Operators: Nokia would sell better with Android

Nokia Lumia

European operators want Microsoft to spend more on marketing the Nokia Lumia brand

Nokia's handsets would sell better if they ran Android and not Windows Phone, mobile operators have said.

The Nokia Lumia isn't good enough to compete with Android rivals or the Apple iPhone, according to four European mobile operators interviewed by the Reuters news agency.

"No one comes into the store and asks for a Windows phone," said an executive in charge of mobile devices at one European operator selling the Lumia 800 and 710.

"Nokia have given itself a double challenge: to restore its credibility in terms of making hardware smartphones and succeed with the Microsoft Windows operating system, which lags in the market," the executive said.

If the Lumia with the same hardware came with Android in it and not Windows, it would be much easier to sell

He said Microsoft's software worked nicely with PCs and allowed you "to do tonnes of cool things" but few customers knew this. "If the Lumia with the same hardware came with Android in it and not Windows, it would be much easier to sell," he said.

Alternative required

Operators want a viable alternative to Apple and Android, not only to offer customers more choice but to give them a stronger bargaining position with phone manufacturers.

"It's good for operators if we can reduce the dominance of Apple," said a spokesman for a second telecoms carrier, who asked not to be named.

Apple uses its dominant position to dictate to operators the minimum number of iPhones they must buy and the size of subsidies they must offer to reduce prices for consumers. The carriers then have to recover the cost by signing up customers to multi-year contracts.

Apple's iPhone costs operators between €600 to €700, while top-end Samsung smartphones can cost €300 to €500. Some complain the Lumia line is too expensive, despite Nokia selling the range to operators and distributors for an average €220 last quarter, well below what had been expected.

AT&T sells the new Lumia 900 for $99.99 with a two-year contract and is marketing it heavily, with it selling out in some US stores. It is expected to arrive in the UK in the next few weeks. Rival operator T-Mobile says the Lumia 710 is among its most popular phones.

In Europe, although most operators are offering the new Nokia Lumia Windows phones, few use the weapons they have to push them: deeper subsidies or bigger marketing budgets.

"This implies that sales to the consumer are proving to be more difficult than we would have expected," said Richard Windsor, global technology specialist at investment bank Nomura.

A spokesman for a third operator who did not want to be named said: "If they could lower the price we think they could sell more. It might be worth making it a bit of a loss leader to get it out of the door. It's not rocket science."

Microsoft marketing

Operators are also frustrated that cash-rich Microsoft is not spending more on marketing Nokia Windows phones. "The operators say to Nokia: 'We will try to bail you out if you and Microsoft come with the marketing money,'" says telecom consultant John Strand.

One device chief at a European operator agreed. "Ultimately, Nokia and Windows are challengers and they either need to come to market with a really disruptive, innovative product or a huge marketing budget to create client demand. So far they have done neither."

Issuing a profit warning last week, Nokia fell short of analysts' estimates by saying it had sold over two million Lumia smartphones in the quarter ending March. Apple sold 37 million iPhones in the last quarter of 2011 while Samsung has sold more than 40 million Galaxy smartphones since the range went on sale in June 2010.

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