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Lumia 900: Do-or-die for Nokia, Windows Phone in U.S.?

Low cost LTE phone -- free to new AT&T customers and $100 for others -- could provide boost versus iPhone, Android smartphones

Nokia's Lumia 900 smartphone goes on sale April 8 in what many analysts believe is a do-or-die moment for Nokia and Microsoft's Windows Phone OS in the key U.S. market.

The Lumia 900, which will run exclusively over AT&T's fast 4G LTE network, is priced at $99.99 with a two-year contract, making it among the lowest-priced LTE smartphones on the market. (AT&T was offering Lumia 900 pre-orders over the Web for free, applying the discount at checkout only to new AT&T customers. But it wasn't clear how long that deal would last.)

Desite its LTE support and low (or free) price, the Lumia 900 is not considered at the forefront of smartphones when comparing its specs with recent competitors and upcoming devices such as the next generation iPhone expected this summer.

The Lumia 900 does offer a 4.3-in. Amoled, 480 x 800 pixel touchscreen for viewing large, clear images, an 1830 mAh battery for seven hours of talk time, and an 8 megapixel rear-facing camera with an aperture that can capture images in low light. The camera can also record high definition video and is complimented by a 1 megapixel front-facing camera.

Still, Lumia's 1.4 GHz Qualcomm APQ8055 processor is just a single core, while many new Android phones boast dual and quad-core chips.

The Lumia also doesn't offer Near Field Communication for mobile wallet purchasing, a feature that's already available on some Android phones and is widely expected to appear in the next iPhone.

The biggest question for Nokia and Microsoft is whether customers will curry to the Windows Phone operating system, which currently holds less than 3% of the U.S. smartphone market, analysts noted.

Nonetheless, most market analysts believe a $99.99 price tag for an LTE phone will woo new smartphone customers. More powerful LTE phones are generally priced between $200 and $300.

"It's very, very important for Nokia to make a statement in the U.S. [with the Lumia 900]," said Ken Dulaney, an analyst at Gartner.

"The problem is that if Microsoft fails with [Windows Phone 7], it takes down Nokia even when Nokia does everything right. Windows Phone 7 has struggled. It doesn't seem to have blunted the growth of Android and iOS," Dulaney said.

"But free is free [with pre-orders] and that's a good value. It's a big 4.3-in. phone at $0, so that is pretty significant," he added.

The free pre-orders could be a sign that pre-orders for the Lumia 900 have been lower than AT&T had expected, Dulaney said.

AT&T started taking pre-orders on March 30.

"Still, I think it's a little too early to panic," said Jack Gold, an analyst at J. Gold Associates, calling a free Lumia 900 "a pretty sweet deal."

Even at $99.99, Nokia and Microsoft were being aggressive "and trying to buy market share" from the iPhone and Android-based devices, Gold added.

AT&T's offer of free Lumia 900 phones to new customers and other expected promotions show that the carrier is trying to offer a "new and exciting" alternative to the iPhone and Android phones, Gold said. A successful Lumia 900 would also give AT&T leverage in future iPhone negotiations with Apple, he added.

"The Lumia 900 is very nicely built and worth well over $99, but adoption will depend on whether users embrace Windows Phone," Gold said. "This is a real bargain price entry for many users sitting on the fence.

"I see it as a win for everyone--Nokia, Microsoft and AT&T--but also a risk. If it doesn't do well, Nokia and Microsoft will have a challenge on their hands. If it can't be successful in the U.S. market, Nokia faces a very uncertain future, while AT&T has very little to lose," he added.

Ramon Llamas, an analyst at IDC, said Nokia, Microsoft and AT&T need to educate buyers about the value of Windows Phone's front screen live tiles and ability to quickly connect to social networks, email and other functions.

"Nokia knows they face an uphill challenge in the U.S.," Llamas said. "In Europe, they are the unquestioned leader, but they are coming to the U.S. with no footprint, where Android and iPhone are very popular. There's a lot of work to do."

Llamas said Windows Phone should be attractive to workers wanting an inexpensive smartphone because the OS offers connections to the Microsoft Office suite, including Word and Excel.

Users aren't likely create a spreadsheet on a smartphone, but they can use Excel to check data in a spreadsheet while on the run.

Several analysts said Nokia needs more than one or two devices to compete in the U.S.

T-Mobile USA began selling the Lumia 710 , a 3.7-in. smartphone, for $50 after rebate, on Jan. 11.

A Nokia official said the 710 has done very well, though she wouldn't divulge sales figures.

"If the 710 is any indication, this 900 will be a really big launch," said Valerie Buckingham, head of North American marketing for Nokia.

She refused to divulge any plans for future Lumia devices in the U.S., but said it will be a "product line for a long time."

Buckingham called 2012 a "comeback year" for Nokia to the U.S., noting that Nokia's market research has found ample numbers of U.S. smartphone users who recall using -- and liking -- Nokia phones before the emergence of the iPhone.

"Nokia has the largest brand and will be re-introduced in the U.S., [which doesn't have] negative connotations about Nokia," Buckingham said.

"There's an incredible love for Nokia. Even though we are a challenger, we really do have many people rooting for us. Many people say Nokia was their first phone, the one that still worked after being dropped in the toilet, and the one they drove their car over and it still worked," she added.

Buckingham argued that the Lumia 900 shouldn't be boiled down to a series of specs, and that smartphone users have more of an an emotional attachment to their devices than they have to computers or other devices.

"You can't reduce the Lumia 900 down to a longer battery or a brighter screen, but it should be what it means to a customer or makes life better," she added. "We take a complex and subtle approach, and see the emotional meaning of it."

Nokia, Microsoft and AT&T are coordinating an unusual level of attention to marketing the Lumia 900, providing special training to AT&T sales reps and adding special displays and signs inside AT&T stores, Buckingham said.

"It's beautiful, runs LTE, is easy to use and personalize," she said. "It's the first phone that really got it all right. The $99.99 price is the cherry on the cake."

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen , or subscribe to Matt's RSS feed . His e-mail address is mhamblen@computerworld.com .

Read more about mobile and wireless in Computerworld's Mobile and Wireless Topic Center.


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