Nokia's Lumia 920 Is Priced Pretty Aggressively In The U.S.

Nov. 9.12 | About: Nokia Corporation (NOK)

Once the Lumia 920 was announced by Nokia (NYSE:NOK) many people thought they would give the phone a try as long as it was priced right. Nokia tends to distribute its phones to the local sellers and let them decide the price tag of the phone. That's why Nokia phones usually carry large price variations between countries. It looks like AT&T (NYSE:T), who has exclusivity of Lumia 920 in the US decided to price this phone very aggressively. The phone's price tag is $450 without contract and $100 with contract, which is much lower than the competition, such as Apple's (NASDAQ:AAPL) iPhone 5 which has a starting price of $649 without a contract or Samsung's Galaxy S III which starts from $549.

While this may hurt margins of the company, this will help it sell more phones, bringing it more visibility. Having a larger visibility will help Nokia greatly when it comes to marketing the phone. If a good quality phone is widely used, it will attract more users over time. In addition to pricing the phone very aggressively, AT&T also decided to throw in a free wireless charger for the phone.

It also looks like Lumia 920 will be available in many countries simultaneously. The latest country to have Lumia 920 this November is said to be India. While India is the biggest market for Nokia and the company still enjoys the status of the largest mobile phone company in the country by volume, Nokia's management waited until a few months ago to release Lumia 900 in the country. With Lumia 920, the company is being more aggressive, which I most certainly like.

AT&T will sell Lumia 820 for only $49 with a 2-year contract. Keep in mind that these contracts actually force customers to buy data services which start from $30 a month. While customers think they are getting the phones for almost free, they actually end up paying the full price of the phone during the life of a contract. If the contract gets cancelled by the customer, the service providers will make sure to get the phone's remaining cost from the customer. On the other hand, most people simply don't know or don't care about this part of the deal, evidenced by the large number of phones sold with these contracts by service providers like the AT&T and Verizon (NYSE:VZ).

Possibly, Nokia can sell a lot of Lumias in the USA as long as the sales associates from AT&T and Verizon cooperate with the company's efforts. Earlier, Stephen Elop said that the company would plant Nokia's people in many AT&T and Verizon stores in order to help push these phones to Americans. Earlier the company's CEO Stephen Elop mentioned this in an interview:

We have the primary role in retail execution with our devices. While Microsoft will help with this and work on this as well, it will be Nokia people, or people under Nokia contract, who are the principal people doing training, doing in-store support, to make sure that our devices are well-represented...There are teams of people in the United States right now who are ready to go into operator stores -- and other retail outlets -- to help people best expose the Windows Phone products, to help them understand how best to present them, which features are important, and so forth...This is a really important time for us, so we're encouraging all employees to actually engage in this and help us communicate these messages.

This move alone should help Nokia sell far more Lumia 920s than the number of Lumia 900s sold by the company since the phone's release. In a number of European countries the phone is already said to be facing a strong demand. Nokia only has one shot at getting this right, and if the company achieves positive cash flow from the latest Lumias, this will mark a successful turnaround for it. Then we will safely be able to say that Stephen Elop successfully turned the company around and became Nokia's Alan Mulally, which I claimed he had to potential to be several months ago.

If a phone is successful in the US (and this is not only limited to phones either) it can make an impact all over the world. The US is like the showcase of the world. Whatever becomes popular here becomes popular elsewhere shortly after. This is why Samsung is heavily invested in this country.

I am a firm believer that Nokia's turnaround will be successful and we are nearing to the end of this turnaround. After the Nokia Maps & Navigations and Nokia-Siemens Networks, it's time for Nokia's handsets division to stand up.

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.