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Nokia Corporation (NOK) Lumia 900 Won’t Upgrade to Windows Phone 8?

Nokia Corporation (NYSE:NOK) has spent a lot of time, energy and capital on developing the Lumia 900 handset, which has gotten positive reviews from critics and users and has been touted as perhaps the best vehicle for the Windows Phone operating systems by Microsoft Corporation (NASDAQ:MSFT). Even AT&T Inc. (NYSE:T), the nation’s No.2 mobile carrier, was very helpful in maketing the phone and selling as the best Window competitor to the Apple Inc. (NASDAQ:AAPL) iPhone and the various Google Inc. (NASDAQ:GOOG) Android devices. However, there is one problem that customers aren’t hesitant about which to tell Nokia.

Nokia Corporation (ADR) (NYSE:NOK)

The Lumia 900 does not upgrade to the new Windows Phone 8 operating system from the current 7.5 version. When it comes to image, that might leave a mark.

Where might that leave the struggling, Finland-based handset maker? Nokia Corporation (NYSE:NOK) maintains a positive (defensive?) attitude, saying that it is working with Microsoft Corporation (NASDAQ:MSFT) to develop a software update that will allow current Lumia 900 users to get the new Windows Phone 8 OS when it launches this fall. That may not calm the already apprehensive masses, who may want to try a Windows Phone but might be sitting on the sidelines because of Nokia’s fading reputation in the smartphone market, and the impending launch of Windows Phone 8, which is of course, unproven.

Nokia Corporation (NYSE:NOK) has felt the pinch too, selling just 4 million handsets last quarter and losing nearly $1.7 billion as a company.  So does this lack of upgradeability pose a problem for the Lumia?

“Of course, anytime there’s a binary break when the software is not upgradeable, that’s potentially a consumer problem,” said Jo Harlow,  Nokia executive vice president for smart devices. “We’ve taken a lot of criticism for this, but I also think there’s a real reality in the market place. There are very few Android devices that can upgrade to Ice Cream Sandwich or Jelly Bean. So, it’s a reality as the capabilities move on.”

Comparing what Nokia Corporation (NYSE:NOK) is facing with what other devices face with Google Inc. (NASDAQ:GOOG) Android may or may not be fair. Google has developed fragmentation across its Android system – less than 10 percent of Android phones utilize the latest incarnation of Android, of which there are several types – Honeycomb, Jelly Bean, Gingerbread, Ice Cream Sandwich, for example. Microsoft Corporation (NASDAQ:MSFT) Windows and Apple Inc. (NASDAQ:AAPL) iOS do not have that fragmentation – 80 percent of current iPhones, for example, run iOS 5, the most recent version.

Nokia Corporation (NYSE:NOK) has a vested interest in the success of Windows in the smartphone market, so it may have to tread very carefully in dealing with integrating the Lumia 900 with the new-fangled Windows Phone 8 in the fall.

“There are a certain set of consumers for whom this is a big consideration,” Harlow said. “But I would argue that even if it were upgradeable, those consumers would still want a device that has the latest and greatest hardware that will be made available with Windows Phone 8. That’s kind of a natural transition that happens whether you look at the iPhone or other platforms.”

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