Nokia reboots Windows Phone push in the US but success will still be hard-won

The company is working closer with mobile operators that it has in the past

Nokia's is rebooting its U.S. Windows Phone push with the arrival of the low-cost Lumia 521 on T-Mobile and Lumia 928 for Verizon Wireless, but increasing sales to meaningful volumes in the very competitive U.S. market will not be easy.

Windows Phone has so far seen little success -- during the first quarter its worldwide smartphone market share was 3 percent. But the situation is even worse in the U.S. where the OS only had a 2 percent share, according to Canalys. Its failure was also underlined when Nokia last month said it had only sold 400,000 phones in the U.S. during the first quarter.

But that doesn't mean Nokia or Microsoft are giving up. If there is one market where Microsoft will want to be successful it's the U.S., because companies always want to be successful in their home market, according to Ben Wood, director of research at CCS Insight.

"I would argue that we are seeing a fresh approach from Microsoft in the U.S. market that at last will see it getting behind Nokia and Windows Phone in a much more meaningful manner," Wood said.

The U.S. operators are also backing Nokia's reboot. Both T-Mobile and Verizon Wireless have signed exclusive deals to start selling the Lumia 521 and the Lumia 928, respectively, in the next two weeks, and AT&T is already onboard.

"In the past Nokia took a very arrogant approach to the U.S. market believing that it could use the same business model that had worked for it in other parts of the world, but that doesn't just cut it with U.S. carriers. If Verizon wants a round phone, you give Verizon a round phone," Wood said.

On Thursday, T-Mobile announced that it will start selling the Lumia 521 on May 22 for US$29.99, plus 24 monthly payments of $5. The device, which has already seen some success on the Home Shopping Network, will also be available from Walmart for $129 on May 11 and the Microsoft Store for $149.

The Lumia 521 is an alternate version of the Lumia 520, which was originally announced at Mobile World Congress in February with a €139 ($180) price tag before taxes and subsidies. It is powered by a 1GHz dual-core processor and has a 4-inch screen and a 5-megapixel camera.

"To date, I think it is the most significant product Nokia has announced, because it takes Windows Phone to a new price point," said Pete Cunningham, principal analyst at Canalys.

Wood agreed: "You get a big bang for your buck. It is a device that has got some of the competitors scratching their heads saying how is Nokia making it for that price," he said.

Verizon Wireless, on the other hand, will start selling the Lumia 928 on May 16 for US$99 after a $50 mail-in rebate, with a new two-year customer agreement, Nokia said on Friday. The 928 is an improved version of the Lumia 920. The phone is slightly lighter than its predecessor and has a Xenon flash.

But even if the arrival of the Lumia 521 and the Lumia 928 is good news for Nokia and will result in improved sales, large-scale success will not come easy, according to both Cunningham and Wood.

While Nokia's brand will still help it sell more Lumia smartphones in other parts of the world, that simply isn't the case in the U.S., according to Cunningham. Also, the U.S. smartphone market is currently utterly dominated by Apple's iPhones, and Nokia is going to face intense competition from Samsung Electronics, HTC, LG Electronics and everyone else for rest of the market, Wood said.

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Tags telecommunicationconsumer electronicsCarrierssmartphonesNokiaMobile OSesmobileT-Mobile USAWindows PhoneVerizon Wireless

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Mikael Ricknäs

IDG News Service
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