LAS VEGAS--Nokia (NYSE:NOK) hopes at some point to have a single flagship Lumia Windows Phone smartphone across all the major U.S. carriers, as Samsung Electronics has done with its recent Galaxy S phones. However, as Microsoft (NASDAQ:MSFT) prepares to acquire Nokia's devices business, a senior Nokia executive acknowledged that the company is not there yet.
In an interview with FierceWireless here at the 2014 Consumer Electronics Show, Jo Harlow, Nokia's executive vice president of smart devices, said that when Nokia reentered the U.S. market with its Lumia phones running Microsoft's Windows Phone software, it needed to reestablish relationships with carriers. So it has built a strategy around building specific, exclusive devices for operators--the Lumia 1020 for AT&T Mobility (NYSE:T), 928 for Verizon Wireless (NYSE:VZ) and 925 for T-Mobile US (NYSE:TMUS), for example.
"That strategy has allowed us to grow with the individual operators," she said. "There will be a point in time where it becomes more efficient for everyone to move to a single device that we're all marketing. When is that point? I'm not sure yet."
Nokia has a long way to go before then. Although in the third quarter it shipped a record 8.8 million Lumias (up from 7.4 million in the second quarter and up significantly from 2.9 million in the third quarter of 2012) Nokia still badly trails the market leaders in smartphone volumes. Additionally, although Windows Phone now has more than 200,000 apps, including popular ones like Instaram and Vine, the platform itself is still way behind Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS in terms of market share.
Yet Harlow said Microsoft bringing Nokia into the fold will yield multiple benefits. The deal is expected to close this quarter, and Harlow said "this is the largest acquisition from a Microsoft perspective and they are highly motivated to make this work extremely well."
As for what will change, Harlow said that Nokia will be able to work more directly with Microsoft's operating system group, headed by Terry Myerson, as well as its "experiences" team, which includes apps like Skype and Lync, Microsoft's enterprise messaging service. Additionally, she said Nokia will be able to share its innovations in areas such as camera software with Microsoft earlier, and will be able to see what is coming in terms of software enhancements earlier as well.
"I think the most important thing is that a certain amount of cross-pollination will make the integration go as fast and be as successful as possible," Harlow said. She said the goal the companies have is "to make the acquired company feel a part of the bigger mother company and for the mother company to look at the acquired company as fundamental part of the operation."
Harlow declined to give a 2014 sales target for Nokia's smartphone business but made it clear that Nokia and Microsoft expect shipments to continue to rise. "Our plan is to grow. There is scope for us to continue grow very aggressively," she said. "And the reason I say that is, as our installed base expands, the influence that that installed base has on other consumers becomes greater." In other words, more Windows Phone users will lead to more interest in the platform, and to more Windows Phone users. "Over time, if you look at most successful brands, the growth curve is fairly steep," she said.
Nokia's best-selling Windows Phone device in 2013 was the low-end Lumia 520. Harlow said that "the opportunity for affordable smartphones is not unique to the U.S. and is certainly growing massively all over the world, arguably in Asia and EMEA faster" as feature phone customers move up to smartphones. She said Nokia's goal is to drive both innovation and scale.
"We will continue to develop new products like the Lumia 520 and push the Lumia line to newer and lower price points," she said, while also bringing "the experiences that we deliver in our-high-end products to our low end as well." Those include features like Cinemagraph, a camera tool that creates animated images.
As for whether Nokia will jump into wearable computing, Harlow said that "it is a keen area of interest." She said single-purpose devices such as FitBit are here to stay, but that wearables need to crack issues on design and purpose or value. "What are the unique things that I get from a wearable that are just what I need, when I need it, where looking at my phone [would] be inconvenient?"
And finally, what about the rumor that Nokia is developing a smartphone running on a forked and modified version of Android? Harlow declined to outright deny the reports, but said it is "not something I can comment on."
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