Bloomberg News

Nokia to Sell $99.99 Windows Phone Via AT&T to Take On Apple

March 26, 2012

AT&T Inc. (T) plans to start selling a Nokia Oyj smartphone with Microsoft Corp. (MSFT) software for half of what it charges for the iPhone, as the device’s makers seek to break Apple Inc. (AAPL) and Google Inc. (GOOG)’s dominance of the U.S. market.

The Lumia 900, which runs on AT&T’s network using faster, so-called long-term-evolution technology, will start selling for $99.99 on April 8, the second-largest U.S. wireless carrier said today in a statement. The latest iPhone and newest handsets running Google’s Android software typically start at $199.

Nokia is counting on Microsoft’s Windows Phone software to reignite sales in the U.S., where the iPhone, Android makers such as Samsung Electronics Co. (005930) and Research In Motion Ltd. (RIM)’s BlackBerry control 92 percent of the market. Microsoft is trying to increase its share of the mobile software market to expand beyond the slower-growing personal-computer market.

“The pricing is aggressive,” said Avi Greengart, an analyst at research firm Current Analysis in Teaneck, New Jersey. “They are hoping to use price to get people to buy a product with an operating system they aren’t familiar with.”

To get the $99.99 price, customers need to sign up to a two-year contract with AT&T. The Dallas-based carrier will also sell the phone without a contract for $449.99, said Steven Schwadron, an AT&T spokesman.

Those price points suggest that AT&T is subsidizing each Lumia by about $350. That compares with a $450 subsidy for the the cheapest version iPhone 4S, which sells for $199 with a contract and $649 without one.

Must Win

Nokia Chief Executive Officer Stephen Elop, a former Microsoft executive, started rebuilding the Espoo, Finland-based company’s smartphone strategy around the Windows Phone operating system last year. Nokia had previously focused on its own MeeGo and Symbian operating systems.

Nokia and Microsoft have said they are willing to spend money to fuel sales. Microsoft said last year it would pay Nokia $1 billion to develop and promote Windows phones. Elop said in October that marketing spending on the Lumia series would be triple the money spent on previous product sales promotions.

Microsoft, based in Redmond, Washington, rose 1.8 percent to $32.59 at the close in New York. Nokia advanced 0.4 percent at 3.99 euros in Helsinki. AT&T added 0.9 percent to $31.79.

The Lumia 900 has a 4.3-inch (11-centimeter) screen, larger than that of the iPhone, and an 8-megapixel camera. Customers can order it online starting March 30, AT&T said.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net


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