Is Nokia's Lumia Too Little, Too Late?

Does Ma Bell see something no one else does?

AT&T (NYSE: T  ) is betting big on Nokia's (NYSE: NOK  ) new Lumia 900, as in bigger-than-the-iPhone big. The wireless carrier is putting its marketing weight behind the new family of devices and Microsoft (Nasdaq: MSFT  ) Windows Phone to try and aggressively play the hand it's been dealt.

Anecdotal evidence suggests that the Lumia 900 is seeing a strong start out of the gate, as reports gather of low availability and constrained supply. An AT&T exec said that Lumia sales have "exceeded" expectations so far. Can this be the device to save Microkia?

Not so fast, my Foolish friend. The Lumia 900 saw a bit of a bump in the road, as a minor software bug had been hindering the device's ability to connect to data networks. Nokia is responding smartly by quickly issuing an update to squash the bug, while simultaneously offering a $100 credit that covers the $100 contract price -- making the device free for a limited time. (The bug has since been fixed and the promotion is now over.)

However, there are also reports that Nokia and AT&T had been actively pulling Lumia 900s off shelves specifically because of the bug and sending them back to Nokia to repair the devices. If true, that would be a clever move: Offer the phone for free to build buzz, and then silently recall the phone to fix it while making it appear sold out to build more buzz. A twofer!

I'm not the only skeptic. Reuters reports that four major carriers in Nokia's European home turf aren't impressed, either. Carrier execs don't believe the Lumia family of devices is good enough to compete with Apple's (Nasdaq: AAPL  ) iPhone or Google (Nasdaq: GOOG  ) Android offerings like Samsung's popular Galaxy lineup.

Telecom operators think the devices, while sleek and bold, are overpriced and lack innovation. They also say Microkia isn't putting much money into marketing the devices and that consumers have negative perceptions because of battery and software bugs found in the earlier models. One unnamed executive said, "No one comes into the store and asks for a Windows phone." He continued, "If the Lumia with the same hardware came with Android in it and not Windows, it would be much easier to sell."

Just last week the Finnish phone giant slashed guidance. Despite the signs that the Lumia may be off to a strong start stateside, it might be too little, too late.

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Fool contributor Evan Niu owns shares of AT&T and Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Google, Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of Nokia, Apple, Microsoft, and Google and creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (10) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 17, 2012, at 10:03 PM, butthead2u wrote:

    Blah, blah, blah...it's all talk and speculation! Nokia is tightly partnered witht the worlds largest software maker. Everyone new there (unless your just a fool) that there was going to be a transition period. These are not the ulitmate phone only transitional, windows phone 8 will truely be the initial ramp up. Three screens and windows everywhere. Microsoft, unlike Apple plays long term. Microsoft won in the 90's and will do it again. People laughed when I bought Apple at $18 around 1997 and they can laugh again when I buy Nokia at $4.

  • Report this Comment On April 17, 2012, at 11:45 PM, funspirit wrote:

    Microsoft is betting HUGE on Windows 8, and Nokia is their horse. You can bet Nokia will be well fed and watered. Microsoft's entire strategy is based on Windows 8 in everything (PC/tablet/phone) so it might just succeed ... Nokia might not be a bad buy here, if my logic is correct.

    Interestingly, Google absorbing Motorola might push OEM's to Softy because of channel conflict.

    http://www.richmakesyourich.com/2012/04/challenge-of-digesti...

    a little about that here.

  • Report this Comment On April 18, 2012, at 12:42 AM, fatmonk wrote:

    if you look at from a positive angle, Microsoft have 95% of market share to go. It is a lot of room in future.

    Apple not long ago has only less 5% of computer market share, today is the biggest company on plant.

    @ butthead2u I will wait for NOK to come down an other 25%. -- I am greedy. I don't believe in 15 from now NOK will be a biggest company.

    -- But hey I am always wrong.

  • Report this Comment On April 18, 2012, at 2:38 AM, trecer wrote:

    The Lumia 900 is the top phone sellling on Amazon right now. Not only that, but out of 93 user reviews, the AVERAGE rating is 5 stars (and that means something, as anyone accustomed to looking over Amazon product reviews knows). The techie gurus may have found faults with various aspects of the phone, but ordinary users are gobbling it up, raving about ease of transition and ease of use. The tech gurus don't realize that these ordinary users are willing to trade a few technical glitches and inefficiencies for low price and simplicity. There's a significant market for phone users who resist the high price of the Apple family (the Lumia 900 is only $100) and dislike the complexity of the Android system. Furthermore, AT&T and other phone companies have and will have a very good reason to put their muscle behind the new Nokia smartphones, since they will get profit out of them that is currently being sucked away from the unwilling carrier masochists by the sadistic Apple. The real winner here is Microsoft, I believe, since the Lumia is going to reestablish its cred in the phone sector and give it a boost with the smartpad operating system that will be rolling out. The new mobile visuals with the MS operating system are quite strong and has successfully differentiated itself from both Apple and Android.

  • Report this Comment On April 18, 2012, at 7:51 AM, butthead2u wrote:

    Fatmonk, I hope it does go down, I'll buy more. But if they come out with some good numbers on the 900 I'll be ready. I don't expect Nokia to have the success that Apple has had but I'm all for doubling or tripling my investment in two to three years, that's not going to happen to Apple now.

  • Report this Comment On April 18, 2012, at 8:10 AM, almypal817 wrote:

    Nokia will be fine. They have sold out of the Lumnia 900 everywhere... They will prevail.

  • Report this Comment On April 18, 2012, at 8:14 AM, DanMichSr wrote:

    I'm stuck in a contract with Verizon using a Droid Charge or I'd be one of the buyers of the Lumina. I believe as contracts expire Nokia/Win phones will be in greater demand than they are now. I'll also get their tablet when that comes out. People That have the Apple desktop might like to stick with the iPhone and iPad. I am running Windows 7 for my desktop and it soon will be Windows 8. So I'll soon have all three running Windows.

  • Report this Comment On April 18, 2012, at 9:29 AM, foolishlycuriose wrote:

    Just an FYI - the European version of the Lumia 900 will only be available (to be sold) in early May. Makes one wonder just what the Reuters reporter was reporting about.

  • Report this Comment On April 18, 2012, at 9:47 AM, lucasmonger wrote:

    Interesting twist, AT&T stores are sold out, but the reason they are sold out is to update the software glitches thus create some demand (and limit the number of "free" phones available. That's downright sneaky.

    But unlike the iPhone, there weren't long lines around the block or news reporters reporting on the frenzy (or lack of frenzy). Although I don't hold high hopes on Nokia, I bought a few shares as I like to bottom-feed (buying Apple and Akamai during the dot-bomb era has worked out very nicely). Only time will tell whether Microkia can continue adding features and capability to catch up to Apple and Android while squeezing out some profit trying to undercut the $199 high-end smartphone price point.

  • Report this Comment On April 18, 2012, at 11:53 AM, techy46 wrote:

    Nokia has issued a statement that both AT&T and Amazon are SOLD OUT of te cyan Lumia 900. AT&T has been restocked with the balck Lumia 900. The AT&T OUT of STOCK for 4 days was not due to fixing the software bug as most buyers applied the online software update. The press is obviously anti-Nokia especially Reuters who's probably in the pockets of Apple and Google investors including hedge funds and mutual funds. This is the kind of yellow reporting that created the fiancial meltdown and continues the EU crisis. Chicken Little lives in NYC.

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