Nokia's Lumia 'Not Good Enough' Say Carriers - InformationWeek

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4/17/2012
08:49 AM
Eric Zeman
Eric Zeman
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Nokia's Lumia 'Not Good Enough' Say Carriers

Nokia's carrier partners say the Finnish phone maker's Lumia line of smartphones can't compete against Apple's iPhone and Google's Android.

Even though they are selling tens of millions of handsets, wireless network operators loathe their reliance on Apple and Google's smartphones. That's why many of them want a third ecosystem in place to offer competition and give them back some bargaining power. Nokia's new line of Lumia-branded Windows Phones aren't filling this role, as some carriers had hoped.

"No one comes into the store and asks for a Windows phone," said an executive at an unnamed European wireless network operator. Speaking anonymously to Reuters, the exec said, "Nokia have given themselves a double challenge: to restore their credibility in terms of making hardware smartphones and succeed with the Microsoft Windows operating system, which lags in the market."

The Lumia 800 and 710 have been on sale in Europe since November. In its latest quarterly report, Nokia said that it sold 2 million of these devices--but it sold five times as many Symbian handsets, which Nokia is in the process of fading out. The Lumia 900 went on sale in the United States April 8, and has been selling better than AT&T expected it to, but Nokia has stumbled badly.

The Lumia 800 launched with battery and camera problems. Though these were later cleared up with a software update, the problems left some customers frustrated. Just two days after launching the 900, Nokia admitted that it had faulty software that affected the device's ability to connect to AT&T's data network. This was also corrected with a software update. Given Nokia's current position in the market, it can't afford to make mistakes such as these with its marquee products.

[ There's another challenge for smartphones running Windows software. Read Windows Phone's Big Problem: Google Ignores It. ]

Reuters' unnamed source noted that Windows Phones can do some cool things, but there is little awareness of the platform's capabilities. "If the Lumia with the same hardware came with Android in it and not Windows, it would be much easier to sell," he said.

Even more damningly, a representative from another carrier called Nokia's Lumia smartphone too cheap to be priced so highly. Prices charged in Europe are closer to the full retail amount. In the United States, AT&T is subsidizing the Lumia and offering it for just $99 on contract. "If they could lower the price we think they could sell more. It might be worth making it a bit of a loss leader to get it out of the door. It's not rocket science," said the representative.

Another complaint coming from European carriers centers on marketing. In the United States, AT&T has put a lot of weight behind the Lumia 900, which had a splashy concert launch in New York City's Times Square, not to mention advertisements. Microsoft's role in the AT&T push for the Lumia 900 is unclear. The network European network operators, on the other hand, claim Microsoft isn't spending nearly enough on marketing its mobile platform.

"We can open our stores to them and train our staff to sell the phones, but that's it," said one of Reuters' sources. "Ultimately, Nokia and Windows are challengers and they either need to come to market with a really disruptive, innovative product or a huge marketing budget to create client demand. So far they have done neither."

Nokia--more so than Microsoft--needs its Lumia smartphones to succeed. The company has forecast losses for the first two quarters of the year. It badly needs to turn things around, and will only do so if these phones start selling.

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