Posted by Sarah Rotman Epps on April 5, 2012
The Nokia Lumia 900—the hero product from Microsoft’s premier Windows Phone partner — hits AT&T stores on April 8. In advance of the launch, the reviews have come rolling in. Mossberg focuses on the flaws, and while nothing he’s written is inaccurate, I can say as a consumer that I find that the joys of the product outweigh its shortcomings. I will say it loud and say it proud: I love my Windows Phone. I liked the HTC Trophy (awful camera notwithstanding); I like the Samsung Focus Flash (a bargain at $0.99, with contract); and Nokia brings the platform to a new level with more sophisticated hardware.
Now, with my consumer hat off and my analyst hat on, what I’ve been thinking about lately is the product strategy and product marketing behind the Lumia launch. Nokia and Microsoft have done many things right: They’ve built a great product. They’ve picked the right price — launching a premium product at an approachable $99 sends a message of both humility (we know we’re coming from behind) and savvy (this product is cheap enough to entice unbetrothed consumers to try something new). Their pricing strategy for T-Mobile’s Lumia 710, at $49, was equally smart and has paid off in reportedly brisk sales. Overall, though, Lumia sales across the product line pale in comparison to, say, the iPhone 4S, whose first day of preorder sales equaled analyst estimates of Lumia handsets in their first two months on the market. Launching Lumia at a major US carrier, as well as in China, the world’s largest smartphone market, gives it a chance to gain momentum but also raises the stakes if it fails.
The smartphone market is ripe for disruption — Palm is dead, Symbian is sunsetting, RIM is faltering, and every player in the ecosystem (other than Google and Apple) wants a third player to wedge between Google and Apple. Windows Phone, led by Nokia, can — and should — be the market disruptor, but doing so requires overcoming two challenges:
- Paying off the channel. I walked into a Verizon store two weeks ago to replace my broken HTC Trophy, and the salesperson did everything he could to dissuade me from buying another Windows Phone and suggested I buy a 4G Droid instead. At AT&T (which had three models of Windows Phones, compared with Verizon’s one, but did not yet have Nokia models), the salesperson was more accommodating and enthusiastic about WP. If you walk into a T-Mobile store, you can’t ignore the images of the Lumia 710 plastered everywhere. What it means: Channel matters. He who pays the operator sells the phone. Judging from how Nokia has approached promotion at T-Mobile, Nokia’s Windows Phones will sell much better than HTC’s or Samsung’s have.
- Targeting the right customer. Nokia’s product marketing is targeted at the vast number of consumers who don’t yet have smartphones. While I see the wisdom of picking a target market whose numbers are large, I also have concerns about this strategy. Not only must Nokia get consumers who don’t yet have data plans to pay for one (a huge ask in a still-soft economy), it also must sell them on the virtues of an operating system that’s less familiar than Apple’s or Google’s. A more disruptive — and in my view, more achievable — goal is for Nokia and Microsoft to convert every BlackBerry user to Windows Phone within two years. BlackBerry users already pay for data, and they’ve consciously or unconsciously opted not to buy into Apple or Google’s ecosystem thus far. And RIM itself acknowledges that it won’t have its next-gen products ready anytime soon. Cash for Curves, I say!
Taking over RIM’s dwindling but still significant smartphone market share — 8.2% globally in Q4 2011, according to IDC — would be a modest but achievable gain for Windows Phone. That takeover, combined with converting some portion of Symbian users to WP — especially in China and India, where Symbian is still strong — positions Nokia and Microsoft as a viable third platform and a foil for Google-Apple hegemony. In the dog-eat-dog smartphone market, viability in itself can be disruptive.