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The situation from Nokia may have just gone from bad to worse

Fresh off not as bad as expected earnings, Nokia, Oyj. (HEL:NOK1V) is preparing to launch Windows Phone 7.5 "Mango" handsets at the annual Nokia World conference in London.  That lineup is expected to include the "Sea Ray"/"Sun" and the Nokia 800, a WP7.5 version of the slick iPod Nano-esque N9.

But disturbing news arrived this week from U.S. advertising blog AdAge, which revealed that Nokia and its partners had been shopping around a troubling document while looking for a U.S. ad agency.  That document revealed that Nokia would likely not launch a handset in the U.S. at all in 2011.

Previously Nokia had always suggested that there would be some product in the U.S. by the end of 2011.  It had used phrases like "limit availability" to characterize this lower volume launch and labeled 2012 the time frame for the "full launch".  But again, there was always the assumption that the company would deliver at least some product, in order to excited customers in the lucrative U.S. market.

If true, this is a major blow to Microsoft Corp.'s (MSFT) hopes to grow market share in the U.S.

It's also evidence of Nokia's ongoing struggles in the U.S. both in sales and at a corporate level in adapting to U.S. carriers' business model.  Unlike many foreign regions where handsets are sold at-cost unlocked, U.S. carriers tend to rely on subsidized locked handsets.  Those subsidies add an extra wrinkle of complexity for handset makers, as they now must appeal to both the customer and the carrier.

Still, it's unacceptable that Nokia has been unable to master this slightly different business model, particularly when its non-U.S. peers like Samsung Electronics Comp., Ltd. (SEO 005930) have done so with ease.

If Nokia indeed delivers its product payload in early 2012, it will not only miss the lucrative holiday shopping season, it will also be delivering already dated hardware onto the ultra-competitive American market.  That may be a death sentence to Nokia's hopes of being a strong competitor in the U.S.

It's already simply dumbfounding that Nokia is the flagship partner of Microsoft's Windows Phone 7 project, yet it has been unable to bring smart phones to market as fast as other WP7.5 manufacturers.  Now the situation may be about to go from bad to worse.

Source: AdAge

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By woofersus on 10/25/2011 2:44:56 PM , Rating: 2
Nokia already made the decision to build WP7 based phones. Regardless of whether or not that's the right move, what doesn't make sense is launching in January/February as opposed to November. Now if they just haven't been able to get it done in time, then I guess they don't have any choice, but it still represents a failure on Nokia's part not to bring their new flagship device(s) to market in time for the peak buying season. There's no way to spin that as a strategic decision.

As far as the attractiveness of WP7 to carriers and customers, you have to forget all the years of Windows Mobile. This is a new OS, and it obviously had to start at 0% market share. That doesn't necessarily make it not an attractive product. Android started somewhere too, and didn't really take off until the 2.0 update. The first year of sales were weak, but the OS has been substantially updated since that first round of phones. And nothing new came out all year really, because handset makers were waiting for the major fall update and the aforementioned holiday shopping season. The 5% market share figure isn't really indicative of success or failure at this point. It's no secret the lack of hardware has held WP7 back a bit. Of course I don't really know whether or not Windows Phone will ultimately be successful, but that's besides the point right now. The bottom line is that Samsung and HTC have seen fit to prepare (several!) new WP7.5 handsets for this fall, and yet the one company with the most riding on WP7.5 seems to have dropped the ball.

btw, I'm not sure what you mean about the current model "eating bandwidth." Android phones sync data too, and the amount involved there is fairly miniscule. Most people won't hit a 2GB cap without streaming music/movies or tethering, or maybe sending a ton of email with attachments. There was a bug in the Yahoo mail app that sucked down early on, but that was fixed like 10 months ago.

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