Not Everyone Needs Candy Crush: Why (and Where) Nokia and Microsoft Have a Chance

By Carol Kopp  SEP 06, 2013 8:45 AM

The Windows phone is finding buyers among first-time smartphone shoppers.

 


Conventional wisdom solidifies very quickly these days. It is already safe to say that Microsoft’s (NASDAQ:MSFT) purchase of Nokia’s (NYSE:NOK) handset business, announced around midnight Monday, is perceived not just as a stinker but as a double stinker, a shotgun marriage of two losers headed nowhere in particular. “It will get very, very messy, and the whole thing is probably doomed,” writes David Pogue, a technology blogger for The New York Times.

Some reviewers have found the Nokia Lumia line of Microsoft Windows-based smartphones to be elegantly designed, competitively priced, and quite as fast and functional as their competitors.

Doesn’t mean a thing.

In a channel check of Manhattan stores that carry Nokia Lumia phones, a writer for The Huffington Post uncovers the ugly truth: “[Customers] say it has no apps and so it’s useless,” says one sales clerk, in a comment that was echoed around the city. The same clerk said seven out of 10 people who buy a Nokia return it once they figure out they can’t get a favorite third-party app for it, like Instagram or Candy Crush.

Actually, there are about 160,000 apps available for Windows phones, compared to about 700,000 for Google’s (NASDAQ:GOOG) Android devices and 850,000 for Apple’s (NASDAQ:AAPL) iPhone.
 
There’s another story, though, from the world outside Manhattan. There’s some evidence that the Microsoft Windows phone is surviving and even prospering there.

The latest sales data from market research firm Kantar World Panel contends that the Windows phone
is “emerging as a key player in the smartphone race.” It’s still number three, that is, but it’s in the race.

Its particular strength, the report says, is its appeal to first-time smartphone buyers. That’s more than half of all current mobile phone users globally, with a far higher percentage in emerging countries. Having never played Candy Crush on a phone, or used any app for that matter, they aren’t wedded to an operating system, or the apps that are available for it.

The Kantar data, for the three months ending in July, indicate that Windows phone sales reached 8.2% in the five major European markets. In Mexico, it made the number-two spot, with 11.6% of sales. 

In late August, before the announcement of the Nokia purchase, the research firm IDC released data indicating that Windows Phone was the second-most-used mobile platform in Latin America. 

In all of the above markets, the big seller is the low-end Lumia 520 model, pictured here. It costs about $150 in Latin America with no contract, compared to about $800 for an Apple iPhone. 

According to Forbes contributor Tero Kuittinen, the low-priced Lumia models are even gaining “substantial momentum” in North America through sales by carriers T-Mobile (NYSE:TMUS) and AT&T (NYSE:T). 

The Microsoft-Nokia partnership, along with every other phone maker, will have a tougher road to success in the two big prizes, India and China. Both have strong competition from local brands, particularly at the low-priced end of the market.

Nokia has a slight edge in India, where 90% of cell phone users have yet to upgrade. It was the number-one phone brand there until recently, and its biggest manufacturing facility is located in India. The Times of India suggests that it could be a winning brand—if it is willing to wage a price war against the homegrown brands.

Bloomberg News calls this the “Hyundai strategy.” That is, sell a decent product for a low price, and hope customers stay with you when they’re ready for a higher-priced model down the road.

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Samsung's Galaxy Gear: Just How Smart Is It? 


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