The Finnish giant has teamed up with Microsoft in a move that will shake up the smartphone industry, writes RICHARD GILLIS

THE WORLD is made up of two types of people: those with a smartphone, and the rest. The race is on to charm this latter group, which still represents the majority of the mobile phone market worldwide.

The industry’s received wisdom suggests that if you get to them first they may well stay with you forever (changing from one operating system to another is a pain we prefer to live without). Lose them now, however, and well, that’s not something to contemplate (Palm, anyone?)

Leading the charge are two of the biggest technology companies in the world. Nokia and Microsoft have joined forces in a – some would say last-ditch – attempt to build a credible position at the top of the market.

Last week was a big moment, as the world’s tech trade and media gathered in London for the launch of the new collaboration, a Nokia handset running Microsoft’s Windows Mobile operating software.

The phone, the Nokia Lumia 800, is made of very strong plastic. It needs to be – very rarely has one device carried such a weight of expectation.

The reception to the Lumia has been largely positive. The industry is alive to the opportunity of the first “real Windows-based phone” and it will be backed by an almost unprecedented advertising blitz designed to electrify the retail supply chain.

Until last week, Nokia was staring at a gloomy future as a purveyor of low-tech talk and text gadgets to the Third World (aka “emerging markets”).

The Finnish company was once the most storied brand in the mobile sector. But, since 2007 and the launch of the iPhone, the financial markets have been concerned about the obvious gap at the top of the company’s product mix. Analysts are looking for the smartphone to deliver any meaningful earnings growth over the next three years.

The lack of success at the top end has repercussions further down the product portfolio. As Chinese competitors cut the cost of entry-level phones, Nokia has struggled to price its “talk and text” phones competitively, unable to cross-subsidise from the top end.

“The reality is if we are not successful with Windows Phone, it doesn’t matter what we do elsewhere,” said Nokia’s president of operations Chris Weber earlier this year.

According to Nielsen’s latest survey of American mobile phone consumers, 38 per cent own a smartphone, the definition of which is blurring by the day as “feature phones” become more sophisticated.

Most startling is the rate of adoption. Up to 55 per cent of those smartphone owners had upgraded in the three months prior to the research being carried out, a jump of 34 per cent year on year.

Apple’s iPhone remains the darling of the critics and public alike, while Samsung’s Android-based Galaxy has sold 30 million handsets worldwide. The iPhone 4S, the latest model launched last month, sold a head-turning four million phones in its first weekend.

But it isn’t just Nokia’s fortunes being carried by the Lumia 800. Microsoft too is barely scratching the surface of a market they see as critical to the future of their core computer business. Many people in developing markets will first experience the internet on a mobile.

According to Neilsen, Windows Phone has just 1 per cent of the US smartphone market, which is led by Android with 38 per cent, followed by Apple’s iOS and Blackberry.

This breakdown is reflected in the phones sold on the Orange network across Europe, the Middle East and Africa markets, according to that company’s senior vice-president of devices and mobile multimedia. Windows Phone is the lowest-selling platform in Orange’s Europe, Middle East, and Africa markets, behind Android in first place, iOS and BlackBerry, which he says enjoys “strong” sales. “Honestly, it hasn’t been as successful as we expected,” he said of Windows Phone, adding that customers were waiting for Nokia’s big unveiling to decide.

David Fitzgerald, head of Windows Phone in Ireland, told The Irish Times that success will ultimately be defined by market share but that other early indicators would tell a more complete story.

In particular, he stressed the importance of the middle men, the links in the supply chain between the devices and the public. “Normal customers still rely on the retailer. They go in to the shop and ask the young man or woman behind the counter, ‘what should I buy?’” said Fitzgerald.

“Our mobile network partners and hardware partners will start to bring new product to market,” he said, and the marketing power of Nokia will encourage their retailers to devote more space.

“The challenge for us and Nokia is to give people a reason to upgrade and with experiences that are different from our competitors.

“One of the things we learnt from Windows 6.5 is that we must have consistency, so if a customer picks up a Samsung phone or a Nokia phone that the experience is the same. We don’t want to have to train staff in lots of different OS’s. Each hardware company will be able to slightly customise the operating system, with different content. But the tiles and design remain the same. A lot of what Nokia will do in terms of marketing will be to champion that experience.”

Microsoft, he says, knows that Nokia will push the Windows Phone system and that the Scandinavian company still has considerable brand equity.

Of Ireland’s five million users, he said, a “huge proportion” are using Nokias today.

“Many normal – non-tech-savvy – consumers are aware of smartphones but are a bit scared. The average consumer needs help to move into the smartphone category. Going from a bog-standard text-and-talk phone to a mini-computer in their pocket is intimidating. Computers 10 years ago used a fraction of the capabilities of these phones.”

Microsoft has put a significant sum of money into the marketing budget for the Nokia Lumia, and Fitzgerald expects other devices to come to market in the slipstream it creates. “We’re not doing it consciously, but it is likely to happen.”

The partnership with Nokia, he says, is different from those the company has with other hardware manufacturers. “It is a deeper relationship. They will drive into the marketplace and shout in a way nobody else has to this point.”

The prize is a big one. And the mood in Helsinki and Seattle has lightened this past week, both companies driven on by a statistic that still defines the smartphone market: most people don’t have one.