Bloomberg News

Nokia Shows ’Lumia’ Windows Phone in Bid to Win Share From Apple

October 26, 2011

Oct. 25 (Bloomberg) -- Nokia Oyj, the Finnish handset maker seeking to revive its smartphone portfolio in the race against Apple Inc., introduced its first handset powered by Microsoft Corp.’s Windows Phone software.

The Lumia 800 is available in cyan, black and magenta, Chief Executive Officer Stephen Elop said at the Nokia World event in London today. Espoo, Finland-based Nokia also introduced the Asha family of lower-priced handsets.

Windows Phone may be Nokia’s last chance to claw back share in the smartphone market after the company lost more than 63 billion euros ($88 billion) in market value since Apple introduced the iPhone in 2007. Elop teamed up with Microsoft to speed time to market, while U.S. software maker needed a major handset player to give credibility to its latest push into mobile software.

“For Microsoft and Nokia it’s now or never so they have to put all they’ve got into trying to create a buzz around the new devices,” said Michael Schroeder, a Helsinki-based analyst at FIM Bank. “It will be very difficult to come back if the Windows Phone strategy fails.”

Elop, a former Microsoft executive, said he went outside Nokia in order to leapfrog the Espoo, Finland-based company’s 10-year-old homegrown Symbian line, which lagged behind on features and hardware. Apple and Google Inc.’s Android have helped slash Nokia’s smartphone market share to 20.9 percent in the second quarter from 50.8 percent when the iPhone came out in 2007, according to Gartner Inc. estimates.

Hopscotch Tiles

“We believe Lumia is the first real Windows Phone,” Elop told the conference in London.

The Windows homescreen, soon to become familiar to millions through Nokia and Microsoft ad campaigns, consists of a hopscotch layout of tiles representing the phone’s key functions and information clusters. These can show updates such as new messages on the mail tile or next appointment on the calendar. The latest version, known as Mango, includes photo tagging and voice dictation.

Nokia’s first challenge will be to stand out from Apple and Android as they vie for customers with the iPhone 4S and Samsung Electronics Co.’s Galaxy Nexus.

Apple’s iPhone 4S, which went on sale this month, set a record with debut-weekend sales of more than 4 million units. Apple had the highest brand loyalty among mobile phone-vendors in the U.S. and Europe, according to a study by Strategy Analytics.

Smartphone Boom

The smartphone market may be big enough to help Nokia win over new customers. Smartphone sales by volume will still grow by 40 percent next year to 645 million units, Gartner says. Windows Phone may become the No. 2 smartphone operating system in 2015, with a market share of 21 percent, according to the researcher.

Android would still lead and Apple’s iOS system would be third, according to Gartner. Microsoft systems are expected to account for 2.8 percent of smartphones sold this year, and 9.9 percent next year, the researcher said.

“The people Nokia wants are the people they need to win back, not the people who stayed with them,” said Carolina Milanesi, a Gartner Inc. analyst who is based in Egham, England. “Their biggest challenge will be to make Nokia sexy again.”

--With assistance from Kati Pohjanpalo in Helsinki. Editors: Kenneth Wong, Simon Thiel

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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