A view through the new Nokia Lumia 1020 smartphone with a 41 megapixel camera is shown during a press event in New York on July 11. The new phone is built around a highly advanced camera. Photo: CFP

Nokia recently introduced a new smartphone, the Lumia 1020, with a powerful 41-megapixel camera in its latest bid to catch up with rivals Samsung Electronics Co Ltd and Apple Inc.

Tech bloggers responded enthusiastically, saying the camera quality was the highest in the market. But analysts questioned whether it was enough to help Nokia, suffering a fall in cash reserves after years of poor sales, survive.

Several said that Nokia needs to market the handsets more aggressively - a tough challenge in the face of its dwindling cash reserves after years of poor sales and the decision this month to buy Siemens' stake in their equipment joint venture.

"The hardware's a beauty on this thing," said tech website Engadget after CEO Stephen Elop on July 11 demonstrated features including "floating lens" technology that adjusts for a camera shake and six lenses that help produce sharper images.

The Finnish mobile phone maker is pinning its hopes for a comeback in smartphones on Microsoft Corp's Windows Phone - an operating system that is struggling to compete with Google's popular Android system.

While regular mobile phones still account for the bulk of its shipments, smartphones are viewed as crucial for its long-term survival because of their higher margins and increasing demand for Web access from mobile phones.

Jo Harlow, Nokia's executive vice president in charge of smart devices, said the growing popularity of photo and video sharing meant more consumers will want better cameras.

"Taking pictures is in the top three things people do with a smartphone. It's a relevant feature to be focused on," she told Reuters. "To stand out you have to differentiate."

The camera on the 808 PureView, which uses Carl Zeiss optics, has been widely praised for taking high-quality pictures even after zooming.

The new Lumia's 41-megapixel count far exceeds those of the iPhone 5 and Samsung Galaxy S4 Zoom, at 8 and 16 megapixels respectively. It is also higher than some compact cameras, although higher megapixels do not necessarily mean better photos as factors such as lens quality also affect the end result.

Recent Lumia phones have also emphasized advanced camera features, including Lumia 920's floating lens technology.

Nokia has not given details about the latest upgrade, but a source confirmed that the camera technology would be its main selling point and the company's own website promises "41 million reasons" to tune in to the event in New York.

"The imaging capabilities here are extraordinary," said Current Analysis analyst Avi Greengart.

But he added, "It's still a Windows Phone ... if somebody is looking for applications they're still going to look at iPhone."

Marketing push

The new Lumia, which uses Windows software, will be sold through US carrier AT&T Inc starting July 26 for $299.99 with a two-year contract, and will be available later in other markets including China, Nokia said.

Telefonica SA, a carrier partner in European and Latin American markets, will get a version of the device, Nokia said without giving any details.

Earlier Lumia models also won positive reviews from critics and technology blogs but have failed to halt a shift to Android phones.

IDC estimates that Android and iOS accounted for 92.3 percent of all smartphone shipments in the first quarter of this year. The Windows Phone, meanwhile, accounted for 3.2 percent, with a shortage of apps proving a major handicap.

Windows Phone has only 160,000 apps, while rivals offer about five times as many because developers prefer to make them for the higher-volume operating systems.

"Despite the quality of the device, I have some serious doubts about whether it will change Nokia's fortunes, and it risks becoming a niche product," said IDC analyst Francisco Jeronimo.

He and other analysts have also said Nokia needs to step up advertising and promotion of its phones. Many have said telecom carrier partners, particularly in the US, have failed to promote Nokia to their customers.

Elop said Nokia was pooling resources with AT&T and Microsoft to market the Lumia 1020, positive news for investors who have been worried about the company's lack of funds.

Cash concerns

While analysts say it is crucial for Nokia to boost marketing and promotions through its carrier partners, the company is likely to keep a wary eye on its marketing expenses.

"This is the first real glimmer of hope for Nokia's resurgence and the viability of the Windows ecosystem in smartphones - provided Nokia, Microsoft, and their operator partners can convince consumers that this experience is indeed a leap forward," said Forrester Research analyst Charles Golvin. "That will be the real hard work."

Ratings agency Standard & Poor's downgraded Nokia by one notch on Friday to B+ from B-, forecasting that net cash could fall as low as 1.3 billion euros at the end of the year.

A portfolio manager for one of Nokia's top 10 institutional investors, who declined to be identified, said he is not in favor of Nokia boosting marketing spending too much and is happy with a slowly-but-surely approach.

Alandsbanken analyst Lars Soderfjell, too, said Nokia should aim for modest marketing - enough to improve sales and buy more time for a turnaround without accelerating cash burn.

"I look at this as a very gradual turnaround. I don't see there being a silver bullet model ... If it can gain a couple of percentage points in market share, then it can gradually recover," he said.

IDC's Jeronimo suggested that Microsoft should also do more to market Windows Phone handsets. Without Nokia's commitment to Windows, Microsoft would have no leading handset partner.

"I think Microsoft has relied a lot on Nokia to promote Windows Phone. That's not enough," he said. "It will be hard for Nokia to do the entire investment."