LONDON--Nokia's new Windows Phone-based Lumia smartphones will not hit the U.S. market for months, but when they do, will the devices have what it takes to entice U.S. consumers?
That's the question everyone is asking this week as Nokia introduces its its first Windows Phone smartphones: the flagship Lumia 800 and the lower-cost Lumia 710. These phones are the first to be announced since Nokia's new CEO, Stephen Elop, took over and threw out the company's old Symbian operating system and partnered with Microsoft.
Nokia, which has struggled in the smartphone market since Apple's iPhone was introduced in 2007, has steadily lost market share over the years. It has gone from 40 percent of the total market in 2009 to less than 20 percent in the most recent quarter.
There's no question that Nokia had to do something, but critics have been skeptical that its partnership with Microsoft will really turn the company around, especially in the U.S. market, where Nokia has almost zero market share.
But Nokia's executives are optimistic. They say they have the right devices and the right software and will be spending more than ever on marketing to get the word out to consumers, including those in the U.S.
"It's a new dawn for Nokia," Elop said at the Nokia World conference here. "And we believe the world is ready for something new, something more integrated and more beautiful. And we think we can break through."
There's no question that Nokia's and Microsoft's rivals have a significant lead in the U.S. smartphone market. According to the latest market share figures from Nielsen, 40 percent of U.S. smartphone subscribers own a Google Android phone. And Apple has about 28 percent market share. Windows Phone, which was introduced a year ago with other hardware partners, has only about 1 percent market share.
So why are Nokia's executives so hopeful that the company can make inroads in the U.S.? The main reason is that the market is still relatively young. That same Nielsen survey indicates that only about 40 percent of wireless subscribers own a smartphone today. That means that 60 percent of U.S. wireless customers are still sporting a basic feature phone.
And this is the market that Nokia and Microsoft can target. These are later adopters of technology, who are looking for a cleaner and simpler device. They want all the great features of a smartphone, but they don't want the hassle of buggy and unstable software nor are they likely technically savvy enough to get into the guts of the phone to customize it to their liking.
"Simplicity is key to consumers," Nokia's head of smart devices, Kevin Shields, said in an interview. "There are a lot of people who want a smartphone, but think they're simply too complicated and hard to use."
Apps ready to go
Indeed, Microsoft has put a lot of effort into making its Windows Phone software easy to use. One of the key things it has done is that it's integrated many commonly used apps like Facebook, Twitter, and Foursquare, directly into the device. This means that when new customers buy a Windows Phone, these apps are pre-installed and ready to use straight out of the box. Not only are the apps already present, but they are also integrated into the phone and things such as contact lists and updates can be easily shared across different apps.
Nokia is taking this concept a step further. It's also struck deals with partners to offer exclusive integrated apps onto the new Lumia devices, such as its Navteq mapping app, a version of its Comes With Music app called Mix Radio, and an ESPN app that offers access all kinds of sports content that might require several different apps on other devices.
While Apple and Google Android also offer some integrated applications into their smartphones, most apps must be individually found in their respective app stores and downloaded on the device. Google's new Ice Cream Sandwich software is expected to bake in more app integration so that things like contacts can be shared between apps, much like what is possible on Windows Phone.
There's no question that Nokia's device will be competing with Apple. Every smartphone on the market competes with the iPhone. And there's also no question that neither Nokia nor Microsoft exude the "coolness" factor associated with Apple. But Nokia's head of North American products, Chris Weber, said that the Microsoft brand is strong among smartphone late adopters. He said that unlike early adopters in the smartphone market who remember Windows Mobile, many in the mass market associate Microsoft with desktop and browser technology that they're already familiar with.
More than the iPhone, Nokia's Lumia products will likely compete against Google Android, which today the only truly viable alternative to the iPhone.
But Android is a platform that is far from simple. Different hardware vendors have slapped on their own software to differentiate their Android devices. And Google has released several versions of the software, which is supported on some devices and not on others. At times this has created software is both buggy and unstable. While geeks, who know how to modify their devices to make them perform optimally, may not mind this, average consumers have been frustrated. My colleague Stephen Shankland recently wrote about Android's identity crisis.
"I fear Google is still too far on the geek side of the spectrum, catering to those who want to enjoy technology, not those who want to enjoy life," Shankland writes in his piece.
Nokia and Microsoft are clearly going after the consumer who enjoys life more than technology.
That said, Windows Phone products have been in the U.S. market for awhile. And the platform has still not managed to gain much market share. Part of the reason for this is that the latest version of Windows Phone, called Mango, was only released a few months ago. And this software upgrade added several important enhancements.
The other issue is that Microsoft's other hardware partners, HTC and Samsung, have also been developing products for Android. And because of the success of Android, they've paid much more attention to development and marketing for these products. The wireless carriers have also pushed Android more than Windows Phone devices.
As a result Windows Phone devices have not been as advanced as Google Android devices. This means that there are no Windows Phone devices with dual core processors, nor are there any that support 4G LTE. This may not be a big deal for other markets, such as Europe where LTE is not yet commercially deployed. But in the U.S. where Verizon Wireless is well on its way to covering the nation with 4G service, these specs matter. And that's likely why Nokia decided not to launch the Lumia in the U.S. first. The Lumia 800 uses the same hardware as Nokia's N9, a device that is based on Nokia's homegrown Meego software and was developed for the International market.
The U.S. version of the Lumia product line may share some similarities with the N9 and the Lumia 800, but inside Elop has promised support for CDMA and 4G LTE.
And unlike Microsoft's other hardware partners, Nokia plans to spend big on its marketing efforts for these new Windows Phone devices. Not only will Nokia target mass-market consumers who may be late adopters of smartphone technology, but it will also target tech savvy influencers, who the company hopes will recommend the devices to others.
Elop said that Nokia plans to seed the market with tens of thousands of devices, which will be given to sales associates at U.S. carriers where the devices will be sold. He said this is a critical component of the company's marketing strategy.
"The most important thing for us is to break through to these key influencers and get the devices into their hands," he said. "Great marketing will get us some of the way there, but we need them to touch it and use it."