Expectations were always high for Nokia’s next round of handsets. Ever since the company partnered with Microsoft, Nokia CEO Stephen Elop promised great things were ahead for the Finnish-based company, and we enthusiastically agreed in our early review. Unfortunately, not everyone is as optimistic about the company’s future.
According to the New York Times, James Faucette, an analyst for Pacific Crest Securities, has drastically cut his shipment projections for Nokia Windows Phone sales this quarter – from 2 million to a measly 500,000. It’s not so much that Nokia produced bad phones; rather, the handsets were not competitively priced, nor did they present a clear advantage over other Windows Phone devices.
With no breakthrough innovation, we believe Nokia’s new phones are unlikely to get traction in a highly concentrated high end, Mr. Faucette said in a research note.
The saturated market is exactly what Nokia is aiming to get a piece of with its Windows Phone-based devices. A few weeks ago, Elop revealed the company’s lofty ambitions to undercut its Windows Phone competition going forward – an objective the CEO said has little concern for profit margins.
Currently, the Lumia 800 is only available to a limited market in the UK, with an early 2012 release slated for the US. So figures may potentially change once a wider audience is reached. However, Ross Rubin, a consumer electronics analyst for research firm NPD, isn’t so sure. Because most American’s are already invested in apps and media for their Android, iPhone or BlackBerry devices, consumers are unlikely to change OS’s, Rubin said.
Microsoft shares some of the blame, too. Overall, Windows Phone 7 hasn’t been the resounding success some people hoped for, especially compared to the popularity of Apple’s iPhone and Google’s Android. In fact, during a recent meeting with financial analysts, Steve Ballmer admitted Microsoft hasn’t “quite sold as many [Windows Phone devices] as I would have liked in the first year.”
Despite this Nokia is remaining steadfast and confident heading into the new year. The company recently said that orders for its Lumia 800 have so far been strong, “The level of pre-orders, as well as reaction in shops today, lead us to be very positive.”
The stakes are indeed high. If the partnership is to be successful the two companies need to hit a homerun, and soon. Developer interest is on the rise for Microsoft’s mobile platform, so the time is right. Maybe the future isn’t as bleak as some believe.
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