LAS VEGAS--Nokia (NYSE:NOK) plans to focus both its technical innovations and marketing for its Lumia phones running Microsoft's (NASDAQ:MSFT) Windows Phone 8 software on its imaging and location capabilities, according to a senior Nokia executive.
Nokia's Chris Weber, executive vice president of sales and marketing, also said right now the company is focused on building its existing relationships with U.S. carriers Verizon Wireless (NYSE:VZ), AT&T Mobility (NYSE:T) and T-Mobile USA, rather than on expanding to more carriers. "We constantly evaluate, in the U.S. market or whatever market, what partners we're with," he said. "Right now our focus is really on broadening the portfolio with AT&T, Verizon and T-Mobile." Weber said the goal for 2013 is to have high-end, mid-range and low-end Lumia devices at all of its carrier partners.
In an interview here at the 2013 Consumer Electronics Show, Weber said that as it expands its device portfolio Nokia will be focusing on its imaging technology and software as well as its "here" location platform as key points of differentiation. "We're just getting started on those innovations," he said, referring to the optical imaging stabilization capabilities in the Lumia 920. "We can create some experiences that are really different and better for consumers."
Weber said that Nokia will continue to improve on imaging hardware and software, and he pointed to its PhotoBeamer application as an innovation. The app allows users to wirelessly transfer photos between phones without actually transferring the photo files from one phone to another. Weber said Nokia will also continue to highlight its location services like its city Lens augmented reality app and Nokia Drive for directions and Transit for public transportation.
Weber acknowledged that Nokia has been working with Microsoft and operator partners on its marketing and sales strategy and that these aspects of Nokia devices can sometimes get lost. He said the goal is to highlight these facets not only in TV ads but all the way down to getting retail sales representatives to highlight them as well. "I think we can take another step forward," he said, adding, "The opportunity is to pick one or two things that really excite the consumer."
The Nokia executive also acknowledged that the company still has to make progress and faces challenges. The company reported shipping 2.9 million Lumia smartphones worldwide during its third quarter, down from the 4 million the company shipped during the previous quarter. In the North American market, Nokia reported shipping 300,000 devices, down from 600,000 in the previous quarter.
Still, Weber said Nokia is confident about the switch to Windows Phone as its primary smartphone platform because of the ecosystem Microsoft has and is increasingly tying together among Windows 8, Xbox, Kinect, SkyDrive cloud storage and more. That ecosystem, he said, will allow Windows Phone to withstand challenges from Research In Motion's (NASDAQ:RIMM) Blackberry 10 and other competing, smaller platforms.
"This ecosystem game is not for the faint of heart," he said. "It's difficult. It takes massive investment." He said Microsoft's ecosystem goes beyond phones to tablets, PCs and gaming systems. "An ecosystem won't survive without that. It has to have rich assets," he said. "We have to earn the right to be that third ecosystem. But they have the building blocks and the platform that scales beyond mobile phones. I think those companies that don't have that will be quite challenged."
On Thursday, a day after the interview with Weber, Nokia released preliminary results for the fourth quarter of 2012 and said it sold 4.4 million Lumias in the quarter, its most ever in a quarter yet. The Finnish firm said that its key devices and services unit exceeded expectations and achieved underlying profitability in the quarter. The news sent Nokia's shares as much as 18 percent higher, according to Bloomberg. However, Nokia warned that seasonality and the competitive environment in the first quarter of 2013 likely will mean that it will be a weaker quarter for devices and services than the fourth quarter was.
Nokia said that the devices and services business had sales of $5.15 billion, up from $4.7 billion in the third quarter but down from around $7.9 billion in the year-ago period. Nokia shipped 86.3 million total handset units in the quarter, including 9.3 million of its touchscreen Asha line.
Interestingly, Nokia also said that Nokia Siemens Networks exceeded expectations for the fourth quarter, delivering record underlying profits and a third consecutive quarter of underlying profitability. The vendor benefited from a strong performance in higher margin product categories and geographic regions and better than expected cost management. Nokia Siemens is in the midst of a restructuring that will ultimately see as many as 17,000 jobs cut by the end of the year as it transitions to a focus on mobile broadband. Nokia said NSN's non-IFRS operating margin for the fourth quarter is now expected to be between 13 and 15 percent on sales of $5.3 billion.
- see this release
- see this Bloomberg article
Microsoft aims to spread Windows Phone to Tier 2 U.S. carriers
Nokia's Elop hints at more Lumia Windows Phones from Verizon
Nokia unveils cloud-based location service 'Here'
Verizon, AT&T, T-Mobile get ready for Microsoft's Windows Phone 8 push
Verizon to launch Nokia's Lumia 822, throwing its support behind Windows Phone
AT&T to launch Nokia's Lumia 920 and 820, giving handset maker a boost