Nokia Lumia 1020 Outdated by Christmas?

NEW YORK ( TheStreet) -- On Thursday, Nokia ( NOK) hosted a big event on a New York City pier proudly introducing their upcoming Lumia 1020 smartphone to the world. One day later it appears the handset could possibly be outdated by the end of the year.

That's not to say the phone won't be usable next year. A move like that would be corporate suicide for all involved. What it means is that this technologically advanced marvel of a digital camera/phone, which goes on sale next week, could face stiff competition from even more technologically advanced models within a few months.

According to a report on The Verge, Microsoft ( MSFT) is currently working on a number of improvements and upgrades to its Windows Phone designs. There could be a small software update within weeks (to match the upcoming Windows 8.1 update for PCs, laptops and tablets) and another, larger update by the end of the year.

But, it's the rumored hardware update that could spell trouble for consumers. Microsoft is reportedly hard at work preparing the platform for the addition of quad-core processors ( Apple ( AAPL) iPhones and Google ( GOOG) Androids have had them for awhile) and larger touch screens (maybe 5-to-6 inches diagonally).

That means, no matter how incredible Nokia's Lumia 1020 really is (and what we witnessed Thursday did seem incredible) a few months from now there will be Windows-based phones with better-performing Qualcomm ( QCOM) processors and larger, higher-resolution screens than Microsoft currently allows in their Windows phones.

Of course, the Lumia 1020 will be able to accept whatever software upgrades Microsoft allows in the future. But, you won't be able to retrofit the device to accept a larger screen or faster processor.

Add AT&T's ( T) announced pricing to the equation and you have what could become a public relations nightmare. AT&T will be asking $300 for the new Nokia camera/phone with the usual two-year contract. That's a lot of money to lay out for any smartphone -- especially a Windows phone (usually priced less than top Android and iPhone models). That will be especially true knowing that a few months from now there will be better models available at the same price or cheaper.

If I shelled out $300 for a new smartphone -- and maybe another $80 for Nokia's nifty add-on camera grip/battery pack -- I would be livid hearing about more advanced models coming very soon.

Nokia shares were losing 2.14% to $4.12 and Microsoft shares were down 0.28%% to $35.41 at 10:41 a.m. in New York.

Companies are constantly working to improve their current products. That's a good thing. It keeps the industry going. But, at some point, the buying public will push back. Something has to give. Apple takes a different approach, improving their iPhones every year or so not every month. That schedule seems to work very well for them.

T-Mobile ( TMUS) is taking the opposite approach to what has become never-ending consumer smartphone envy. For an additional $10/month, you can sign-up for T-Mobile's "Jump!" program. It allows T-Mobile subscribers to switch/upgrade their smartphone (if it's not damaged) twice a year.

T-Mobile's solution looks like a win-win situation for all sides -- keeping innovation advancing at a pace as well as offering a way for consumers to take advantage of it all without going broke.

--Written by Gary Krakow in New York.

>To submit a news tip, send an email to: tips@thestreet.com.

Gary Krakow is TheStreet's senior technology correspondent.

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