Nokia unveils Windows phones

Nokia and Microsoft have taken the wraps off two new Lumia smartphones in what may be their last major shot at reclaiming a market lost to Apple, Samsung and Google.

The companies hoped the flagship Lumia 920 - sporting a bigger screen and cutting-edge camera technology - would become a potent weapon in an escalating global mobile industry war.

But investors said it lacked "wow", and shares of Nokia, which once dominated the cellphone market, plummeted 13 percent.

Many of the industry analysts who got to see the phone up close in New York said it was a solid device with a few differentiating features, but it did not push the envelope - as Nokia CEO Stephen Elop had said it would.

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.

The Lumia 920 - which executives billed as the flagship Windows phone - uses "PureView" camera technology to reduce blurring from hand motion and has wireless charging capability.

Powered by Qualcomm'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.

Nokia announced no partnerships with wireless service providers, leading some analysts to worry this was a sign of weak carrier support, and the Finnish handset maker said it would announce pricing and roll-out dates for the new Lumia only later, on a country-by-country basis.

Some analysts said Nokia's reticence on dates and prices did not help the investor sentiment.

"The challenge is that the world is working on the 4th, 5th and 6th editions of their devices while Nokia is still trying to move from chapter one. It still has quite a bit to catch up," said RBC analyst Mark Sue.

"People were looking for something that would dazzle. Most investors will view it as evolutionary, not revolutionary ... Nokia has made some good progress but investors were looking for quantum leaps. We didn't get that."

Last night's Lumia launch was the first in a flurry of planned mobile-device launches, with Google's Motorola Mobility set to show off its latest smartphone later that day, Amazon.com to unwrap new Kindle Fire tablets on Thursday, and Apple expected to unveil the latest version of its seminal iPhone on September 12.

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.

Samsung last week became the first to announce a smartphone running Windows Phone 8, which it said it would begin selling as early as next month.

Ecosystem warriors

Nokia has logged more than 3 billion euros in operating losses in the past 18 months, forcing it to cut 10,000 jobs and pursue asset sales.

The Finnish handset maker's 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 captured only 3.7 percent of the global smartphone market, according to Strategy Analytics. Android phones have 68 percent, while Apple has 17 percent.

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 October 26, making it easier for developers to write apps for both, and Microsoft hopes this will boost the platform's popularity.

The new Lumias could, however, benefit from the continuing decline in Research In Motions 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.

"If you were looking for an iPhone knock-out punch, this isn't it. That's not going to happen with one product," said Ross Rubin, analyst at Recticle Research.

(Additional reporting by Nicola Leske in New York and Bill Rigby in Seattle; Editing by Edwin Chan, Tim Dobbyn, Maureen Bavdek, Gary Hill)