Nokia Aims a Tablet at Apple: Exclusive

Nokia, which has been watching Apple and Research In Motion (RIMM) run away with its smartphone business, can't afford to let this opportunity go by. Like the jump into netbooks with the Booklet, Nokia has shown a recent eagerness to respond to new markets. "I feel they have to do this, or risk falling behind in the category," says Kumar.

Pricing and timing are critical if Nokia has any hope for success in tablets.

Nokia needs to have a tablet ready for sale in time for the back-to-school computer buying surge and well before the holidays, says Kumar.

With Apple's iPad starting at $500, Nokia has to aim lower -- at what will likely be a moving target.

"The problem here is that the pricing of tablets is likely to drop at a furious pace over the next four quarters," says MKM's Kuittinen. "Nokia needs to get its products out fast and ramp up the production rapidly or it's going to be tough to play catch-up."

Nokia's challenge isn't just on the hardware front.

Apple's iPhone software runs the iPad, while Google's Android and Chrome operating systems will run new tablets from a host of big tech brands, and Microsoft is likely to put Windows 7 to work on its tablets. That leaves Nokia and its still-evolving MeeGo software as a distant and unknown contender.

Nokia faces long odds of finishing in the money in tablets, says Kumar.

"I'm not holding my breath on this one," Kumar said.

--Written by Scott Moritz in New York

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