09/04/2012 08:04 pm ET Updated Nov 04, 2012

Lumia 920, Lumia 820 May Be Nokia And Microsoft's Last Chance At Survival In Smartphone Market

* Seen as last major shot at winning back market share

* Lumia phones to run on latest Windows Phone software

* New phones coming from Motorola, Apple, Samsung

* Nokia shares fall 15 percent after unveiling (Updates shares, adds full Luma specs)

By Tarmo Virki and Sinead Carew

HELSINKI/NEW YORK, Sept 5 (Reuters) - Nokia and Microsoft Corp took the wraps off the struggling European company's most powerful smartphone on Wednesday, in what may be their last major shot at reclaiming a market lost to Apple, Samsung and Google.

The world's largest software maker and the Finnish company that once dominated the cellphone market showcased the device in New York on Wednesday, and planned to demonstrate it for industry insiders in Helsinki as well.

Microsoft and Nokia hope the new Lumia will become a potent weapon in an escalating global mobile industry war, but analysts were initially less than impressed. Nokia's shares plummeted 15 percent shortly after the unveiling, to 1.94 euros.

The Lumia 920 and smaller Lumia 820 run on the latest Windows Phone operating software, which Microsoft hopes will rival Apple's iOS and Google's Android to become a third mobile platform. If the new phones do not appeal to consumers, it could spell the end for money-losing Nokia and deal a serious blow to Microsoft in its attempts to regain its footing in the market.

The Lumia 920 - which executives billed on Wednesday as the flagship Windows phone - sports "Pureview" camera technology to reduce blurring from hand motion, and wireless charging capability. Powered by Qualcomm Inc's Snapdragon processor, it comes with augmented reality technology that lets users see details of their surroundings through the camera.

The Lumia 920 - available in yellow or red - sports a bigger, brighter 4.5-inch screen than Nokia's previous smartphones, taking a page from rivals such as Samsung, which has backed larger displays in past years. It comes with an 8.7 megapixel camera, in line with rival devices, but Nokia hopes the "Pureview" technology will give it an edge.

"The Lumia 920 feels like more of an evolution of existing Lumia phones than the revolution we expected from the close collaboration between Nokia and Microsoft," said Ben Wood, head of research at CCS Insight. The two companies "will have to spend eye-watering sums on marketing and offer the new phones at aggressively low prices."

The stakes are high for both Nokia and Microsoft, who want the new Lumia to make a splash in an increasingly crowded market.

Google's Motorola Mobility intends to show off its latest smartphone later on Wednesday, Inc will unwrap new Kindle Fire tablets on Thursday, and Apple is expected to unveil the latest version of its seminal iPhone on Sept. 12. Samsung Electronics says it will sell its own Windows phone as early as next month.

The Finnish handset maker has logged more than 3 billion euros ($3.8 billion) in operating losses in the past 18 months, forcing it to cut 10,000 jobs and pursue asset sales.

Its share of the global smartphone market has plunged to less than 10 percent from 50 percent during its heyday, before the iPhone was launched in 2007.

Windows phones have only captured 3.7 percent of the global smartphone market, according to Strategy Analytics. Android phones have 68 percent, while Apple has 17 percent.

For Microsoft, successful Lumia sales could convince more handset makers and carriers to support its Windows Phone 8 software, which promises faster performance and a customizable start screen. The Finnish company said it would announce pricing and roll-out dates later, on a country-by-country basis.

Samsung last week became the first to announce a smartphone running Windows Phone 8, at the IFA trade show in Berlin. But it was not able to provide the model to visitors at the show.


Apple's first iPhone revolutionized the mobile industry, popularizing the model of a third-party developer "ecosystem," today considered pivotal to the success of any operating system.

Part of the reason for the limited success of Windows phones is that they support only 100,000 or so apps, compared with about 500,000 or more for Android or iPhones.

There is also the interconnection between apps and content, typified by Apple's iTunes and iCloud, which share content across devices, that acts as a powerful disincentive to switch between vendors.

"Much has been made of Windows Phone emerging as 'the third ecosystem' in mobile. This is a huge task in itself, but Apple's and Google's entrenched positions where consumers have already invested heavily in apps and content makes switching platforms less attractive," said Ben Wood from mobile sector research company CCS Insight.

The new phone software is similar to the Windows 8 desktop and tablet software to be released on Oct. 26, making it easier for developers to write apps for both, and Microsoft hopes this will boost the platform's popularity.

But the Windows operating system is by no means universally popular in the PC market, so consumers will not necessarily come to the mobile phone equivalent with unalloyed goodwill.

"Consumer perceptions of the Windows brand have been shaped by PC usage. Although Windows 8 will help, there is still plenty of work required to overcome historical prejudices in the transition to mobile," said Wood.

The new Lumias could, however, benefit from the continuing decline in Research In Motion Ltd's BlackBerry, and from a recent legal blow to the Android operating system.

A California jury decided last month that some of Samsung's hot-selling Android smartphones copied features of the iPhone, which may result in import bans and drive handset makers to put more resources into making Windows-based phones.

But for Nokia and Microsoft to exploit that window of opportunity, it must first find favor with consumers, who so far have shown little enthusiasm for smartphones with Windows software. ($1 = 0.7947 euros) (Additional reporting by Bill Rigby in Seattle; Editing by Edwin Chan, Tim Dobbyn and Maureen Bavdek)