Bloomberg News

Nokia Shows Lumia Windows Phones in Bid for Share From Apple

October 26, 2011

(Adds analyst comment in ninth paragraph.)

Oct. 26 (Bloomberg) -- Nokia Oyj, the Finnish handset maker seeking to revive its lineup of smartphones in the race against Apple Inc., introduced its first handsets powered by Microsoft Corp.’s Windows Phone software.

The Lumia 800, featuring a curved display and available in cyan, black and magenta, will sell for about 420 euros ($585) excluding taxes and subsidies. Nokia also showed a 270-euro Lumia 710 and introduced the Asha family of lower-priced phones at the Nokia World event in London today.

Windows Phone may be Nokia Chief Executive Officer Stephen Elop’s last chance to claw back share in the smartphone market after the company lost more than 63 billion euros in market value since Apple introduced the iPhone in 2007. Elop teamed up with Microsoft to speed time to market, while the 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.

Nokia added 1.5 percent to 4.90 euros as of 1:36 p.m. in Helsinki trading. The stock is down 37 percent this year.

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.

Work To Do

“They still have a lot of work to do,” said Carolina Milanesi, a Gartner Inc. analyst who is based in Egham, England. While the new handsets show that Nokia can “execute on the strategy they outlined back in February,” it is still important to develop the software further to provide a user interface that sets the device apart from other smartphones, she said.

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.

Nokia today also unveiled a suite of applications that integrate its maps database with data on buildings, buses, people and other objects, in a bid to differentiate its new Windows Phone handset from rivals.

The LiveView application attaches names, links and other tags to objects seen through a handset’s camera viewfinder, while the Pulse application lets users share their map location and status with selected contacts. Other applications give public transportation and walking directions for more than 400 cities, and share user-created information on outdoor locations.

Maps

Nokia bought Chicago-based digital mapmaker Navteq in 2008 for $8.1 billion. It continued Navteq’s business of supplying electronic maps for drivers to find addresses, continued enriching the database with 3D views, and added free navigation to handsets. This year, the unit was integrated with other services to form a new Location and Commerce business unit.

Nokia today also presented four new handsets under the Asha brand on its low-end Series 40 platform to lure consumers in emerging markets, and said it has improved the range of applications for these phones, with Rovio Entertainment Oy’s “Angry Birds” game now available for touchscreen models.

The Nokia Asha 200, the company’s first Qwerty dual-SIM model, has a suggested base price of 60 euros and will ship this quarter. The Nokia Asha 300, also priced at 60 euros, is a touch-and-type handset with a traditional phone keypad and is already shipping in Nigeria, Cambodia and Singapore.

Smartphone Boom

The Nokia Asha 303 is a Qwerty touchscreen that will have a base price of 115 euros and ship this week. It’s the successor to the C3, whose most popular variant has sold 20 million units globally in 15 months.

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,” Milanesi said. “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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