Nokia Lures Carriers With Different Lumia Models; T-Mobile Joins AT&T

NOK: Nokia logo

Lifting uncertainty around Nokia’s (NYSE:NOK) U.S. plans for this holiday season, a second U.S. wireless carrier, T-Mobile, announced that it has bagged exclusive access to a Nokia Windows Phone 8 smartphone. The Lumia 810, which will be made available in the coming weeks, has been custom-built for T-Mobile and is a close relative of the Lumia 820 released earlier. This came just days after the Lumia 820 and the higher-end 920 were introduced exclusively for AT&T, and clears concerns about the Lumia WP8 being available on just a single carrier.

The announcement sheds more light on Nokia’s Lumia WP8 launch in the U.S. which, until last week, was shrouded in mystery after the company declined to give out pricing or availability details while introducing the new Lumias last month. Given AT&T’s (NYSE:T) and T-Mobile’s historical support of the Lumia, it now looks like they have been given exclusive access to the Lumias for a few months before Nokia looks to add other carriers such as Verizon (NYSE:VZ) and Sprint (NYSE:S) by potentially offering them exclusive access to other custom-built Lumias.

The U.S. smartphone market is extremely crucial for handset makers since success here generally translates into positive consumer sentiment in other markets. It is therefore important that Nokia figures out the U.S. market, where it has historically lagged rivals. To start off, with its past iPhone experience, AT&T could prove to be an able ally in this quest. However, considering that the Windows Phone has little brand awareness currently, Nokia will need all the carrier support it can garner, going forward. Product-wise, the Lumia looks a strong competitor to other popular smartphones and Nokia will hope that the carriers’ backing, together with Microsoft’s Windows push in the coming months, will help put more of these in people’s hands.

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Nokia banking on Microsoft and carrier partnerships

The timing of the Lumia launch will however put Nokia in direct competition with a host of popular smartphones such as the iPhone 5 and the Galaxy Note II. To counter that, Nokia’s strategy is to align the Lumia launch with the release of Windows 8 in late-October so as to benefit from Microsoft’s Windows push during the holiday season. Looking to carve a niche for itself in the fast-growing mobile market, Microsoft is expected to put its marketing muscle behind the combined Windows 8/Windows Phone 8 story and leverage its huge PC user base to drive sales during the holiday season and beyond. Hardware partners such as HP, Asus, Acer and Dell are also expected to make the best use of the holiday season to boost PC demand with their respective launches of Windows 8-powered ultrabooks, tablets and PCs. In its own words, Microsoft is preparing to make the Windows 8 launch its “biggest product and services launch” ever.

In addition, Nokia will be counting on the support from carriers who are looking to increase competition in the smartphone market to lessen the impact of subsidies on their margins. Offering carriers exclusive access to different custom-built Lumias will undoubtedly help Nokia garner more marketing support from them. With different Lumia models, carriers can look to differentiate themselves from competitors and compete for different market segments.

AT&T, which had exclusive access to the Lumia 900 earlier this year, put a lot of marketing weight behind it, affording the phone a “hero” status at its stores and making it the exclusive free phone for all AT&T employees to generate awareness. The Lumia therefore not only benefited from a greater marketing push of its founding partners but also one of the country’s biggest national carriers. This ensured that the Lumia 900 was among the top three best-selling handsets at AT&T until July, a period of four months since launch. [1]

WP8 has essential ingredients for success

Overall, the Lumia has seen decent traction build up with carrier support in the U.S. and China helping Nokia double its Lumia sales every quarter since their launch late last year. However, where carrier partnerships have not been hard to come by, getting people to warm up to the Windows ecosystem has proved increasingly tough considering how well-entrenched Android and iOS have become as mobile ecosystems. The iTunes store and Google Play boast more than 650k and 600k apps, respectively, while there are only 100K available in the Windows Phone Marketplace.

This is where WP8 offers both Nokia and Microsoft their best chance to find a place in the growing mobile market. While building Windows 8 and WP8, Microsoft ensured that both share the same kernel and therefore inherit the same rich feature set that has made Windows a household name in the PC industry. This will help integrate the two platforms closely, thereby making apps developed for either platform easier to port. Having a huge user base for its Windows PC platform will therefore help Microsoft generate significant support for the new integrated Windows8/WP8 user experience, driving the sales of Windows Phones in general and the Lumia in particular.

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  1. Apple’s iPhone 4S is no longer the top-selling smartphone in the U.S.,, September 4th, 2012 []