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April 18, 2012

Nokia Windows Phone Lagging Behind Apple, Android

AT&T has been selling the Nokia Lumia 900 for two weeks in the United States, and the telecom company says the demand for the phone is strong. European operators, however, are far less optimistic about Lumia’s ability to catch up with iPhones and Android phones in performance and sales revenue.

“No one comes into the store and asks for a Windows phone,” an executive of mobile devices at a European operator told Reuters. The operator has sold Lumia 800 and 710 phones since December 2011. “Nokia have given themselves a double challenge – to restore their credibility in terms of making hardware smartphones and succeed with the Microsoft Windows operating system, which lags in the market.”

So far, Nokia’s gamble on Windows appears tenuous at best. Early smartphones from the company were unsuccessful, hurting perception of Nokia at the high end of the market. The once dominant manufacturer now only commands a one-percent share of the U.S. smartphone market.

Nokia has suffered in the financial markets as well. Both Moody and Standard & Poor have significantly cut the company’s credit rating, Moody grading the company’s debt-worthiness just one grade above junk. As a result, Nokia shares have hit a 15-year low.

“Ultimately, Nokia and Windows are challengers and they either need to come to market with a really disruptive, innovative product or a huge marketing budget to create client demand,” said a device chief for another European operator. “So far they have done neither.”

Some operators suggest that Nokia start promoting their phones by offering the phones as loss leaders. Operators have also complained Nokia isn’t putting enough marketing dollars behind the product, particularly since they partner with cash-rich Microsoft.

Although the Lumia 900 took “Best of CES” at this year’s show, many tech bloggers have complained about poor screen performance and lagging battery life. A Yankee Group survey, however, did find that more customers were interested in purchasing Windows phones than were interested in purchasing BlackBerries.

“The highly marketed April launch of the Lumia 900 on AT&T’s network could represent the beginning of a new, more successful era for Microsoft and Nokia in the U.S. smartphone market,” said Katie Lewis, an analyst for Yankee Group. “But with European operators speaking out against the device after months of trying to sell it in their own markets, the Lumia 900’s outlook is looking grimmer as consumers catch wind of these negative reviews and comparisons with iOS- and Android-based smartphones.”

Edited by Braden Becker

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