Nokia Drops Price Of Lumia 900: Lumia 920 Coming Sooner Than Expected?

Sep.11.12 | About: Nokia Corporation (NOK)

When I checked (NASDAQ:AMZN) to see the price of a Lumia 900 (NYSE:NOK), I was surprised. If one gets the phone with a 2-year AT&T (NYSE:T) contract, it only costs $10. This is incredibly cheap for a high-end smart phone and it shows me that the Nokia 920 will be hitting the shelves sooner than many expect it to do so. When Lumia 900 was introduced in the market for the first time, the users could buy it for $100 as long as they agreed to a 2-year AT&T contract. A few months ago, the company reduced the price to $49, which I personally took advantage of, and now it costs the buyers only $10.

Speaking of Amazon, so far, Nokia's Lumia 900 received 437 reviews with an average score of 4.6 out of 5.0. This is the highest average customer score of all high-end smart phones sold by Amazon. Out of the 437 reviews, nearly 400 are either 5-star or 4-star reviews. Indeed, this is a great score for a phone that is said to be "far behind" the competition.

On an unrelated note, the company will have an internal ethics investigation regarding its controversial advertisement last week. The company's ad included a "simulation" of what the Pureview technology on a Lumia 920 will look like, and the company did not indicate anywhere in the ad that it was a simulation. Initially, this received a lot of backlash from the social media; however, it turns out that the company's simulation was actually pretty accurate. Despite the botched advertisement, the company's Pureview technology is still superior to the competition. Earlier, the company apologized to the investors and consumers of the company about the ad incident:

Nokia recently apologized when it became clear that a video, which had been produced to demonstrate the benefits of optical image stabilization, failed to make clear that it was a simulation only and not shot using the new PureView camera on the Nokia Lumia 920. This video was produced while the Nokia Lumia 920 was in early prototype and still not ready to show the full benefits of the amazing innovation it contains. While there was no intention to mislead, the failure to add a disclaimer to the video was obviously a mistake, and we apologize for the misunderstanding it did cause.

Some say there is no such thing as a bad advertisement. I am actually starting to think that the recent developments might be actually good for Nokia. First, there is going to be a time gap between Lumia 920's announcement and actual introduction to the market. The controversy surrounding the way the phone was advertised will keep it in media's focus for a while, and hopefully, this will keep the hype going for long enough. Second, now that Lumia 920's photographic capabilities received a lot of attention, a lot of people will start testing it to see what the whole controversy is about. Without the botched ad, the device's photographic ability might not have gotten as much attention. Once the phone comes in the market, there will be a lot of videos on the internet and TV comparing its video capabilities with that of other phones.

The company also provided more details about launching of Lumia 920 in the markets. So far, the details regarding the phone's introduction in the US market is limited; however, there are more details regarding the phone's introduction in the European market. It looks like Europeans will be able to buy their first Lumia 920s in November. The phone will come with Vivendi, France's second largest mobile operator and Telecom Italia, Italy's largest operator. Nokia is also in talks with Everything Everywhere, the parent company of Orange and T-Mobile in the UK, for a potential November launch of Lumia 920. The smaller European nations might have to wait until 2013 in order to obtain the phone. Many people tend to do their gift and electronics shopping around Christmas and New Year's time; and it will be a shame if Lumia 920 can't get to as many markets as possible before Christmas.

At this point, I don't expect many people to buy the Lumia 900 when the introduction of the Lumia 920 is only a couple months away. I ended up buying the Lumia 900 about 6 weeks ago and I am very happy with it; however, I am also sad that I will have to wait a while before I can get my hands on the Lumia 920. Now that the Lumia 900s price (with a 2 year AT&T contract) is ridiculously low, bargain hunters might find a lot of value in this phone. If someone doesn't care about having a Windows 8 Phone and they just want to have a great phone at a great price, this will present a great opportunity. By the time the Lumia 920 comes to the market, Nokia's Lumia 900 inventory must shrink as much as possible.

As usual, I continue to be long in Nokia. I am willing to sit this through and see where it leads. There is no such thing as completely safe investment, and Nokia still has a lot of issues to work through. I would recommend investors allocate a small percentage of their portfolio to Nokia until the company is at least able to show profits. In the short term, the biggest threats for Nokia are Apple's (NASDAQ:AAPL) iPhone 5 launch, being able to market Lumia 920 efficiently and being able to supply the market sufficiently when the phone is introduced. If Nokia can deliver enough of Lumia 920s before the hype wears off, the phone can be quite profitable for the company.

Disclosure: I am long NOK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.