The Lumia 900, Nokia’s higher-end Lumia smartphone running on the Mango version of Microsoft’s Windows Phone operating system, will be out in the U.S. on AT&T’s (NYSE:T) network and will sell for just $99 when purchased with a two-year contract. Will it win the market away from Apple’s (NASDAQ:AAPL) iPhone and popular Google (NASDAQ:GOOG) Android phones?
Both companies are pouring money into marketing the device to ensure its success. According to Nokia financials, Microsoft paid the Finnish phone maker $250 million to use Windows in its smartphones, and that’s just the first of multiple payments. Back in January, ahead of the CES 2012 conference, it came out that Microsoft, Nokia, and AT&T would spend a collective $200 million marketing the Windows Phone.
Nokia and Microsoft also announced last week that they’re pouring $24 million into a new app development program for Windows Phones. Nokia also paid AT&T an additional $25 million to make the Lumia 900 the exclusive phone given to employees of the telecom to increase their familiarity with the platform and, the companies hope, earn the device some evangelists who will sell it to AT&T customers.
A long way to go to catch up
That’s a lot of marketing money, but it’s a necessary expenditure considering the U.S. smartphone competitive landscape. While sales tracking groups like Gartner and NPD haven’t released data for the first quarter just yet, estimates on the state of 2012’s U.S. smartphone market are coming out. Canaccord Genuity’s Mike Walkley said in a note to clients on Monday that Apple and Samsung (PINK:SSNLF) continue to dominate the market.
Now that the rush following the iPhone 4S release has faded, Android phones appear to be back on top of Apple at wireless carrier Verizon (NYSE:VZ). Walkley estimates that Samsung, for example, sold about 41 million phones in the first quarter, with sales especially strong for the new Samsung Galaxy Note and Galaxy S II on AT&T’s network. Apple is expected to trail with 32.6 million phones sold over the quarter.
Meanwhile Walkley believes that Nokia sold just 12.5 million phones during the first quarter, which demonstrates just how weak the company’s brand is among consumers. The Lumia 900 is intended to be the rebirth of that brand in a device as sexy as iPhone, cheap as Samsung’s Androids, and distinguished by its Windows platform. But Nokia and Microsoft’s competitors have serious advantages.
A window of opportunity
There are multiple popular Apple and Samsung models spread across not just AT&T, but also Verizon, Sprint (NYSE:S), and T-Mobile USA. Apple realized in 2011 that the smartphone market had grown to a point that its business could no longer grow if it was exclusive only to AT&T.
In December, rumors suggested that Nokia and Microsoft would release the lower-end Lumia 710 on Verizon’s network in April as well, but that’s a 3G device that likely won’t attract early adopters hungry for the best technology, nor would it lure budget shoppers away from the free-with-a-contract iPhone 4.
There is at least a small window of opportunity for the Lumia 900 to make its mark during the second quarter. With no major iPhone or Samsung phone release looming, it will have the stage to itself.
The iPhone 5 is coming, though, and Apple has traditionally released new iPhone models around the end of the second quarter. A new model of Samsung’s flagship Galaxy S smartphone is expected during the same period.
Nokia has a chance, but the Lumia 900’s exclusivity to AT&T could ultimately damage its chances.