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.
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][/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.