On Monday Nokia unveiled the Lumia 900, its latest attempt to take on the iPhone and Android smartphones. The Windows Phone-running device has all the makings of a popular smartphone -- sleek hardware design including a large 4.3-inch screen, a major carrier partner in AT&T and super-fast network capabilities known as LTE.
But that doesn't mean it's a slam dunk for Nokia (NOK). The market is already flooded with devices that do all of the above. And despite Nokia and Microsoft's (MSFT) best efforts, both companies still have an insignificant piece of the U.S. smartphone pie, which belongs to Google (GOOG) and Apple (AAPL). To take on the competition, the duo will have to prove that their partnership can result in a truly different -- and better -- mobile experience for consumers. that's easier said than done.
"Differentiation matters," Stephen Elop, CEO of Nokia, told Fortune in an interview following the company's announcement on Monday. "Many of those other devices -- if you squint your eyes a little bit -- are blurring over because they're all the same experience. They all have the same static collection of applications that don't do much when you just look at it."
Nokia chose to partner with Microsoft because it didn't want to become just another Android phone manufacturer. But while the Lumia 900 is a good-looking piece of hardware and Microsoft's "tile-centric" user interface has gotten good reviews, it's hard to see how that alone can be enough of a differentiator for Microsoft and Nokia. Even exclusive application partnerships with brands like ESPN and Sesame Street Workshop are unlikely to help give the Lumia 900 an edge, because many developers still feel there's no compelling reason to create apps for Nokia's Windows phone devices. At least not yet.
At the company's press conference on Monday, Elop called the Lumia 900 a "beachhead" in the war of ecosystems. It's clear Nokia realizes it's no longer about coming out with one "iPhone killer" -- it's about coming out with a killer ecosystem that encompasses hardware, applications, a dedicated developer base and more. It's also clear that Nokia and Microsoft realize that they will have to fight with all their might to become a viable "third platform."
Microsoft has already said it will give developers a slightly bigger cut of app revenue than Google and Apple do. And since February, Nokia has moved as fast as possible to churn out new Lumia smartphones that run Windows Phone.