Nokia’s (NYSE:NOK) new Lumia line of Windows Phone 8 smartphones finally has a big enough presence in the U.S. market to make it count. AT&T (NYSE:T) recently launched the Lumia 820 and its exclusive Lumia 920 on November 9th, two days after it started taking pre-orders. Verizon (NYSE:VZ) has also started taking pre-orders for its own exclusive, the Lumia 822, and plans on shipping it to customers starting November 13th. The Lumia 810, a T-Mobile exclusive, is also likely to be launched soon now that the holiday season is closing in. While Nokia had AT&T and T-Mobile for its debut Lumia launch in the U.S. earlier this year, the fact that Verizon is also on board now and Microsoft (NASDAQ:MSFT) recently launched the Windows 8 OS for PC and tablets gives Nokia its best chance to create a niche for itself in the highly competitive smartphone market.
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. AT&T, which is backing the Lumia to the hilt and is the only carrier to have the high-end Lumia 9xx, could use its past iPhone experience to prove an able ally in this quest to create a third mobile ecosystem. However, considering that the Windows Phone has little brand awareness currently, Nokia will need all the carrier support it can garner. Product-wise, the Lumia looks a strong competitor to other popular smartphones and giving carriers exclusive access to different custom-built Lumias could help Nokia win more carrier backing, which, together with Microsoft’s Windows push in the coming months, will be instrumental in putting more Lumias 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 recent release of Windows 8 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 will 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 to Microsoft’s push, Nokia will be counting on support from carriers who are looking to increase competition in the smartphone market and lessen the impact of subsidies on their margins. Offering carriers exclusive access to different custom-built Lumias is how Nokia is looking to get more marketing dollars behind the Lumia brand. With different Lumia models, carriers will look to differentiate themselves from competitors better and try to make the most out of the ‘exclusivity’ they have over their respective Lumias.
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. 
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 sell about 11 million units in all, with sales doubling in the first three quarters since 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 close to 700k apps respectively while there are only about 120K 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 has helped 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, from both developers and users alike, thereby driving the sales of Windows Phones in general and the Lumia in particular.Notes:
- Apple’s iPhone 4S is no longer the top-selling smartphone in the U.S., BGR.com, September 4th, 2012 [↩]