(Adds comments by Nokia executive and apps developer)
* Seen as last major shot at winning back market share
* Lumia phones to run on latest Windows software
* New phones coming from Motorola, Apple, HTC
* Nokia shares fall 13 pct, lack of price, details a letdown
By Sinead Carew and Tarmo Virki
NEW YORK/HELSINKIA, Sept 5 (Reuters) – Nokia
shares plummeted 13 percent after its new Lumia smartphones
failed to impress investors looking for transformational
handsets to rescue the struggling Finnish company.
Nokia and its partner Microsoft Corp showcased the
Lumia 920 phone on Wednesday in what may be their last major
shot at reclaiming market share lost to Apple Inc,
Samsung Electronics Co Ltd and Google Inc.
Microsoft and Nokia hope the device – sporting bright
colors, a bigger screen and technology that reduces blur and
shakiness in pictures and video – will become a potent weapon in
an escalating global war to dominate the mobile industry. But
investors said it lacked “wow” and gave it a quick thumbs-down.
Some analysts said Nokia’s reticence about dates, prices or
carrier partners also did not help.
Nokia shares traded in Helsinki began sliding midway through
the New York launch and ended down 13 percent at 1.99 euros,
their biggest single-day loss since June. Nokia’s U.S.-listed
stock closed down nearly 16 percent at $2.38. The stock had
gained 67 percent since mid-July as anticipation built ahead of
the Lumia’s unveiling.
The Lumia was the first in a flurry of planned mobile-device
launches expected ahead of the holiday shopping season. Google’s
Motorola Mobility showed off three new smartphones based on
Android software later on Wednesday. Verizon Wireless the top
U.S. mobile provider committed to sell all three of the Motorola
phones.
Amazon.com Inc will unwrap its new Kindle Fire
tablets on Thursday and Apple is expected to unveil the latest
version of its seminal iPhone on Sept. 12.
“The challenge is that the world is working on the 4th, 5th
and 6th editions of their devices, while Nokia is still trying
to move from chapter 1. It still has quite a bit to catch up,”
said RBC analyst Mark Sue.
“People were looking for something that would dazzle. Most
investors will view it as evolutionary, not revolutionary. Nokia
has made some good progress, but investors were looking for
quantum leaps. We didn’t get that.”
Many of the industry analysts who saw the phone up close in
New York deemed it a solid device with a few differentiating
features. But it did not push the envelope as Nokia CEO Stephen
Elop had promised.
The device runs on the latest Windows Phone operating
system, which Microsoft – the world’s largest software maker –
hopes will rival Apple’s iOS and Google’s Android to become a
third mobile platform.
Nokia announced no partnerships with wireless service
providers, leading some analysts to worry this was a sign of
weak carrier support. The Finnish handset maker said it would
announce pricing and roll-out dates for the new Lumia later on a
country-by-country basis.
“It is impossible to assess this launch without price and
roll-out info. This is disappointing,” said Bengt Nordstrom, CEO
of telecommunications consultancy Northstream.
For Microsoft, successful Lumia sales could convince more
handset makers and carriers to support Windows Phone 8, which
promises faster performance and a customizable start screen.
Samsung last week became the first to announce a smartphone
running that software, which it said it would begin selling as
early as next month.
If the new phones do not appeal to consumers, it could spell
the end for money-losing Nokia and deal a serious blow to
Microsoft in its attempts to regain its footing in the market.
“We’re working with our carrier partners to finalize our
plans,” said Jo Harlow, executive vice president of smart
devices for Nokia.
Windows phones have captured only 3.7 percent of the global
smartphone market, according to Strategy Analytics.
Asked about estimates that Windows phones might account for
10 percent of the market by the end of 2013, Harlow said: “With
momentum, if we’re at 10 percent at the end of 2013, I’d be a
happy girl.”
ECOSYSTEM WARRIORS
Nokia badly needs a hit. It has logged more than 3 billion
euros ($3.8 billion) in operating losses in the past 18 months,
forcing it to cut 10,000 jobs. Its share of the global
smartphone market has plunged to less than 10 percent from 50
percent during its heyday, before the iPhone arrived in 2007.
The Lumia 920 – billed as the flagship Windows phone – uses
“PureView” and floating-lens technology for its 8.7 megapixel
camera to reduce blurring and shakiness from hand motion, and
has wireless charging capability.
Powered by Qualcomm Inc’s Snapdragon processor, it
comes with augmented reality technology that lets users see
details of their surroundings through the camera. And it sports
a bigger, brighter, 4.5-inch screen than Nokia’s previous
smartphones, taking a page from rivals such as Samsung, which
has backed larger displays.
Attendees at the New York event did not see the Lumia as a
significant threat to the iPhone, the device that revolutionized
the mobile industry and popularized the model of a third-party
developer “ecosystem,” today considered pivotal to the success
of any operating system.
Part of the reason for the limited success of Windows phones
is that they support only 100,000 or so apps, compared with
about 500,000 or more for Android or iPhones.
Apple’s and Google’s entrenched positions – where consumers
have already invested heavily in apps and content – discourages
switching to a new mobile system.
Windows Phone 8, however, might have several factors in its
favor. It is similar to the Windows 8 desktop and tablet
software to be released Oct. 26, making it easier for developers
to write apps for both. Microsoft hopes this will boost the
platform’s popularity.
“The big difference versus Android is that there is a big
Microsoft developer base that will catch on quicker, once there
is a sufficient customer base,” said Magnus Jern, founder and
chief executive of Barcelona-based Golden Gekko, which has
created Windows Phone apps for Heathrow Airport and for Yellow
Pages in many European countries.
Many developers already working on iOS and Android may look
to support Windows via HTML5 – a Web programming standard
intended to work across different mobile platforms – to avoid
having to fund a third or fourth development team.
“HTML5 apps require less skilled resources to achieve a
minimum level of service. And although it’s a compromise, it
works and is usually an acceptable compromise,” Jern said.
The new Lumias could also benefit from the continuing
decline in Research In Motion Ltd’s BlackBerry
and from a recent legal setback for the Android operating
system.
A California jury decided last month that some of Samsung’s
hot-selling Android smartphones copied features from the iPhone,
which might result in import bans and drive handset makers to
put more resources into making Windows-based phones.
But for Nokia and Microsoft to exploit that window of
opportunity, they must first win over consumers, who so far have
shown little enthusiasm for Windows smartphones.
“If you were looking for an iPhone knock-out punch, this
isn’t it. That’s not going to happen with one product,” said
Ross Rubin, an analyst at Recticle Research.
($1 = 0.7947 euros)
(Additional reporting by Nicola Leske in New York, Jussi
Rosendahl in Helsinki and Bill Rigby in Seattle. Writing by
Edwin Chan; Editing by Tim Dobbyn, Maureen Bavdek, Gary Hill and
Andre Grenon)
