What the Lumia 900 means for Nokia and Microsoft, and how they're bringing it to market

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Posted 06 April 2012 14:59pm by Sam Dwyer with 3 comments

Nokia and Microsoft’s sharp-looking new phone, the Lumia 900, is coming out today, and while there are no visible signs of panic, both companies desperately need a winner.

Nokia has been struggling for years now to compete in the rapidly changing mobile market, and Microsoft’s Windows Phone 7 OS has achieved only 2% penetration. Both companies are in danger of being locked out entirely, and need a smash hit.

So far, the results of their labors look pretty good. But will that be good enough? Nokia lost $1.4b in 2011, which includes a fourth quarter cash payment of $250m made by Microsoft. If the Lumia isn’t a breakout, is Microsoft willing to keep Nokia afloat?

 Here’s a look at how all the pieces are coming together:

Physically, the new Lumia 900 is lovely. Nokia has developed it’s polycarbonate unibody design through several iterations now, and the look is unlike anything else on the market except for, perhaps, a second generation iPod Nano. The fit and finish are reportedly superb - a sharp contrast to the chintzy feel exuded by most Androids. The colors of the AMOLED screen are richer than an iPhones, though some reviewers are complaining about inferior resolution. Photographs are through an 8mp Carl Zeiss lens (which means nothing), and they look merely OK.

The Windows Phone 7 OS is visually attractive, and is capable of competing with iOS and Android. First-time smartphone buyers (and there will be many of these over the next few years) will not be unpleased. Design fiends who prefer the look of Windows Phone 7 may convert. Android nerds and iPhone partisans will not, but that’s hardly surprising.

There are early complaints about the number of apps available in the Windows shop: 80,000 and growing.

Evaluating an app store by it’s quantity of apps is a mediocre metric, but it isn't meaningless. App quantity indicates the enthusiasm of a development community, if not necessarily the quality of it’s labors. More Microsoft money is being spent to develop an “app campus” in order to encourage developer platform adoption.

The potential for powerful Xbox Live integrations is intriguing. If enough Windows Mobile phones are sold, this connection could be the site of some exciting action.

The Lumia 900 will be available through AT&T at a price of $99, with a two year contract. The carrier is giving the phone “hero” placement as it’s first big LTE phone, and is permitting it to be used as a wireless hotspot for up to five devices (no doubt in part to highlight speed of new LTE network). Also, as Matt Rosoff of Business Insider notes, AT&T is making the Lumia 900 the exclusive free phone for employees. This special treatment comes at the reportedly low, low cost to Nokia of $25m of Microsoft’s money.

AT&T is undoubtably pleased to have a potential knock-out product made by a more agreeable partner than Apple.

Absolutely. The Palm Pre was given similar “hero” treatment by Sprint, which actually paid for the privilege in the form of marketing spend. Getting the Lumia into the pockets of AT&T employees is a smart move - one of the complaints made by Palm was that Sprint sales reps didn’t know the product, and couldn’t convey the finer points of it’s unique WebOS. 

The Pre was also positively reviewed by tech bloggers, positioned as an iPhone alternative, and heavily marketed. It didn’t matter. Palm was subsequently purchased by HP, which recycled WebOS for use in their TouchPad tablet, which was positioned as an iPad alternative, heavily marketed, and also a humiliating failure.

Palm was widely mocked for attempting to out-cool Apple with arty, conceptual ads directed by Tarsem Singh that featured an early New Wave hit by the band Freur, and were probably derived from Ridely Scott’s famous work for Chanel in 1980.

Nokia and Microsoft aren’t playing that uptown game, at least not right away. Nokia has been making a large PR push targeting "influencers." The first several Lumia ads in mid-March portrayed the phone as the rugged choice of youthful male extreme sports enthusiasts under the slogan "Focus on Amazing," and exhorted viewers to sign up for trial phones. This was conducted through the main Nokia Facebook page and the web property Nokia Connects, which has been building the Nokia brand while focusing on photography. 

Newer ads, released several days ago and picked up widely by gadget blogs, go negative on the iPhone. There are three of them: they're painfully unfunny, and are aimed squarely at Apple, which is portrayed as an arrogant corporate monolith. This is one example:

 The videos push three critiques of the iPhone:

The screen is hard to see in sunlightIt breaks easilyIf you hold it wrong, it loses signal

The first point, about the screen, is probably a defensive positioning. Though the argument is correct - the iPhone does wash out - few people seem to be complaining about this issue. The bigger problem for Nokia in comparison with the iPhone is the lower screen resolution of the Lumia. The second point, about resistance to breakage, is a position of strength for Nokia. The third point, raising atennagate, is a little weird, because the iPhone 4S fixed this problem. But Nokia is willing to take what it can get, and perhaps there are still some low-hanging fruit out there who will find this ad compelling.

These ads direct to a microsite, Smart Phone Beta Test, which has three programs:

To instill a sense of impatience, and connect it to a date. This is accomplished by the countdown timer and video of man waiting in an office, doing nothing. Distributing the three videosHub for a Twitter influencer campaign focused on Beta Testers  

As of 4/4, the Beta Testers microsite has been shared 1,287 times on Twitter and Liked 3k times. The hashtag for the Beta Testers Twitter campaign, #betaphone, has been tweeted 126 times and the @smartphonebeta account has 650 followers.

These aren’t huge numbers - they’re a little fizz that can’t hurt. The Lumia also has premier placement on Nokia and AT&T’s websites. AT&T’s Facebook also manages to squeeze mentions of the product in to it’s messaging mix. But curiously there’s not a word about the phone on any of Microsoft’s digital marketing presences except for it’s Windows Mobile site.

Today, for release day, Nokia is executing a Times Square takeover in NYC, which means coordinated digital billboards - hopefully clever ones that can be intereacted with via text or other means. A "special guest" is performing -  and AT&T reps are claiming that the Lumia 900 is "above anything we've ever done."

UPDATE: The party was a splashy, big success, with lots of cool billboards and Nicki Minaj.

The Lumia 900 is a really nice-looking phone, but it's not revolutionary. The marketing is understated. Nokia and Microsoft are playing it cool. They don't want consumers - or anyone else - to spend time thinking how close to the edge they are, and they don't want to set up the Palm Pre narrative of this is our do or die phone.

There's no show-stopper campaign that gets in front of the product - the PR and marketing for the Lumia 900 is very specifically targeted and articulated, and seems to be generating interest. Early adopters might buy this and be proud of it. Average AT&T store shoppers in for their first smartphone may "discover" it, and be seduced by it's lovely form. 

Despite what the reps say, this isn't an iPhone-sized blockbuster. It's a really nice phone, and Nokia and Microsoft are hoping that it sells accordingly. With enough support from AT&T, it might.

Unfortunately for a slow-burn strategy, it's not clear that the targets Nokia and Microsoft are struggling to hit now will be relevant in, say, a years time. The mobile device market is poised for greater convergence between laptop, tablet, and TV functions.

Apple is in a prime position to pull the strings tighter between it’s iPhone, iPad, computers, and Apple TV. Google and it’s Android partners will be able to cobble a competing product together - and we’ve still yet to see what will come out of their Motorola acquisition. Amazon is lurking in the background as a wild card. RIM is a dead duck.

Without Microsoft, Nokia would be almost completely out of runway - the tragic backdrop for all of these events is that the company is slashing R&D spending and letting employees go.

Microsoft is in a curious position. It's still Microsoft. It has plenty of cash. It also has a lead on the race into the connected living room in the form of the Xbox. And now it's intimately involved with a mobile hardware manufacturer.

If the new Nokia phones fail to sell in the US and the company can no longer continue to operate independently, Microsoft is in position to harvest the assets and follow Google and Amazon as they attempt to Apple-fy into end-to-end digital service providers. They might not want to do this - liscensing is the story of Microsoft's success, and is what led them to market dominance - but they have the option open. And it might become necessary.

Sam Dwyer is an Analyst based in Econsultancy's New York office. He can be followed on Twitter @sammydwyer.

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What the Lumia 900 means for Nokia and Microsoft: ask the experts

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Posted 10 April 2012 14:29pm by Heather Taylor with 0 comments

After last week's launch of the Lumia 900, all eyes are on Nokia and Microsoft to see if their new partnership is a game changer in the mobile industry. 

Following on from our post on Nokia and Microsoft last week, we've asked a few industry experts what their views were on the future of the partnership and how it will affect marketers and their future mobile campaigns.

There is no doubt that in android and iPhone, Windows have some huge challenges ahead of them, but on the positive side both now find themselves in the rare position of being a challenger brand looking to break into the market, so there should be an open door to innovate, which is something they have been good at since the release of Windows Phone 7. The release of the Lumia though should be viewed as just one of the prongs of MIcrosoft's attack on the marketplace, with other relationships carrying equal importance, particularly in the US.

I think the Lumia 900 will sell well (from what I have read about Nokia and AT&T's promotional push), but it won't fly off the shelves and suddenly make Windows Phone competitive this year. At best, it will give Windows Phone and Nokia more traction with consumers and developers, and they can build on that with their next iterations.  I don't think it is going to change the marketplace much for now.

In selected markets the Lumia phones may sell. They will be more successful in Europe than in North America, where Nokia's brand remains relatively strong. Overall I see only modest success for Lumia in the aggregate. 

There's no indication that Windows Phone will be able to gain significant marketshare in 2012. Everyone's watching to see if new phones are exciting enough to get good sales over the holiday season. This would put Windows Phone on a growth track in 2013 and make it a real contender in the space.

There is a lot at stake for Nokia, and I don't know how much runway they have left.  It is important for Microsoft too, but I believe they are in it for the long run.  They have demonstrated with Bing that they are willing to take losses for as long as it takes, and mobile is arguably even more important than search to Microsoft.  After the launch of Windows Phone 7, I would have expected a quicker pace of updates to catch up with iOS and Android. Instead, they seem to be taking their time and prepare for a big Windows (Phone) 8 release across all device classes.

Nokia has a lot more to lose than Microsoft. Mobile is their essence and core business - they need to find a path forward. Microsoft has a much longer runway and ample room for experimentation but for Nokia, it's about survival.

For Nokia perhaps the company is at stake. While Nokia can continue for several years in its current condition, investors won't give Nokia many more chances to "turn it around." If Lumia fails to deliver against the hype the value of the company will further decline and investors will dump the stock, forcing Nokia to take drastic action and perhaps sell itself. 

There's a lot of doom-mongering about the future of Nokia which is not justified, and I also think futures of Nokia and Windows Phone are not necessarily one and the same. Windows has put mobile at the core of its development of Windows 8, and I think that how this connection works is something that is not adequately addressed by many analysts. If the new Windows 8, together with an aggressive approach to tablets is successful, it will pull the mobile side of the business along with it - as users will want their devices to speak to each other. Windows Phone by itself I believe would struggle to survive if it was not supported by the wider Windows offering, but the picture is alot more complicated than that. However, time is tight of course, and with Apple, Samsung etc continuing to deliver innovation, Windows has to get products to market fast.

If Windows Phone were to succeed it would represent another platform for developers and publishers to address. Marketers would be mildly inconvenienced by additional fragmentation in the market but it would not affect them dramatically. By the same token failure would also not have a dramatic impact on marketers since they're not addressing Windows Phones (for the most part) today.

For an online marketer, the trend of mobile and iPad traffic going through the roof will remain in force. If your website is smartphone-ready, Windows Phone 7 will bring a new audience that is eager to interact with your brand. If you haven't launched a mobile version yet, now is a good time!

The honest answer is that marketers are not thinking about this right now. Most businesses still don't have a credible approach to the mobile channel in general, so niche issues like this aren't really on the radar. In simple terms though, the more successful OS there are in the market, the more cost of app development goes up, so a conflation of the market around iOS and Android would have benefits

I can't think of any significant impact. This is not going to change the landscape overnight.

I'd recommend to hold off developing Windows Phone specific apps while the user base is relatively small. Invest in your web presence instead by making it mobile-ready. This way you will improve the experience for the iOS/Android audience, while preparing for Windows Phone device launches.

In 2012 marketers do not need a Windows Phone app strategy. If the Lumia phones take off they can revisit the issue in Q4 of this year. By the same token Microsoft is currently subsidizing mobile app development for Windows Phones. So if developers/marketers want to take advantage of that program it makes sense to create an app earlier rather than later.

My advice would be to first build the best cross-platform mobile web site they can, and probably stop there.  90% of apps don't need to be native, and the time of the vanity apps is long gone.  Many indie developers are still sitting on the fence whether to develop for Android, so Windows Phone is even further away for them (unless they are a Windows shop and developing for Windows Phone is a natural choice).

At the moment it's a watching brief - clearly Windows Phone has a great UI that its users love, and the Lumia devices are very good. I hope that the user base grows so that we have a more competitive 3-way market as that's more healthy than the 2-way share most analysts are predicting. The demise of Blackberry is no loss to anyone who spends their life designing mobile UX as we do, but if Nokia and Microsoft and Nokia approach the market correctly, and position mobile within a useful ecosystem of devices, content and experience, I honestly don't see why they can't be successful in the future.

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