Nokia will invest in new materials and new technologies for upcoming Windows Phones, targeting higher-priced handsets as well as more affordable models to broaden Lumia's appeal. "It takes a tremendous amount of work to break through as the third ecosystem" CEO Stephen Elop said on Nokia's financial results call today, after announcing a $1bn operating loss for Q2 2012, but was confident that Microsoft's announcement of Windows Phone 8 - and limited upgrade potential for existing Lumia devices - would not necessarily ruin Nokia's Q3.
Microsoft announced Windows Phone 8 last month, outlining the new smartphone OS' shared kernel with Windows 8, but also confirming that any current Window Phone 7.x device would not get an upgrade. Instead, they'll have to make do with Windows Phone 7.8, a halfway-house of UI tweaks that makes the current platform look like WP8 but lacks the underlying technologies.
However, Nokia believes that will not necessarily be a drawback. "What we're very focused on communicating right now is that existing owners - and people who buy devices tomorrow - will be very clear what they're getting from Windows Phone 8" Elop said in response to questions as to users might be confused. In fact, the company has seen activation of Lumia handsets as being "stable to up" in the period after Windows Phone 8 was announced.
"We have to carefully communicate, the updates and upgrades we are providing for the existing devices are anticipated not just up to Windows Phone 8 but after Windows Phone 8 ships" Elop conceded. "We will continue to sell existing Lumia devices beyond Windows Phone 8, in some cases for quite a while. We're working very closely with developers ... to ensure application development flow continues across the platforms."
Nokia's estimates for Q3 are roughly in line with those of Q2, though plus-or-minus 4-percent. That relatively broad range, Elop explained, is because of the degree of uncertainty around how Windows Phone 7 will be impacted by the new incoming version.