Nokia is considering signing operator exclusives when it unveils its first Windows Phone 8 smartphone this fall. According to reports, some factions within the firm believe it should emulate the original iPhone strategy of partnering with a select few cellcos, in order to command strong sales commitments and marketing profile from those partners.
Apple itself is also said to be considering a reversion to its policy of exclusives for the ‘iPhone 5’, in order to regain its handset’s old cachet, while keeping older or lower specified models for the mass market. In Nokia’s case, though, it would have to persuade high impact operators that a WP8 launch would be worth the kind of promotional commitments that exclusives usually involve.
According to The Financial Times, Nokia’s traditional policy of chasing maximum volume and reach is under fire because Android vendors, especially Samsung, are doing a better job in that respect. With some big name operators like AT&T voicing support for Windows Phone as a ‘third way’ to balance the power of Apple and Google, the time may be right for a change of route.
The reports indicate that, although a tier one cellco in the elusive US market might be the biggest prize, Nokia would kick off with one or two of its traditional European allies, and the FT says it is already in negotiations with some possible partners, citing France Telecom and Deutsche Telekom (which have a joint procurement scheme).
The deals might go even further than Apple’s by giving the carriers a financial stake in the success of the new products, offering incentives such as revenues shares, and they would incorporate elements of the relationship Nokia has succeeded in building with AT&T, such as dedicated support and customized features.
The report suggested that Nokia’s plan strategy ‘reflects recent success in the US, where it struck a similar sales agreement solely with AT&T’. However, Nokia did not deliberately confine the Lumia 900 to a single cellco and Verizon Wireless is expected to offer it soon, while T-Mobile has other Lumia offerings. And the AT&T pact has hardly delivered stellar results yet ‘ Nokia sold 600,000 devices in North America during the second quarter and has halved the price of the 900.
Nokia refused to comment, saying its discussions with operators were always confidential. However, a no-holds barred push from a big name carrier would be a huge boost as well as easing pressure on Nokia’s own promotional budgets. And the Finnish vendor is not as unaccustomed to cellco collaboration as many think ‘ it has worked hard to woo US operators, even before the switch to WP7, by setting up design centers near their offices to work on customized offerings; and it has some long-standing and intense alliances with emerging marketing operators that embrace services as well as devices.
While Nokia has huge problems, it is fashionable to overlook the strengths it does still have. Early sales of Nokia’s Lumia range, for instance, have been perceived to be solid but unexciting, and clearly dwarfed by shipments of iPhones and Galaxies. But it is easy to forget that even the starriest handsets often have gradual build-ups, as we are reminded by a new study from analysts at Strategy Analytics.
The firm estimates that Nokia has shipped 6.9m Lumia smartphones worldwide during the family’s first three quarters on sale, from Q411 to Q212. That companies to 3.7m iPhones in its first three quarters in 2007, and just 1.3m for the Samsung Galaxy’s first nine months in 2009. Indeed, the decidedly underwhelming original Galaxy is a textbook example of how a company can come back from a lacklustre launch.
Neil Mawston, executive director at Strategy Analytics, commented in a statement: “Based on historical shipment benchmarks, Nokia’s new Lumia portfolio is performing reasonably well. Some of the pessimism surrounding Nokia and Microsoft’s emerging partnership so far may be misplaced.’
Of course, back in 2007 the total smartphone market was far smaller than it is now, and arguably the iPhone ‘ with a couple of other models like the LG Prada ‘ were ushering in a new breed of handset, and so that 3.7m figure is far more impressive than it appears in the light of the huge smartphone volumes of 2012. And the Lumia has a far tougher competitive landscape than those early superphones, if it is to gain significant market share. However, such studies are a useful antidote to the sometimes unquestioning assumption that no challenger can hope to worry Apple or Samsung any more.