Nokia's focus on features and services with Windows Phone 8 Lumias puts challenge to rivals

Nokia's newly launched Windows Phone-8 based devices, unveiled on Thursday in New York, will force other mobile makers to more distinctly differentiate their handsets with features and services, or suffer blending into the background.

At the launch event for Lumia 820 and 920, it was clear that Nokia was playing to its core strengths in services, with Nokia Maps, Nokia Transport and Nokia Drive all upgraded with new features for the two devices.

The evolution of Nokia's services should worry rivals. While companies such as Samsung differentiate through the use of things like voice commands (S Voice), Nokia has chosen to improve the core experience of Windows Phone 8, which seems a more sound use of development time than adding additional but somewhat limited features. The developments shouldn't only worry Android makers though; it sets the bar for other Windows Phone 8 handsets from other manufacturers.

Francisco Jeronimo, mobile analyst at IDC, concurs.

"What makes it unique from competitors, however, are the range of services that Nokia developed to create additional value to its clients and to compete with other Windows Phones that will come to market in the next quarters," Jeronimo said. "Nokia Maps is probably the most noticeable service. The maps offer is a lot more advanced than any the other mobile maps offering on the market."

Given that both of the new devices have essentially the same feature set, the buyer's choice will likely be made on pricing, which hasn't yet been announced. However, with the devices likely to be priced competitively (particularly in the UK, where contract-subsidised handsets are the norm) to help both Nokia and Microsoft win back market share, other manufacturers will need to up their game - or lower their prices - in order to compete.

And launching the handsets with almost the same feature set also means Nokia retains a consistency of user experience across the range – a boon for those who want the full-fat smartphone experience without the full-fat price tag.

Enterprise appeal

Similar feature sets with differing price tags will also help the Lumias win hearts and minds in the enterprise: lower price-point handsets can be rolled out to the masses, while higher-end devices are given to the execs - yet both user bases will be able to use near-identical apps and features. Of course, the Windows Phone 8 operating system is a platform likely to appeal IT departments, both in terms of playing to those companies that are Microsoft shops as well as easing support concerns for firms that have gone down the BYOD route.

The other area of development in Nokia's favour is the growth of the Windows Phone Market, which has gone from around 7,000 apps at launch to more than 100,000 now. While that's nowhere near the scale of the Android or iOS app stores, it does show a shift in developer support for the Microsoft platform, which is crucial to the success of Nokia.

However, despite the positive initial reception at the event, the soundness of Nokia's strategy will not be proven until it starts selling the handsets, and even then it will take between three and six months before it can be established as a success or failure.

"The next two quarters will define Nokia's future. The company took a long-term strategy and a bold decision to invest in the new operating system. This is a marathon and will not give Nokia a short-term boost on sales, but it is important that Nokia continues quarter over quarter to grow its volumes steadily," Jeronimo said. "The time has come for Stephen Elop to prove his strategy was right."