Nokia Corp. (NYSE: NOK) plans to launch its long-awaited N8 smartphone next week at its Nokia World 2010 event. But wait, there’s more. The company is also expected to release its E7 smartphone at the same event. The N8 uses the new Symbian3 operating system and has been positioned as Nokia’s competitive response to the iPhone from Apple Inc. (NASDAQ: AAPL) and phones using the Android operating system from Google Inc. (NASDAQ: GOOG).
Early reports on the E7 phone indicate that it will include a 4-inch touchscreen and a full QWERTY keyboard. The E7 is also expected to run the Symbian3 OS, although there are some observers who expect the phone to use the new MeeGo operating system developed by Nokia and Intel Corp. (NASDAQ:
INTC).
Nokia is still the largest handset maker in the world, but the company’s margins suffer because it does not have a strong product in the smartphone segment of the mobile market. Apparently the N8 and the E7 are set to turn that around, if analysts at Morgan Stanley are correct. The research group raised its rating on Nokia stock two notches, from ‘underweight’ to ‘overweight’, and lifted the target price from 6.5 euros to 9 euros.
Nokia’s long delay in getting the N8 to market has generated a lot of pent-up demand for the phone and Morgan Stanley expects Nokia to get a boost to the device’s average selling price as well as a boost in numbers.
Could be, but there’s a lot against that scenario. First of all, the long delay in delivering the N8 didn’t really increase demand, it has just piled it up. Second, the reported selling price in Finland is 499 euros, which is less than a buyer might have to pay for an iPhone or an Android-based smartphone. Third, there is no guarantee that the Symbian3 OS is going to compare well with competing operating systems. Besides, it is just a placeholder OS until Nokia decides to release a Symbian4 OS, which is expected in 2011.
Unless, of course, MeeGo is a success on the E7. Then maybe all the development on Symbian will stop, and Nokia will have to start over again. That might not be as difficult as it sounds because the company has a new developer kit, called QT, that allows apps developers to write an application once and deploy it across a number of other platforms.
The fourth thing that could keep Nokia from the heady heights predicted by Morgan Stanley is the launch of the E7 phone. Is N8 or E7 the flagship? Where do the marketing dollars go? Nokia’s ability to handle confusion in the marketplace will be sorely tested with all these products and operating systems loose in the wild soon.
As of this writing, Paul Ausick did not own a position in any of the stocks named here.
GameChanger Stocks to Build Your Wealth. GameChangers are companies that rewrite the rules, revolutionizing the way we live and thrive. And their business breakthroughs delivered handsome profits for savvy investors who got in early. Discover the next generation of GameChangers you should be buying now. Download your FREE copy of Hilary Kramer’s new report here.
