Representatives from four major European operators that have been selling Nokia's (NYSE:NOK) Lumia Windows Phone smartphones don't think the devices can effectively compete with Apple's iPhone or smartphones running Google's (NASDAQ:GOOG) Android platform, according to a Reuters report.
Under the cover of anonymity, the operators told Reuters that Lumia phones are overpriced and not innovative, and they said there is a lack of marketing dollars put behind the phones. Additionally, they said the early Lumia models have suffered image problems caused by glitches in the battery and software. Part of the blame is being laid at the feet of Nokia's key partner, Microsoft (NASDAQ:MSFT), which is banking on Lumia sales to propel Windows Phone deeper into the consumer consciousness.
"No one comes into the store and asks for a Windows Phone," an executive in charge of mobile devices at a European operator, which has sold the Lumia 800 and 710 since December, told Reuters. The executive added: "If the Lumia with the same hardware came with Android in it and not Windows, it would be much easier to sell."
A spokesman for another European operator, who did not want to be named, complained about the price of Nokia's European Lumia models: "If they could lower the price we think they could sell more," the spokesman said. "It might be worth making it a bit of a loss leader to get it out of the door. It's not rocket science."
Nokia said it is seeing positive momentum for its Lumia devices and that the lineup has been launched in 42 markets globally, including the U.S. and China, the world's two largest smartphone markets. "Our flagship Lumia 900 is off to a strong start and is exceeding expectations with AT&T in the U.S. We continue to work closely with, and receive the support of our operator partners," Niklas Savander, Nokia's executive vice president of markets, told FierceWireless in a statement. "Currently, more than 80 operators in Europe are offering Lumia. Just last week, we introduced the Lumia 610 NFC, with Orange as the first operator to bring it to market."
The seeming lack of support for Nokia comes at a trying time for the company as it transitions to using Windows Phone as its primary smartphone platform. Moody's cut its rating on Nokia's debt to Baa3 from Baa2, and maintained a negative outlook, meaning that Nokia could be downgraded by Moody's to "junk" status. Moody's said it was worried by Nokia burning through cash and its deteriorating feature phone business. Last week Nokia indicated that its key non-IFRS Devices & Services operating margin would be around negative 3 percent in the first quarter. For the second quarter, Nokia said it expects its Devices & Services operating margin to be similar to or below the level of the first quarter.
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Article updated April 17 with a statement from Nokia.