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Are Microsoft and Nokia brewing up “the perfect storm” for Apple and Android’s smartphone market share?

pyroscott

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by Scott Johnson

Sprint 4G Rollout Updates

Monday, April 2, 2012 - 12:29 PM MDT

 

Microsoft entered the modern era of smartphone operating systems with the release of their Windows Phone 7 (WP7) platform. The first WP7 handsets went on sale October 21st 2010 with Sprint receiving their lone WP7 offering 5 months later with the HTC Arrive. The HTC Arrive suffered from slow sales numbers and Sprint brass quoting a poor “user experience” for returns of the device. There was recently evidence that Sprint may have rejected a follow-up to the Arrive, the HTC Maaza, when a tester prototype phone showed up for sale on ebay.

 

The WP platform still has not gained as much as a 5% market share as Microsoft continues to lose market share. Ratings giant Nielsen saw such a small market share for WP that they did not even include WP as a separate platform and inserted their statistics in the “other smartphone” category.

 

World-Wide-Smartphone-Market-Share.png

 

Even though the HTC Arrive has failed to generate a whole lot of buzz at Sprint, many of the consumers who purchased the device think very highly of it. The user rating of the HTC Arrive currently stands at 4.6 out of 5 stars and 91% of those who purchased the phone would recommend it to a friend. This stands out in comparison to the highly vaunted Apple iPhone 4S which currently boasts a 4.4 rating out of 5 stars with 86% of consumers who would recommend it to a friend. Windows Phone fans at Sprint are so passionate that they have started a petition to Sprint to procure more WP devices that currently has over 2,400 signatures.

 

Partnership with Nokia gives Windows Phone a partner committed to the OS

 

Microsoft began their campaign to gain ground on the US smartphone market by announcing that they would partner with one of the largest phone makers who has been longing for a reentry into the US market. On February 11th 2011, Nokia announced that they had established a partnership with Microsoft to make their mobile platform the primary operating system for Nokia phones. In Nokia, Microsoft found a partner to not only build flagship devices that are designed to pull the most possible functionality out of the WP operating system; they also found a partner to help them market the phones and operating system. Nokia is set to release the first LTE enabled phone running the Windows Phone operating system on April 8th in the form of the Nokia Lumia 900 on AT&T’s network for a mere $99.99.

 

Customers are unfamiliar with the operating system

 

Microsoft has learned from the past, while the operating system may be able to compete with the likes of iOS and Android, unless the sales staff can highlight the strong points of the OS, is familiar with the phone and has incentive to sell the phone over other models, the phone will not sell in the quantities they desire. This is why Nokia is spending upwards of $25 million to provide the Lumia 900 to AT&T for “company use” allowing the sales staff to trade in their iPhones and Androids in exchange for a free Nokia Lumia 900. This move will allow the customer to see the phone as more desirable because the sales staff always seems to have the “cool, cutting edge” phones. Additionally, this will extend the sales staff’s familiarity with the OS well beyond the training that AT&T provides them.

 

Microsoft has also given AT&T sales staff a financial incentive to sell WP models. A $200 million program has been initiated by Microsoft, through AT&T to pay a $10-15 commission for every windows phone that an employee sells to a customer. If the AT&T test bed pays off in increased sales of WP handsets, the promotions will likely spread to other carriers like Sprint when they begin receiving shipments of their WP flagship later this year.

 

Customers want apps on their smartphone

 

As it stands, the Windows Phone Marketplace has about 65,000 apps, this number pales in comparison to the nearly half a million apps in iTunes and nearly as many in Google Play. Even more concerning, is the lack of some of the most popular apps. Pandora, Bump, Skype, Dropbox and Google Maps are all missing from the WP platform trumping an argument that WP has quality apps and not merely a large quantity of apps.

 

Microsoft and Nokia have contributed $12 million each to develop a mobile app development program. They also plan to spend $10 million on an advertising campaign to promote the competitors of the top apps that are absent from the WP Marketplace. Apps also tend to cost more on the WP Marketplace than other app stores due to the developers needing to charge extra to make up for smaller sales numbers since the OS has such a small portion of market share. Without apps, the platform will have a tough time catching on with customers, and without customers, the platform will have a hard time attracting developers.

 

Advertising can make consumers more receptive to Windows Phone

 

The Nokia Lumia 900 is reported to be the benefactor of a $100 million “hero” advertising campaign. It is not known how Microsoft, Nokia and AT&T will split up the advertising costs, but that much money will certainly bring customer awareness up for the operating system and for Nokia’s brand recognition. Sprint customers will no doubt see these ads and become more familiar with WP and Nokia (should Nokia build a device for Sprint’s network) so when a WP device is released on Sprint’s network, it will also benefit from the ad campaign.

 

Another Windows Phone flagship is rumored for a late 2012 release to capture sales during the holiday season, with another “hero” advertising campaign; this could bring Sprint and Verizon customers into the fold nicely if it is a Nokia model released on all three carriers.

 

Consumer perception must be that Windows Phones are “flagship” devices

 

Many would-be buyers of WP7 handsets such as the HTC Arrive could have been turned off by the combination of lackluster stats and lower price and confused the device with a mid-tier offering. If someone were to compare AT&Ts offering of Samsung handsets today, you would see the Galaxy Note coming in at $300, the Galaxy SII coming in at $200 and the Focus Flash at $1, there is also a newly released Focus S at $200.

 

The Nokia Lumia 900 would have no such comparisons, and even at a lower price, could be perceived as a flagship at a value price. The Windows Phone OS has been designed to run smoothly on less system resources. The dual core processors, large amounts of memory and larger screens of the Android competition tend to wash out the stats of the Windows Phone lineup. That shortcoming is being remedied with the next WP offerings it seems. Sprint is set to receive a WP with a Qualcomm MSM8960 dual core 1.5GHz and LTE connectivity

 

[float right]6816486486_0a7a619d2a.jpg[/float]One of the best ways for an operating system to gain new customers is by “smartphone envy.” Friends, family and coworkers tend to show other people some of the more advanced features that their phone has and some of the best apps. In order to spur this type of referral, Microsoft needs to gain market share, and quickly. Windows phone will gain functionality with the release of Windows 8, which will tie the phone OS and PC OS closer together.

 

The OS can also gain significant ground by integrating further with the popular XBox 360 platform, but they can't afford to lose any ground on Android and iOS. By infusing money into different methods of marketing and into application development, Microsoft is hoping that they can sell handsets and gain market share. They won’t continue throwing money at the platform if it never catches on, but thanks to the moves that they have made, most notably bringing Nokia on board, they may just have the right recipe. They will undoubtedly watch carefully what happens with AT&T as a “test bed” when they start planning their marketing campaigns for Sprint and Verizon.

 

Maybe someday Windows Phones will “sell themselves” as Android and Apple phones seemingly do, requiring smaller marketing budgets, but for now Microsoft and Nokia need to launch a full scale marketing attack on the market to secure their place in the future.

 

Sources: Android Authority WPCentral betanews phonenews

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I went to an At&t store to check out the Lumia 900. I am used to the HTC Hero's smaller 3.2 in screen, so the 4.3 in screen made the phone seem massive to me. But I cannot overstate how great the screen was, probably the best I have ever seen on a cell phone. Very responsive also. But At&t's plans are way overpriced. It would be hard to buy that phone at the moment due to At&t's ridiculous price for plans and the knowledge that S4 processors with built-in LTE modem will significantly be more efficient are coming soon.

 

 

Sprint needs to get a Nokia 4 to 4.3 in S4 processor phone soon hopefully and if they get them for under a $100 subsidized, that is 5 right there that I will order. Upgrading the HTC Arrive might attract a family member or two since they like physical keyboards.

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The problem, from my perspective as a smart phone consumer, is that anyone buying a phone and apps for Windows Phone has to be at least slightly concerned that this will be just the latest Kin or Zune fiasco - a product that is expensively rolled out, underperforms in the marketplace, and then is shelved in favor of the Next, Non-Backward-Compatible Big Idea from Redmond. That Nokia (S80 -> Maemo -> Meego -> WP7) is the lead player doesn't inspire much confidence either.

 

Plus I honestly don't see the space for another smart phone OS in the market. Apple has the halo phone market sewn up, Android is the flashy alternative for those who don't do Apple, and RIM has its declining corporate base for those who don't do Apple or Android.

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I will agree that a physical keyboard is something that I still want, and the fact that the new 'high end' android devices seem to be missing it frustrates me. They seem to only be making cheap phones for 14yo girls to text on, but I like being able to see the email that I am responding to while I type. If WP was able to make a competitive phone with a great keyboard, I would consider leaving android. After all, that was the reason that I never went to the iPhone...

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Josh...I think the problem is that physical keyboards on large smartphones adds thickness which is a no-no in terms of smartphone trends. All the manufacturers are striving for thinner and bigger screen smartphones especially to compete with the iPhone. While I agree with you that there are still individuals including yourself that would like to see a smartphone that has all the features of a high-end smartphone but with a physical keyboard, the market demand just isn't as high as it was once before.

 

I used to be like you in that I loved the physical keyboard on the smartphone because to me it was easier to type text messages, websites or anything that requires word entry but the more I used the onscreen keyboard, the more I got used to it and probably would not get a physical keyboard anymore. Not to mention that the physical keyboard smartphones are thick as heck.

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I went to an At&t store to check out the Lumia 900.

 

That is awesome that you already were able to check it out. It's not set to hit shelves for another week. Was it an employee phone? Or training phone?

 

The problem, from my perspective as a smart phone consumer, is that anyone buying a phone and apps for Windows Phone has to be at least slightly concerned that this will be just the latest Kin or Zune fiasco - a product that is expensively rolled out, underperforms in the marketplace, and then is shelved in favor of the Next, Non-Backward-Compatible Big Idea from Redmond.

 

That is definately a concern, but I think as long as Windows Phone sells and gains market share, they will stick with it. They are talking about integration with Windows 8, I don't think they would be bringing it in to their main OS if it wasn't sticking around.

 

I will agree that a physical keyboard is something that I still want, and the fact that the new 'high end' android devices seem to be missing it frustrates me.

 

I think we will be seeing at least a couple slider phones coming out in the next year. I would sure think there would be an Android and possibly a Windows Phone slider.

 

I used to be like you in that I loved the physical keyboard on the smartphone because to me it was easier to type text messages, websites or anything that requires word entry but the more I used the onscreen keyboard, the more I got used to it and probably would not get a physical keyboard anymore.

 

Eric, I was able to convert the wife over also. I never had a slider phone, so I didn't understand the hype, it just seemed like one more thing to break on the phone. The wife was upset that there were no slider phones available but upgraded to the E4GT and once she fell in love with swype, she forgot all about the physical keyboard and extra thickness of the slider.

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pyroscott, it was in the news I read a few places that most At&t stores have at least one employee that have them, the one I went to had at least 2 (I only talked to two employees there), one black and one cyan. They were employee phones. I recommend you check one out at least, but I suggest calling first, there is no guarantee the employee with the Lumia 900 is working when you go in to visit. The two employees that had it didn't seem that excited about it, which could be a problem at launch, they thought it was nice, but neither had really used it much even though they had had it a few days already.

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Also if you are a new At&t subscriber, you can potentially qualify to get the phone for free. I believe the promotion is $100 off phone and accessories for new subscribers. Plus if you pre-order online, you will get it April 6th (the first ones ship out April 5th), before the introduction date of April 8th.

 

Though it is a great phone from the little time I spent using it, it is not enough to convince me to switch to At&t at the moment and pay a lot more a month, but there is a chance we might have to get a new contract since our phones are falling apart and Sprint's current lineup is rather pathetic in my opinion, through the HTC One series looks nice if we had to go with Android.

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pyroscott, it was in the news I read a few places that most At&t stores have at least one employee that have them, the one I went to had at least 2 (I only talked to two employees there), one black and one cyan. They were employee phones. I recommend you check one out at least, but I suggest calling first, there is no guarantee the employee with the Lumia 900 is working when you go in to visit. The two employees that had it didn't seem that excited about it, which could be a problem at launch, they thought it was nice, but neither had really used it much even though they had had it a few days already.

 

I'll have to check it out. Not interested in going with the Lumia 900, especially on AT&Ts network, but it is almost like a beta test for what could easily be the best WP to date, releasing later this year.

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For Windows Phone fans, a new Sprint Windows Phone is on the way. The LG LS-831 was FCC certified for CDMA/EVDO operation in ESMR 800 / Cellular 850 / PCS 1900 bands. It has WiFi & Bluetooth. It does NOT have LTE or WiMax -- it is 3G only.

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4rings..when was this LG LS-831 phone FCC approved? I hope this is not the phone that will be launched this fall. I want that Windows Phone in the fall to have LTE service as well as the Windows Phone Apollo OS preinstalled.

 

Edit: It looks like this was approved back in Oct 2011. Seems like such a long time to be released after being approved about 6 months ago. Hopefully it gets launched soon.

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4rings..when was this LG LS-831 phone FCC approved? I hope this is not the phone that will be launched this fall. I want that Windows Phone in the fall to have LTE service as well as the Windows Phone Apollo OS preinstalled.Edit: It looks like this was approved back in Oct 2011. Seems like such a long time to be released after being approved about 6 months ago. Hopefully it gets launched soon.

 

The LS-696 was approved in January a week after the Viper and it is 3G only. Sprint will continue to launch 3G only phones. I wouldn't expect ALL phones to be 4G LTE for another year or 2 at least. Some people DON'T want 4G phones with the battery drain.

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The LS-696 was approved in January a week after the Viper and it is 3G only. Sprint will continue to launch 3G only phones. I wouldn't expect ALL phones to be 4G LTE for another year or 2 at least. Some people DON'T want 4G phones with the battery drain.

 

Another free on contract windows phone... They must be really trying to capture the first smartphone sales for people who want something cheap. Maybe Sprint just wants another windows phone to fail so they can stop offering them to customers.

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I thihnk windows phone has the oppurtunity to steal market share from blackberry more than android or iphone. Ive used the nokia lumia 710, and i was very impressed. The phone boots up in seconds, and gui is flawless. The keyboard is nice, alot better than android. But even for me the apps are what is killing windows phone. There is some minor flaws they do need to work with on windows phone, but it's gonna take time. And if microsoft has ever proved anything to us, they will poor billions into something just to make it sell..... i.e. xbox :)

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And if microsoft has ever proved anything to us, they will poor billions into something just to make it sell..... i.e. xbox :)

 

Very true, they have the money to wait it out and let the market come to them.

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There is easily room for three major OS in the consumer smartphone space, it's a huge and rapidly growing market. Blackberry has lost the consumer market and is having increasing trouble retaining corporate customers due to the improved security features of the other players (and the fact that people don't like carrying two devices). If Microsoft can keep developer momentum going I believe Windows Phone will take over the #3 spot pretty quickly. My Arrive has been the best smartphone experience I've ever had, I actually have less problems with it than my wife does with her iPhone 4s and far less issues than with Android devices I've used.

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I haven't read any of the above comments. However anyone I have ever talked to about the windows phone says " They are the worst phone I have ever had". I can't picture Windows ever getting any better.

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