The Temporary Exclusivity of the Lumia 920
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AT&T is First to Offer the Nokia Flagship Smart Phone
When the Nokia (NYSE: NOK) Lumia 920 goes on sale next month in the U.S., it will be carried by only one wireless operator, AT&T (NYSE: T). The Lumia 920 is Nokia’s flagship Windows 8 smart phone, announced in New York with much fanfare in September. Thus, in salespeak, the phone will be available “exclusively” from AT&T. But this is not the kind of exclusivity AT&T got for the first iPhone, and a Nokia spokesperson was quick to point out that there would be other carrier announcements in the coming weeks for the U.S. It appears that AT&T isn’t interested in being the exclusive carrier of the phone for any great length of time.
And why should it? Back when the carrier launched the predecessor to the 920, the Lumia 900 in the Spring, AT&T tried to drum up interest in the phone with a splashy ad campaign and even a Nicki Minaj concert in Times Square, to little avail. When Nokia reported their second quarter results in July, only 600 thousand Lumia 900s had been shipped to North America, and no one (outside of Nokia/Microsoft) really knows exactly how many of the phones were sold to retail customers. At the time, the 900 was dubbed Nokia’s “last best chance,” but it turned out to be just another Windows Phone flop, compared to typical smart phone launches that sell millions of phones in a quarter.
AT&T is now giving Nokia/Microsoft another last best chance, but without as much effort or enthusiasm. Since AT&T’s 3G network is based on GSM, and Nokia’s experience is predominantly in GSM, the match was logical, if not made in heaven. The Lumia 920 also carries a CDMA radio which should make it compatible with Verizon, but Nokia doesn’t have much of a track record with CDMA technology, so Verizon may not be interested. Whether other U.S. carriers will be interested at all depends much on the reception of the phone and Windows 8 (phone and PC) in general.
In almost every way, including the OS, the 920 is an improvement on its predecessor, but this may not be enough to sell the phone into a crowded market, especially with the iPhone 5 effectively sold out (wait time on the Apple store is stated to be 3-4 weeks). If the Lumia 920 has a chance at all, it is by riding on the coat tails of a successful Windows 8 PC launch. As Stephen Elop, Nokia CEO and ex-Microsoft executive put it, the war for the mobile device market is a “war of ecosystems,” where these ecosystems consist of the OS developer, hardware manufacturers, app developers, networking infrastructure including cloud and cellular carriers, and all their associated products and services.
Apple (NASDAQ: AAPL) has been successful in fostering its iOS ecosystem partly because of cross-linking to their desktop platform, Mac OS X. iOS is based on Mac OS X from its kernel to the majority of its APIs, and Mountain Lion, the latest Mac OS release, increased the level of integration between the platforms by fully integrating iCloud support. Thus, from the start, Apple achieved significant code reuse in the development of iOS, as well as offered prospective iOS developers a well-integrated development environment for both Mac OS and iOS apps. iOS users in turn benefited from an experience that offered a familiar Apple look and feel, as well as consistency across a broad range of apps. The health of the iOS ecosystem owes much to the wealth of apps on the iOS app store, over 700 thousand at last count, and in turn much to the superb developer tools Apple has made available, almost for free.
To a very large extent, Windows 8 represents an attempt by Microsoft (NASDAQ: MSFT) to emulate the Apple model. Microsoft completely revamped Windows in order to support the touch interface (Metro) and thereby created a large body of common OS code and APIs between the PC, tablet, and phone platforms, which hadn’t existed before. Developers who use Visual Studio 2012 will be able to create apps for any Windows 8 platform, desktop or mobile. With only about 110 thousand apps on the Windows Phone app store, the ecosystem badly needs greater developer participation. Windows 8 will also offer consumers a touch user interface in Metro that has much in common with Windows 8 Phone, and greater familiarity with the Metro UI approach will help Windows 8 phones garner a greater following. Windows 8 will also offer better integrated cloud services between the desktop and mobile platforms. Unlike Apple, Microsoft has the added advantage of a huge installed base of Windows users as prospective customers for Windows 8. Thus, a successful Windows 8 launch can be expected to have more of a halo effect on Windows 8 phone sales, just on the basis of sheer numbers alone. So much is riding on the success of Windows 8 for both Microsoft and Nokia.
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