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Nokia’s (NYSE:NOK) comeback plans for the lucrative U.S. market got a huge boost this week. The company recently announced that it has garnered the support of the country’s largest wireless carrier, Verizon (NYSE:VZ), for its Lumia line of Windows Phones. [1] The Lumia 822, which will be made available in the coming weeks, has been custom-built for Verizon and is a close relative of the Lumia 820 and 810 released earlier on AT&T (NYSE:T) and T-Mobile respectively. Also, priced at $99, it is a mid-range smartphone aimed at first-time smartphone users. With this announcement, Nokia now has a customized smartphone for three of the four largest national carriers, giving it enough exposure to make its latest U.S. foray count.

The U.S. smartphone market is extremely crucial for handset makers since success here generally translates into positive consumer sentiment in other markets. It is therefore important that Nokia figures out the U.S. market, where it has historically lagged rivals. AT&T, which is backing the Lumia to the hilt and is the only carrier to have the high-end Lumia 9xx, could use its past iPhone experience to prove an able ally in this quest to create a third mobile ecosystem. However, considering that the Windows Phone has little brand awareness currently, Nokia will need all the carrier support it can garner. Product-wise, the Lumia looks a strong competitor to other popular smartphones and giving carriers’ exclusive access to different custom-built Lumias could help Nokia win more carrier backing, which, together with Microsoft’s Windows push in the coming months, could be instrumental in putting more Lumias in people’s hands.

See our complete analysis for Nokia stock here

Nokia banking on Microsoft and carrier partnerships

The timing of the Lumia launch will however put Nokia in direct competition with a host of popular smartphones such as the iPhone 5 and the Galaxy Note II. To counter that, Nokia’s strategy is to align the Lumia launch with the recent release of Windows 8 so as to benefit from Microsoft’s Windows push during the holiday season. Looking to carve a niche for itself in the fast-growing mobile market, Microsoft will put its marketing muscle behind the combined Windows 8/Windows Phone 8 story and leverage its huge PC user base to drive sales during the holiday season and beyond. Hardware partners such as HP, Asus, Acer and Dell are also expected to make the best use of the holiday season to boost PC demand with their respective launches of Windows 8-powered ultrabooks, tablets and PCs. In its own words, Microsoft is preparing to make the Windows 8 launch its “biggest product and services launch” ever.

In addition to Microsoft’s push, Nokia will be counting on support from carriers who are looking to increase competition in the smartphone market and lessen the impact of subsidies on their margins. Offering carriers exclusive access to different custom-built Lumias is how Nokia is looking to get more marketing dollars behind the Lumia brand. With different Lumia models, carriers will look to differentiate themselves from competitors better and try to make the most out of the ‘exclusivity’ they have over their respective Lumias.

AT&T, which had exclusive access to the Lumia 900 earlier this year, put a lot of marketing weight behind it, affording the phone “hero” status at its stores and making it the exclusive free phone for all AT&T employees to generate awareness. The Lumia therefore not only benefited from a greater marketing push of its founding partners but also one of the country’s biggest national carriers. This ensured that the Lumia 900 was among the top three best-selling handsets at AT&T until July, a period of four months since launch. [2]

WP8 has essential ingredients for success

Overall, the Lumia has seen decent traction build up with carrier support in the U.S. and China helping Nokia sell about 11 million units in all, with sales doubling in the first three quarters since launch late last year. However, where carrier partnerships have not been hard to come by, getting people to warm up to the Windows ecosystem has proved increasingly tough considering how well-entrenched Android and iOS have become as mobile ecosystems. The iTunes store and Google Play boast close to 700k apps respectively while there are only a little over 115K available in the Windows Phone Marketplace.

This is where WP8 offers both Nokia and Microsoft their best chance to find a place in the growing mobile market. While building Windows 8 and WP8, Microsoft ensured that both share the same kernel and therefore inherit the same rich feature set that has made Windows a household name in the PC industry. This will help integrate the two platforms closely, thereby making apps developed for either platform easier to port. Having a huge user base for its Windows PC platform will therefore help Microsoft generate significant support for the new integrated Windows8/WP8 user experience, from both developers and users alike, thereby driving the sales of Windows Phones in general and the Lumia in particular.


Notes:

  1. Verizon Wireless introduces Nokia Lumia 822 to Fall portfolio, Nokia Press Release
  2. Apple’s iPhone 4S is no longer the top-selling smartphone in the U.S., BGR.com, September 4th, 2012

Disclosure: No Positions

Source: Nokia Prepares For U.S. Assault As Verizon Boards The Lumia Bus