Nokia and Microsoft's sharp-looking new phone, the Lumia 900, is coming out today, and while there are no visible signs of panic, both companies desperately need a winner.
Nokia has been struggling for years now to compete in the rapidly changing mobile market, and Microsoft's Windows Phone 7 OS has achieved only 2% penetration. Both companies are in danger of being locked out entirely, and need a smash hit.
So far, the results of their labors look pretty good. But will that be good enough? Nokia lost $1.4b in 2011, which includes a fourth quarter cash payment of $250m made by Microsoft. If the Lumia isn't a breakout, is Microsoft willing to keep Nokia afloat?
Here's a look at how all the pieces are coming together:
The device is nice and the OS is all right
Physically, the new Lumia 900 is lovely. Nokia has developed it's polycarbonate unibody design through several iterations now, and the look is unlike anything else on the market except for, perhaps, a second generation iPod Nano. The fit and finish are reportedly superb - a sharp contrast to the chintzy feel exuded by most Androids. The colors of the AMOLED screen are richer than an iPhones, though some reviewers are complaining about inferior resolution. Photographs are through an 8mp Carl Zeiss lens (which means nothing), and they look merely OK.
The Windows Phone 7 OS is visually attractive, and is capable of competing with iOS and Android. First-time smartphone buyers (and there will be many of these over the next few years) will not be unpleased. Design fiends who prefer the look of Windows Phone 7 may convert. Android nerds and iPhone partisans will not, but that's hardly surprising.
There are early complaints about the number of apps available in the Windows shop: 80,000 and growing.
Evaluating an app store by it's quantity of apps is a mediocre metric, but it isn't meaningless. App quantity indicates the enthusiasm of a development community, if not necessarily the quality of it's labors. More Microsoft money is being spent to develop an "app campus" in order to encourage developer platform adoption.
The potential for powerful Xbox Live integrations is intriguing. If enough Windows Mobile phones are sold, this connection could be the site of some exciting action.
Carrier partnership is strong
The Lumia 900 will be available through AT&T at a price of $99, with a two year contract. The carrier is giving the phone "hero" placement as it's first big LTE phone, is permitting it to be used as a wireless hotspot for up to five devices (no doubt in part to highlight speed of new LTE network), and, as Matt Rosoff of Business Insider notes, is making the exclusive free phone for AT&T employees. This special treatment comes at the reportedly low, low cost to Nokia of $25m of Microsoft's money.
AT&T is undoubtably pleased to have a potential knock-out product that doesn't come with as many strings as working with Apple has.
Hey, isn't this like the Palm Pre?
Absolutely. The Palm Pre was given similar "hero" treatment by Sprint, which actually paid for the privilege in the form of marketing spend. Getting the Lumia into the pockets of AT&T employees is a smart move - one of the complaints made by Palm was that Sprint sales reps didn't know the product, and couldn't convey the finer points of it's unique WebOS.
The Pre was also positively reviewed by tech bloggers, positioned as an iPhone alternative, and heavily marketed. It didn't matter. Palm was subsequently purchased by HP, which recycled WebOS for use in their TouchPad tablet, which was positioned as an iPad alternative, heavily marketed, and also a humiliating failure.
The Digital Marketing: Microsites + Social Media + Video Campaign
Palm was widely mocked for attempting to out-cool Apple with arty, conceptual ads directed by Tarsem Singh that featured an early New Wave hit by the band Freur, and were probably derived from Ridely Scott's famous work for Chanel in 1980.
Nokia and Microsoft aren't playing that uptown game, at least not right away. Nokia has been making a large PR push targeting "influencers." The first several Lumia ads in mid-March portrayed the phone as the rugged choice of youthful male extreme sports enthusiasts under the slogan "Focus on Amazing," and exhorted viewers to sign up for trial phones. This was conducted through the main Nokia Facebook page and the web property Nokia Connects, which has been building the Nokia brand while focusing on photography.
Newer ads, released several days ago and picked up widely by gadget blogs, go negative on the iPhone. There are three of them: they're painfully unfunny, and are aimed squarely at Apple, which is portrayed as an arrogant corporate monolith. This is one example:
The videos push three critiques of the iPhone:
- The screen is hard to see in sunlight
- It breaks easily
- If you hold it wrong, it loses signal
The first point, about the screen, is probably a defensive positioning. Though the argument is correct - the iPhone does wash out - few people seem to be complaining about this issue. The bigger problem for Nokia in comparison with the iPhone is the lower screen resolution of the Lumia. The second point, about resistance to breakage, is a position of strength for Nokia. The third point, raising atennagate, is a little weird, because the iPhone 4S fixed this problem. But Nokia is willing to take what it can get, and perhaps there are still some low-hanging fruit out there who will find this ad compelling.
These ads direct to a microsite, Smart Phone Beta Test, which has three programs:
- To instill a sense of impatience, and connect it to a date. This is accomplished by the countdown timer and video of man waiting in an office, doing nothing.
- Distributing the three videos
- Hub for a Twitter influencer campaign focused on Beta Testers
As of 4/4, the Beta Testers microsite has been shared 1,287 times on Twitter and Liked 3k times. The hashtag for the Beta Testers Twitter https://twitter.com/#!/smartphonebeta campaign, #betaphone, has been tweeted 126 times http://www.hashtracking.com/fast-report/?hashtag=betaphone and the @smartphonebeta account has 650 followers.
These aren't huge numbers - they're a little fizz that can't hurt. The Lumia also has premier placement on Nokia and AT&T's websites. AT&T's Facebook also manages to squeeze mentions of the product in to it's messaging mix. But curiously there's not a word about the phone on any of Microsoft's digital marketing presences except for it's Windows Mobile site.
Time for a party
Today, for release day, Nokia is executing a Times Square takeover in NYC, which means coordinated digital billboards - hopefully clever ones that can be intereacted with via text or other means. A "special guest" is performing - and AT&T reps are claiming that the Lumia 900 is "above anything we've ever done."
The verdict
The Lumia 900 is a really nice-looking phone, but it's not revolutionary. The marketing is understated. Nokia and Microsoft are playing it cool. They don't want consumers - or anyone else - to spend time thinking how close to the edge they are, and they don't want to set up the Palm Pre narrative of "this is our do or die phone."
There's no show-stopper campaign that gets in front of the product - the PR and marketing for the Lumia 900 is very specifically targeted and articulated, and seems to be generating interest. Early adopters might buy this and be proud of it. Average AT&T store shoppers in for their first smartphone may "discover" it, and be seduced by it's lovely form.
Despite what the reps say, this isn't an iPhone-sized blockbuster. It's a really nice phone, and Nokia and Microsoft are hoping that it sells accordingly. With enough support from AT&T, it might.
Unfortunately for a slow-burn strategy, it's not clear that the targets Nokia and Microsoft are struggling to hit now will be relevant in, say, a years time. The mobile device market is poised for greater convergence between laptop, tablet, and TV functions.
Apple is in a prime position to pull the strings tighter between it's iPhone, iPad, computers, and Apple TV. Google and it's Android partners will be able to cobble a competing product together - and we've still yet to see what will come out of their Motorola acquisition. Amazon is lurking in the background as a wild card. RIM is a dead duck.
Without Microsoft, Nokia would be almost completely out of runway - the tragic backdrop for all of these events is that the company is slashing R&D spending and letting employees go.
Microsoft is in a curious position. It's still Microsoft. It has plenty of cash. It also has a lead on the race into the connected living room in the form of the Xbox. And now it's intimately involved with a mobile hardware manufacturer.
If the new Nokia phones fail to sell in the US and the company can no longer continue to operate independently, Microsoft is in position to harvest the assets and follow Google and Amazon as they attempt to Apple-fy into end-to-end digital service providers. They might not want to do this - liscensing is the story of Microsoft's success, and is what led them to market dominance - but they have the option open. And it might become necessary.
Sam Dwyer is an Analyst based in Econsultancy's New York office. He can be followed on Twitter @sammydwyer.
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