquely Nokia” and not just another tablet. Based on these newer reports, the only thing uniquely Nokia about this tablet is its support from Microsoft. But Windows 8, in what is likely a standard 10-inch tablet, won’t be enough to win consumers.

The two companies are still struggling to make the Lumia smartphones a hit in an iPhone-obsessed market. A tablet is just going to drain Nokia’s manufacturing resources, even if it does produce an initial order of only 200,000 tablets, as suggested by rumors.

Battle of the brands

At this point, it’s still a mystery how anyone, let alone a brand as unpopular as Nokia, is going to diminish iPad mania. The only company that has made any progress in the tablet market is Amazon (NASDAQ:AMZN[5]). The Kindle Fire managed to steal 14% of the U.S. tablet market at the end of 2011. It proved that a smaller tablet could compete with Apple’s 10-inch iPad, and it also proved that a low enough price will net consumer dollars.

Amazon sold 4 million Kindle Fires in less than two months, $800 million in sales in one fell holiday-season swoop. The Kindle Fire had incredible brand strength behind it, though. From the Kindle e-book brand to Amazon’s broader retail operation, the Kindle Fire represents a portal to things consumers want. What does Nokia have? Windows isn’t a content proposition to tablet buyers, it’s a utility. That won’t come close to killing the iPad.

Nokia and others looking to take a new stab at tablets need to tread lightly. Amazon is an important success story, but its successes aren’t easy to replicate, even for Amazon itself. Word was the company planned to release a bigger, more powerful Kindle Fire this month to compete head to head with the new iPad. The iPad preorders prove that would have ended badly. Take notes, Nokia, and be careful.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello[6] and become a fan of InvestorPlace on Facebook.[7]

Endnotes:
  1. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  2. NOK: http://studio-5.financialcontent.com/investplace/quote?Symbol=NOK
  3. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  4. CMPFF: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMPFF
  5. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN
  6. @ajohnagnello: http://twitter.com/#%21/ajohnagnello
  7. InvestorPlace on Facebook.: http://www.facebook.com/pages/InvestorPlace/178906405484848

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