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  (Source: South Africa World Cup Blog)
"No one comes into the store and asks for a Windows phone." -- Euro executive

It's been a wild ride for Nokia Oyj.'s (HEL:NOK1V) first Windows Phone super-phone, the Lumia 900 LTE.  The last week has brought strong salesembarrassing bugs, and even a bit of respect from the American market.

I. Sampling the Hatorade

But Reuters reports that the increasing Nokia Lumia Windows Phone buzz is met with icy disdain across the pond in the UK.  One of Europe's top markets, UK carriers appear to be giving up on Nokia's Lumia, after hardly giving it a chance to shine.

An executive at a European telecom who had been selling the Lumia 710 and 800 complained, "No one comes into the store and asks for a Windows phone.  Nokia have given themselves a double challenge: to restore their credibility in terms of making hardware smartphones and succeed with the Microsoft Windows operating system, which lags in the market."

The executive is quoted as praising Windows Phone for its "tons of cool" features, but then throws the OS under the bus, stating, "If the Lumia with the same hardware came with Android in it and not Windows, it would be much easier to sell."

The curious thing with the European carriers is that they claim to be frustrated with Google Inc.'s (GOOG) Android legion and with the pricey iPhone from Apple, Inc. (AAPL) -- a device that may never turn a profit for carriers.  But when it comes to selling the Lumia's Reuters reports that the carriers are making hardly any effort.  Nokia's Windows Phones are tucked away in unseen corners and clerks peddle Apple iPhones and Samsung Electronics Comp., Ltd. (KS:005930) Galaxy phones on smartphone shoppers.

It's a tale of two continents.   In Europe, carriers are still eagerly ponying up the 600 to 700 euros (~$800 to $900 USD) to sell iPhones to customers, despite the fact that they may never turn a profit on the device.  Even Samsung phones are fetching an impressive 300 to 500 euros (~$400 and $650 USD) from the EU carriers.

Meanwhile, U.S. carriers appear to be adopting a different philosophy.  Encouraged by discounted handsets from Nokia and Microsoft Corp. (MSFT), the carriers are finally giving the platform a chance and pitching it to customers.  AT&T reports strong sales of the Lumia 900 LTE, which is prominently featured in nearly every U.S. store.  T-Mobile USA -- a subsidiary of Deutsche Telekom AG (ETR:DTE) reported that the Lumia 710, an entry-level Nokia Windows Phone, as among its most popular handsets.

II. Some Say Lower the Price; Others Say It's Hopeless

Richard Windsor, global technology specialist at investment bank Nomura predicted Nokia Lumia phones to take in 300 Euros on average.  Their actual haul is about 220 euros on average.  Yet, carriers seem to have no interest in these bargain devices in Europe and aren't even trying to sell them to customers.

The carriers seem to contradict each other.  One executive is quoted as saying, "If they could lower the price we think they could sell more. It might be worth making it a bit of a loss leader to get it out of the door. It's not rocket science."

Nokia Lumia 900 LTE
EU carriers are giving Nokia contradictory advice about how to bump sales, while reportedly putting little effort into trying to push the Lumia line. [Image Source: Nokia]

Another suggests that price is not enough.  They state, "We can open our stores to them and train our staff to sell the phones, but that's it.  Ultimately, Nokia and Windows are challengers and they either need to come to market with a really disruptive, innovative product or a huge marketing budget to create client demand. So far they have done neither."

The perplexing situation has to be particular frustrating for Nokia who is seeing accelerating U.S. sales, but has been largely scorned in its home continent.  If there's one thing illustrated by all the European criticism surrounding the Lumias, it's that while EU carriers may complain about Apple and Samsung's profit-seeking, they really don't mind all that much or have much desire to seek out and promote alternative options.

That's bad news for Nokia and anybody who isn't named Samsung or Apple.

Source: Reuters



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Expert?
By messele on 4/17/2012 5:07:56 PM , Rating: 1
How do you figure that the iPhone may never turn a profit for the carriers? Since you are talking about Europe in the context of the article when you come out with a stupid claim like that why then link to an article (that was already a bunch of crap) about an American carrier?

Here is a fact that actually is a fact.

My handset retails for 699GBP. I paid 200 up front for it and the contract was 35 per month for 24 months.

By my reckoning that's 1,040GBP or a gross profit of 341GBP. Remove the 20% VAT from those figures and you have a true GP of 284.17

Can the network give me 2,000 minutes per month and unlimited data and still turn a net profit? Yes of course they can because most of that money is going into infrastructure costs and believe it or not these people know what they are doing. They turn a very nice profit and absolutely love expensive handsets no matter where they come from.

Maybe they are not pushing these new handsets because they are not being subsidised by MS or Nokia or whoever like the US ones are, or is that too blatantly obvious or simple to make for an interesting trashy story.




RE: Expert?
By felang on 4/17/2012 5:37:52 PM , Rating: 2
So you´re saying that a profit of GBP 11.84 per month covers unlimited data + 2000 minutes + infrastructure costs, and leaves enough for a nice net profit? I´m not an expert, but that seems low to me.


RE: Expert?
By JasonMick (blog) on 4/17/2012 5:40:27 PM , Rating: 4
quote:
How do you figure that the iPhone may never turn a profit for the carriers? Since you are talking about Europe in the context of the article when you come out with a stupid claim like that why then link to an article (that was already a bunch of crap) about an American carrier?
Err, that's a well known fact cited by Bloomberg, the WSJ and other financial analysts well above my pay grade. Sorry if you were unaware of it.

http://online.wsj.com/article/SB100014240529702034...

Contrary to popular belief, phone service is not free. There's the cost of tower deployment, the cost of maintenance, the cost of powering the towers, the cost spectrum licensing, to name just a few.

On your average smartphone, carriers absolutely can and do turn a nice profit.

On the iPhone, it really depends on the carrier and the deals it made with Apple behind closed doors, but the WSJ and other sources have indicated in past pieces that the margins are small to nonexistent, in most cases.

In many cases it's a trade-off -- a small loss for a new subscriber.

The hope --as the above WSJ piece states, is that sales of the iPhone will eventually become profitable, over the life the multi-year deal.


RE: Expert?
By messele on 4/18/2012 1:59:42 AM , Rating: 2
You are still mixing quotes about US situations with an article concerning the UK. Quote from the WSJ all you want but until I see something about a UK carrier in there it's just not relevant.

And yeah, I am saying that unlimited data and calls does effectively come for free, it's infrastructure that costs (a lot), but don't forget the UK has a lot denser population that the US so deployment should not be quite so daunting and indeed th very expensive 3G setup costs occurred years ago now so that initial setup will have been recouped.


RE: Expert?
By ilt24 on 4/18/2012 11:00:47 AM , Rating: 1
He's using an article that speculates something he wants to be true.

In the U.S on a two year contract with the iPhone (at least the 16GB 4s) the carrier has to overcome a $18.75/m subsidy. With monthly plans (voice+data) going for $60 to over $100/month, I think there is plenty of room for carriers to make money.


RE: Expert?
By ncalipari on 4/18/2012 7:20:51 AM , Rating: 1
quote:
Err, that's a well known fact cited by Bloomberg, the WSJ and other financial analysts well above my pay grade. Sorry if you were unaware of it.


they are loosing money because there is a minimum commitment threshold.

Again: they might not make a margin on the sale of the handset, but they aim at long term profit. That's the business model of telecoms.

It's sad when a journalist manipulate the facts to make it look like he's right. It's even more sad when that journalist do it with arrogance.


RE: Expert?
By ngdbsdmn on 4/17/2012 6:32:06 PM , Rating: 3
While I don't fully agree with the article's critical tone against the carriers, I feel even stronger against your presentation that the carriers get a decent deal.

1st, let's get the numbers closer to reality. You pay ~832 GBP over 2 years (ignoring VAT). The carrier doesn't pay full retail for the handset, maybe they get it for 550 GBP. Apple pays about ~150 GBP to make it. Carrier's costs over 2 years with you are at least 50 GBP (probably double that with upgrades to 4G, etc). So that's 400 GBP profit *upfront* for Apple and 232 GBP profit for the carrier over 2 years.

Is this a decent deal for a carrier? NO, of course not! That's why they'll burn you as much as possible with high prices on any services that are not bundled in those 35 GBP / month.

Back when you bought your own dumb phone with 250 GBP and then got into a 15 GBP / month contract, the carrier made at least 310 GBP off of you over 2 years and very often much more than that since you didn't have many things included in those 15 GBP.

Apple managed to get the carriers in a race to the bottom by getting them to fight each other in selling the iPhone for less and less profit. The same holds true for the expensive Android phones but, with few exceptions, those can be had by the carriers at seriously lower prices, yielding more profit.

So here comes Lumia 900. The article implies that Nokia tries to sell it to the carriers at 220 - 300 eur. I firmly call bullshit on that. If it would be true, the carriers could give it away for free on a 35 GBP / month contract. Instead, I think Nokia asks about as much as Samsung does for the Galaxy S II.

And that's why the carriers have a big problem. On one hand they want Microsoft as a 3rd player on the market to bring more balance to the table and more control back in their hands. On the other, they are frustrated by the position Nokia / Microsoft puts them in. They have to ask the same price for Lumia 900 as they do for something like a Galaxy S II but they can't keep a straight face when asked which is the better phone. Even worse, they would need to actively con a customer into buying a Windows Phone device knowing their effort could backfire with common people who can easily be flamed with hardware related arguments that their new and expensive Windows Phone is crap compared with a year old Galaxy S II.

I think the carriers are rightfully pissed off by Microsoft / Nokia. Too bad I have no pity for the carriers in general. When they had total control over the network it was a nightmare. So fuck'em!


RE: Expert?
By Reclaimer77 on 4/17/2012 9:00:41 PM , Rating: 1
Thank you! My god what is so hard for people to get about this?

quote:
So here comes Lumia 900. The article implies that Nokia tries to sell it to the carriers at 220 - 300 eur. I firmly call bullshit on that. If it would be true, the carriers could give it away for free on a 35 GBP / month contract. Instead, I think Nokia asks about as much as Samsung does for the Galaxy S II.


Bingo! But good luck convincing this crowd how illogical this situation is. Common sense is very uncommon on this subject.

quote:
On the other, they are frustrated by the position Nokia / Microsoft puts them in. They have to ask the same price for Lumia 900 as they do for something like a Galaxy S II but they can't keep a straight face when asked which is the better phone. Even worse, they would need to actively con a customer into buying a Windows Phone device knowing their effort could backfire with common people who can easily be flamed with hardware related arguments that their new and expensive Windows Phone is crap compared with a year old Galaxy S II.


Right again. I'm basking in your logic and common sense. Please post more here. A LOT more.

Seriously these people are blaming carriers for "not pushing" Windows Phone. They can't be serious with this. There's really nothing TO push.


"Can anyone tell me what MobileMe is supposed to do?... So why the f*** doesn't it do that?" -- Steve Jobs














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