Nokia Extends Lumia Partnership With AT&T For Windows Phone 8

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Lifting uncertainty around Nokia’s (NYSE:NOK) U.S. plans this holiday season, AT&T announced that it will launch the Finnish company’s first Windows Phone 8 smartphones, the Lumia 920 and the Lumia 820, next month. [1] No details about the pricing were revealed, however.

This announcement finally sheds some light on Nokia’s Lumia WP8 launch in the U.S., which has so far remained shrouded in mystery after the company declined to give out pricing or availability details while introducing the smartphones last month. Given AT&T’s (NYSE:T) historical partnership with Nokia, we believe that the carrier will most likely get exclusive access to the smartphones for a few months before Nokia looks to add other carriers such as Verizon (NYSE:VZ) by possibly 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 figure out the U.S. market, where it has historically lagged rivals. With its past iPhone experience, AT&T could prove to be an able ally in this quest. Product-wise, the Lumia looks like a strong competitor to other popular smartphones, and Nokia will be hoping that AT&T’s marketing prowess, together with Microsoft’s Windows push this holiday season, will help put more of these in people’s hands. Going ahead,

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Nokia banking on Microsoft and carrier partnerships

The timing of the Lumia launch on AT&T will put Nokia in direct competition with a host of popular smartphones such as the iPhone 5 and the Galaxy Note II. However, Nokia’s strategy will be 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. With Microsoft looking to carve a niche for itself in the fast-growing mobile market, the software giant is expected to put a lot of marketing muscle behind the combined Windows 8/Windows Phone 8 story and leverage the huge PC user base it has 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 support from carriers who are looking to increase competition in the smartphone market to lessen the impact of subsidies on their margins. 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. [2]

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 for Nokia, 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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Notes:
  1. AT&T to Add Nokia Lumia 920 and Nokia Lumia 820 to Fall Lineup, AT&T Press Release, October 4th, 2012 []
  2. Apple’s iPhone 4S is no longer the top-selling smartphone in the U.S., BGR.com, September 4th, 2012 []
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