The price of Nokia's (NYSE:NOK) flagship Windows Phone smartphone at AT&T Mobility (NYSE:T), the Lumia 900, was cut in half to $49.99, though both Nokia and AT&T insist that sales are doing well and that the price change is part of normal business operations.
Nokia Lumia 900
The cut comes a little more than three months after the LTE-capable Lumia 900 went on sale for $99.99. Although such price changes are normal in the lifecycle of many smartphones, the change for the Lumia 900 has attracted more attention because of Nokia's recent struggles as it tries to regain momentum in the smartphone market via Microsoft's (NASDAQ:MSFT) Windows Phone. Nokia is expected to post weak second-quarter results on Thursday after it lowered its outlook for the quarter last month.
AT&T promised its largest smartphone advertising push for the Lumia 900 when it went on sale in early April. Both companies have said sales have exceeded expectations, but had not provided précises sales figures.
Still, Nokia and AT&T went to paints to downplay the significance of the price change. Nokia spokesman Keith Nowak told FierceWireless that there was "nothing unusual or alarming about it," and that both AT&T and Nokia work together on pricing, which in the U.S. market is often dictated by rational activity carriers engage in. He also pointed out that AT&T has started offering the Lumia 900 in pink, in addition to cyan, black and white, and that carriers do not often add SKUs for phones that are not performing well.
"We continue to be pleased with sales of the Lumia, which is part of our industry-leading portfolio of smartphones, and we routinely offer promotions on handsets," AT&T spokesman Mark Siegel told the New York Times.
According to an analysis by asymco analyst Horace Dediu, Nokia has sold a total of 330,000 Lumia phones in the United States.
Lumia 900 owners may have been stung last month when Microsoft noted that older Windows Phone 7.5 phones like the Lumia 900 will not be fully upgraded to Windows Phone 8 later this year due to hardware limitations. The current Lumia range and all other Windows Phone 7.5 phones will get an upgrade to Windows Phone 7.8, which will deliver a more customizable home screen, one of the central features of the new software.
"Nokia cutting the price on the Lumia probably has to do with the phone not being compatible with the next version of the Windows Phone operating system and it needing to clear out its inventory," Michael Schroeder, a FIM Bank analyst in Helsinki, told Bloomberg. "Nobody will want to buy the current version once the new operating system is out."
Nokia has committed to Windows Phone 8, which has received support from a wide variety of handed makers and U.S. carriers. AT&T, T-Mobile USA, Verizon Wireless (NYSE:VZ) and U.S. Cellular have all voiced support for the platform, and greater carrier support is seen as crucial to Windows Phone gaining more traction in the market. Along with Nokia, HTC, Huawei and Samsung have also committed to releasing Windows Phone 8 devices this year.
- see this WSJ article (sub. req.)
- see this NYT article
- see this asymco post
- see this Bloomberg article
- see this Reuters article
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