Nokia’s new Android-based N1 tablet has seen immediate success in China. Two batches of the Lollipop-running iPad-mini clone sold out very quickly. This raises the provocative prospect of a Nokia hardware comeback built around Android rather than Windows.
The tablet is only available in China but coming to Europe and eventually North America. It retails for the equivalent of $249 making it considerably cheaper than an iPad Mini 3. Early “reviews” have been positive. Apple partner Foxconn is actually the maker of the device and a licensee of the Nokia brand.
This is how Nokia intends to maintain a consumer presence in the future: license its brand to third parties who will make, market and distribute on the company’s behalf.
Nokia sold its handset division to Microsoft in 2013 for more than $7 billion. Subsequently Microsoft decided to retire the Nokia brand but keep “Lumia” on its Windows Phones going forward.
Under the deal terms Microsoft would ultimately have been required to transition away from the Nokia brand. However the early move away from it will probably hurt Windows Phone sales in Europe, where the Nokia brand is arguably strongest.
Europe is the market where Microsoft has seen the greatest penetration for its smartphones. It has not been able to make much headway in the US or China in terms of market share. Windows Phones drive less than 2 percent of global mobile internet traffic according to StatCounter data. In the US the number is about 1.1 percent.
As part of its handset division’s sale to Microsoft, Nokia is precluded by a non-compete clause from making feature phones for a decade. However the company is free to start making smartphones at the end of this year (2015). It can make (or license to make) tablets now because non-phone mobile devices are not covered by the clause.
Before Nokia became a Microsoft partner it evaluated using Android as its smartphone operating system. Then CEO Stephen Elop — the once and future Microsoft employee — said the company declined to go with Android because it would make Nokia’s smartphones harder to differentiate. Indeed, Microsoft’s operating system was supposed to provide, in Elop’s words, “a key point of differentiation.”
The decision proved to be a huge miscalculation that ultimately triggered the sale of Nokia’s hardware business to Microsoft. Had Nokia also made Android phones or gone with Android exclusively it would probably still be independent today.
For a very brief time earlier this year Nokia released the Android-based Nokia X, X+ and XL. These devices were reportedly in development before the Microsoft acquisition. Before they could prove themselves or fail Microsoft decided to discontinue the lower-end smartphones.
The N1 implies that Nokia (through partners) could build a high-quality, aggressively priced smartphone that potentially could compete globally on the still-existing strength of the Nokia brand. It may not happen but it would be very interesting if it did.
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