Device operating systems

Price Is Right for Nokia's Windows Phone

Falling smartphone prices are one reason why Windows Phone, despite a slow start, is well positioned to overtake Android in market share as soon as 2013.

Pyramid Research 's forecast that Microsoft Corp. (Nasdaq: MSFT)'s operating system would lead the pack by 2015 attracted skepticism when it was first published in May, but just two months later, market dynamics continue to support the fact that Windows Phone is off to a good start. (See Why Windows Phone Will Beat Android and Windows Phone & World Domination.)

The main reason is price. Nokia Corp. (NYSE: NOK) is rumored to soon be reducing prices on its Symbian Ltd. -based handsets by 10 percent in an effort to slow the decline of its market share as it transitions to Windows Phone. It's a mode of damage control, says Pyramid Research analyst Stela Bokun. (See Nokia Lowers Outlook, Shares Slump and Symbian Is Dead. Long Live Windows Phone.)

"For Nokia, it’s about making sure that they keep the loyal customers until they are ready to entertain them with the new devices," Bokun wrote in an email to LR Mobile. Nokia would prefer to transfer these consumers from Symbian to WP7 rather than have to fight for them back once they've gone to a competitor.

At the same time, Microsoft is preparing to lower prices, as it expects the production cost for WP devices to decline to $100 to $150 next year. This will have major implications for the price of Windows devices, as well as their appeal to consumers, carriers and hardware makers, Bokun says.

The result of the falling prices at Microsoft and Nokia could be a very good start for the Windows Phone ecosystem. Nokia will likely retain some market share despite an early slide, more hardware makers will consider building WP7 devices given the lower production costs, and more consumers will look at the phones given their lower price tags.

Of course, Android's scale is driving its prices down as well, but the recent scuffles between Apple, High Tech Computer Corp. (HTC) (Taiwan: 2498) and other Android partners may have some handset makers diversifying to rely less heavily on the OS. Windows Phone could be the most attractive alternative. (See Apple Wins Patent Victory Over HTC and Wireless Competition's Courtside Seats .)

"With the change in the price of WP devices, and the multivendor strategic approach of Microsoft, the main advantage of Android -- scale -- may be removed," Bokun said back in May. (See Nokia Boss Declares War on Android.)

— Sarah Reedy, Senior Reporter, Light Reading Mobile

optodoofus 12/5/2012 | 4:58:25 PM
re: Price Is Right for Nokia's Windows Phone

The article starts off by saying " Windows Phone, despite a slow start, is well positioned to overtake Android in market share as soon as 2013", and then justifies this statement by talking about rumors that Nokia may be cutting prices in the future.

Is it a slow news day and someone had to make quota?  Or a blatant shill paid for by Mcrosoft and/or Nokia?

I expect better from this website. 


sarahthomas1011 12/5/2012 | 4:58:24 PM
re: Price Is Right for Nokia's Windows Phone

Nokia has already cut prices on its flagship phones in Europe, and I expect more cuts to come. Microsoft confirmed that much, and it's going to happen across the board. It's not going to be easy for Windows Phone to gain share, especially when its main partner posted such a big loss in the second quarter, but I think there's still room for a third OS.

opticalwatcher 12/5/2012 | 4:58:20 PM
re: Price Is Right for Nokia's Windows Phone

Considering that Nokia effectively end-of-lifed its present smart phone operating system, the large sales decline and losses are (or at least should be) expected.

The Symbian phone sales were already starting to drop off well before any alliance with Microsoft--it just would have otherwise been a long, slow, painful process. It really is a gutsy move by Nokia to make a clean break. Everyone likes to second guess, but most aren't looking very carefully at and don't have to take responsiility for the bleak prospects of their other options.

The real question is if Nokia can get its Windows phone out and start making significant sales before its losses become overwhelming. I'm sure Microsoft would help out if it came to that.

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