An unhappy call: Nokia forecasts financial pain
Phone maker is in transition, CEO says
Nokia on Wednesday warned that its first-quarter financial results will fall short of analysts’ expectations, and its second quarter is also likely to be weak.
That news came two days after the Finnish handset maker introduced the Lumia 900 to U.S. consumers, the first fruit of its milestone partnership with Microsoft.
Noting that the company is “in transition,” Nokia CEO Stephen Elsop cited lagging sales in emerging markets and noted that much is riding on its alliance with Microsoft.
“We have established early momentum with Lumia, and we are increasing investments in Lumia to achieve market success,” says Elsop, who left as head of Microsoft’s business division in September 2010 to take the top job at Nokia.
Once the world’s dominant cellphone maker, Nokia has slipped to third behind Samsung and Apple in producing high-end smartphones.
The Lumia 900 features the Windows Phone operating system, which has received positive reviews but accounted for just 1.8% of smartphones sold in 2011, compared with 49.2% and 18.8% for market leaders Android and Apple IOS, respectively, according to technology research firm IDC.
“Nokia’s transition is taking longer than planned,” says Al Hilwa, IDC software applications analyst. “The question is, will Windows Phone grow fast enough to rescue them financially?”
AT&T is offering the Lumia 900 for $99.99 with a two-year contract, pumped up by a national ad campaign on TV, radio, print and billboards, as well as being featured in 2,200 company-owned stores. The phone can tap into AT&T’S zippy 4G LTE network — said to be up to 10 times faster than 3G — in the 31 markets where that service is available.
Nokia has pre-loaded Lumia with some cool new apps. For example, users can download and store streaming music files and maps using a Wi-fi connection, thus saving on cellphone Web-usage plans. Later, they can access the stored music and maps without burning through usage plans. “Nokia is investing in apps for Windows Phone in a way that no other device maker is doing,” Hilwa says.
Meanwhile, Microsoft is touting the use of square touch tiles to access apps, the same interface planned for Windows 8, the next version of Microsoft’s flagship PC operating system, expected later this year. Lumia users get access to Office apps and their Xbox Live entertainment accounts. “We’re resetting mobile strategies in each of these two really global companies,” says Aaron Woodman, Windows Phone product manager. “I think it’s going to pay off for both companies, and it’s going to really benefit consumers.”