While Russia had first confirmed a North Korean satellite launch, it now says that no satellite reached the orbit.
According to U.S. information the third stage never separated from the second one and both fell into the sea south of Japan.
The 'west', i.e. the U.S., is trying to get additional UN sanctions on North Korea but the Chinese and Russians will likely block those. The 'western' argument is that the North Korean launch violated UN Security Council resolution 1718 (pdf) established in 2006 after NoKo exploded a nuclear device.
China and Russia have a good formal reason to dispute that. As the 'western' media will not spell that out I will do so here. In UNSCR 1718 the Security Council:
2. Demands that the DPRK not conduct any further nuclear test or launch of a ballistic missile;
…
5. Decides that the DPRK shall suspend all activities related to its ballistic
missile programme and in this context re-establish its pre-existing commitments to a
moratorium on missile launching;
The term ballistic missile is quite specific:
A ballistic missile is a missile that follows a sub-orbital ballistic flightpath with the objective of delivering a warhead (often nuclear) to a predetermined target.
A satellite, by definition, is an orbital object and the launch of satellites is thereby not forbidden under UNSCR 1718. There are signs that this was indeed an attempted satellite launch. North Korea took all the necessary steps in international law that are required for a satellite launch like informing the international air and shipping organizations about the flight path and drop zones. A picture of the missile shows a big nosecone which is typical for a satellite launcher and atypical for a ballistic missile.
Of course the launch of such a satellite carrying missile will also bring experience for the further development of ballistic missiles. As the FAS security blog remarks:
The reason the world is worried about this test is not because we are worried about competition in the satellite launch business. (Good luck to them!) The world worries because the launcher the North Koreans used is a Taepodong-2, which most everyone believes is their next step up toward a long-range ballistic missile. By taking a warhead off and putting a small third stage and a satellite on top, they might call it a space launcher but the first two stages are exactly the same.
As the third stage never separated, it either failed or it was only a mock up to start with. But as South Korea plans to launch its first satellite this summer, a North Korean satellite now would have been a great point in the permanent North-South propaganda war. That is why I personally believe that this was a real satellite launch attempt.
The question of satellite launch or ballistic missile launch with a mock third stage is for now undecidable. The sea where the second and third stage landed is about 20,000 feet deep. Unless Captain Nemo's Nautilus brings the wreckage to the surface, the UNSC will have to agree to disagree over what the missile really was and if the launch was a breach of UNSCR 1718 or not.