For a brief window last decade, it looked like Nokia (NYSE: NOK) was going to control the mobile phone market. By the end of 2007, the Nokia 1100 series of mobile phones had sold over 200 million units, the N82 was going to take smartphones mainstream before Research in Motion (NASDAQ: RIMM), and the company was making films with Spike Lee. Shares were trading at $40 and the sky was the limit. Then Apple Inc. (NASDAQ: APPL) released the iPhone and it all came crashing down. Now, in 2010, Nokia still controls over 30% of the mobile phone market but with market share and stock price falling fast, the future is bleak.
Last week, the company released its latest smartphone, the 7705 Twist, a device that is an amalgam of features from competing products. The Twist features the same small square form of Apple’s new iPod Nano, albeit slightly larger. The screen slides away to reveal a QWERTY keyboard, houses a 3-megapixel camera, and supports the typical array of Verizon (NYSE: VZ) media functions, including V-Cast Music support, Navigator, Corporate Email, and others. It is a smartphone intended to capture a teenage and college aged audience that is already dominated by the iPhone and the Google (NASDAQ: GOOG) Android-powered Droid X from Motorola (NYSE: MOT). The Droid, more than others, looms large over the Twist and every other Nokia phone on the market. Verizon’s national ad campaigns focus on Motorola’s device, not on Nokia’s.
The day Twist was unveiled, the world was focused on another story coming out of Nokia: the appointment of Stephen Elop as the company’s new CEO. Elop, formerly of Microsoft‘s (NASDAQ: MSFT) business division, replaced Olli-Pekka Kallasuvo and is the first non-Finnish CEO of the company. This is an exciting and important moment for the company; Elop’s background in powerful American software companies like Microsoft and Adobe (NASDAQ: ADBE) give him perspective on the world market that has been sorely missed at Nokia over the past five years. If the company uses this transition period as an opportunity to completely reconsider its smartphone strategy, they may have a chance of competing against Apple, Google, and Research in Motion in the coming years. It would be wise to leverage their relationship with Microsoft—through Elop and their alliance for developing mobile software formed last year—in planning their major smartphone competitor. A powerful Nokia-made phone running the Windows Phone 7 operating system might just have a shot. It’s not time to spend on Nokia yet, but it would be smart to hold for just a bit longer.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
Hilary Kramer’s 3 Breakout Stocks Under $5. Low prices can mean big profits. New report from Hilary Kramer details her secret to telling a breakout stock from a broken stock. Plus, her Top 3 Breakout Stocks to Buy Now. Get your FREE copy here.
