Nokia Faces Operator Frustration Over Lumia Marketing

Questions are being raised over the level of marketing support being offered to mobile operators for the Nokia/Microsoft smartphone push.

Europe has long been a Nokia stronghold, but European carriers are finding Nokia’s first Windows Phones difficult to sell, Reuters reported 17 April.

Operator Frustration

Reuters cited “sceptics among operators” who point to some early software issues; hardware that’s nice enough but not envelope-pushing; the phone’s price – despite its being at least half of what’s charged for competing smartphones; and the lack of marketing dollars supporting the phones.

“Operators are also frustrated that cash-rich Microsoft is not spending more on marketing Nokia Windows phones,” states the report.

“We can open our stores to them and train our staff to sell the phones, but that’s it,” a device chief at a European carrier told Reuters. “Ultimately, Nokia and Windows are challengers, and they either need to come to market with a really disruptive, innovative product or a huge marketing budget … [and] so far they have done neither.”

The situation, however, is perhaps still more complicated. Operators pay more for Apple iPhones than all other devices, and so need to get them off shelves and attached to two-year data contracts. Also, carrier employees, whether motivated by employers or their own biases, may also still need some convincing about Nokia Windows Phone smartphones.

In Paris, a Reuters reporter found Nokia Lumia smartphones not prominently displayed, and was first shown an iPhone and then a number of Android-running smartphones, according to the report.

US-based Forrester analyst Sarah Rotman Epps recently also blogged about actively shopping for a Windows Phone, only to be dissuaded at a Verizon store, where the salesperson instead gave a hard sell on a 4G Droid smartphone. At an AT&T store, she found the salesperson to be more enthusiastic about Windows Phones – which AT&T sells three of, to Verizon’s one – though it didn’t yet have the Nokia models. At a T-Mobile store – the only top-four carrier that currently doesn’t sell an iPhone – images of the Nokia Lumia 710, Rotman Epps found, were “plastered everywhere.”

“What it means?” Epps added. “Channel matters. He who pays the operator sells the phone.”

Nokia Suffering

Nokia will announce the results of its 2012 first quarter 19 April, but on 11 April, it offered investors a warning that early Windows Phone sales aren’t yet what they hope they will be.

While Nokia has sold 2 million Lumia smartphones, competitive industry dynamics and gross-margin declines led to “disappointing” first-quarter results, Nokia CEO Stephen Elop said in a statement, illustrating that Nokia’s Devices & Services business “continues to be in the midst of transition.”

“We have established early momentum with Lumia, and we are increasing our investments in Lumia to achieve market success,” Elop added. “Our operator and distributor partners are providing solid support for Windows Phone as a third ecosystem, as evidenced most recently by the launch of the Lumia 900 by AT&T in the United States.”

AT&T began selling the 4G-equipped Lumia 900 for $99 (£62) – IHS iSuppli later revealed that the phone has a $217 (£136) bill of materials – on 8 April, though lower-end Lumia models have been available for several months.

Despite criticism from the European carrier “sceptics,” US analysts say the Lumia 900 represents Microsoft and Nokia just getting started. In addition to marketing dollars, selling more Windows Phone handsets may also require patience and time.

“I see the Lumia 900 as the first step for Nokia,” Gartner Research Vice President Carolina Milanesi has told eWEEK. “This is not the device that will make Nokia, but it will be the device that gets Nokia back into the game. There will be other devices before the end of the year, and Nokia and Microsoft need to build momentum in time for the holiday season so that by then consumers are familiar with Lumia and the offering.”

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