Bloomberg News

Verizon Is Said to Offer Nokia Windows 8 Phone This Year

August 22, 2012

Verizon Wireless plans to sell a new Nokia Oyj phone with Microsoft Corp. (MSFT:US)’s Windows 8 software this year, marking the first time it has released a Windows device since May 2011, a person with knowledge of the matter said.

Microsoft and Nokia are holding a press conference on Sept. 5 in New York to discuss Nokia’s Lumia brand of Windows phones. While Verizon isn’t expected to be part of that event, the carrier intends to roll out a Nokia phone later, said the person, who asked not to be named because the plans are private. That would give Nokia a new beachhead at the top U.S. carrier, building on its longstanding relationship with No. 2 AT&T (T:US) Inc.

Verizon is looking to lessen its dependence on Apple Inc.’s iPhone and devices running Google Inc. (GOOG:US)’s Android software, which dominate the smartphone market. For Microsoft and Nokia, meanwhile, the move would bolster efforts to regain market share. The Nokia phone would also provide fresh ammunition against the latest iPhone, which people familiar with the matter expect to be introduced on Sept. 12.

“Nokia has had a difficult time breaking in to the U.S. market,” said Charlie Wolf, a Needham & Co. analyst in New York who has a neutral rating on the shares. “Landing on the Verizon network is a positive development. It doesn’t solve the problem, but it is a big step in the right direction.”

Brenda Raney, a spokeswoman for Basking Ridge, New Jersey- based Verizon Wireless (VZ:US), declined to comment, as did Erica Fields at Redmond, Washington-based Microsoft. Christopher Hollis, a U.S. spokesman for Espoo, Finland-based Nokia, also declined to comment.

Shares Gain

Nokia shares climbed 1.9 percent to 2.32 euros today in Finland. Microsoft fell 0.8 percent to $30.54 in New York trading, while Verizon Communications Inc., the co-owner of Verizon Wireless, declined less than 1 percent to $42.62.

Verizon released its only current Windows Phone, the Trophy from HTC Corp., more than a year ago, and it hasn’t been a top seller. Microsoft and Verizon also stumbled with the 2010 release of the Kin phone, which was scrapped after less than two months in Verizon stores. While that experience strained relations, the companies have made strides in improving the partnership since then, the person said.

For now, Nokia is more closely tied with AT&T, which introduced the Lumia 900 Windows Phone on April 8. AT&T Chief Executive Officer Randall Stephenson has promoted the device and uses it personally.

Previous Generation

Nokia’s first Windows Phone in the U.S. was the Lumia 710, which debuted at T-Mobile USA in January. Both the AT&T and T- Mobile Lumia devices rely on Microsoft’s older-generation Windows Phone 7 software.

Microsoft is releasing the Windows Phone 8 operating system as a companion piece to its new software for personal computers and tablets. The phone software will be able to run on devices with speedier, dual-core chips and high-definition screens, Microsoft has said.

In July, a Nokia vice president told the tech news website Neowin that Nokia’s Lumia Windows phones would soon be available on Verizon.

Microsoft had a 3.5 percent share of the mobile operating system market in the second quarter, with shipments of 5.4 million, according to research firm IDC. That’s dwarfed by Android’s more than 68 percent and Apple’s 16.9 percent.

Nokia (NOK1V) sold 4 million Lumia phones worldwide in the second quarter. The company needs to sell five times that many per quarter if it wants to offset the decline in its previous smartphone platform, Symbian, said Needham’s Wolf.

“If the Windows Phone 8 delivers, I think Nokia has a chance,” he said.

To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net; Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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