Nokia Lumia Smartphones Need Microsoft's Marketing Dollars to Succeed

Key to making the Nokia-Microsoft partnership a global success may be "cash-rich Microsoft" ponying up big-time marketing dollars for the Lumia series, says a new report.

Will the success of the Nokia-Microsoft partnership come down to marketing dollars?

Europe has long been a Nokia stronghold, but European carriers are finding Nokia€™s first Windows Phones difficult to sell, Reuters reported April 17. Reuters cited €œskeptics among operators€ who point to some early software issues; hardware that€™s nice enough but not envelope-pushing; the phone€™s price€”despite its being at least half of what€™s charged for competing smartphones; and the lack of marketing dollars supporting the phones.

€œOperators are also frustrated that cash-rich Microsoft is not spending more on marketing Nokia Windows phones,€ states the report.

€œWe can open our stores to them and train our staff to sell the phones, but that€™s it,€ a device chief at a European carrier told Reuters. €œUltimately, Nokia and Windows are challengers, and they either need to come to market with a really disruptive, innovative product or a huge marketing budget €¦ [and] so far they have done neither.€

The situation, however, is perhaps still more complicated. Operators pay more for Apple iPhones than all other devices, and so need to get them off shelves and attached to two-year data contracts. Also, carrier employees, whether motivated by employers or their own biases, may also still need some convincing about Nokia Windows Phone smartphones.

In Paris, a Reuters reporter found Nokia Lumia smartphones not prominently displayed, and was first shown an iPhone and then a number of Android-running smartphones, according to the report.

U.S.-based Forrester analyst Sarah Rotman Epps recently also blogged about actively shopping for a Windows Phone, only to be dissuaded at a Verizon store, where the salesperson instead gave a hard sell on a 4G Droid smartphone. At an AT&T store, she found the salesperson to be more enthusiastic about Windows Phones€”which AT&T sells three of, to Verizon€™s one€”though it didn€™t yet have the Nokia models. At a T-Mobile store€”the only top-four carrier that currently doesn€™t sell an iPhone€”images of the Nokia Lumia 710, Rotman Epps found, were €œplastered everywhere.€

€œWhat it means?€ Epps added. €œChannel matters. He who pays the operator sells the phone.€

Nokia will announce the results of its 2012 first quarter April 19, but on April 11, it offered investors a warning that early Windows Phone sales aren€™t yet what they hope they will be.

While Nokia has sold 2 million Lumia smartphones, competitive industry dynamics and gross-margin declines led to €œdisappointing€ first-quarter results, Nokia CEO Stephen Elop said in a statement, illustrating that Nokia€™s Devices & Services business €œcontinues to be in the midst of transition.€

€œWe have established early momentum with Lumia, and we are increasing our investments in Lumia to achieve market success,€ Elop added. €œOur operator and distributor partners are providing solid support for Windows Phone as a third ecosystem, as evidenced most recently by the launch of the Lumia 900 by AT&T in the United States.€

AT&T began selling the 4G-equipped Lumia 900 for $99€”IHS iSuppli later revealed that the phone has a $217 bill of materials€”on April 8, though lower-end Lumia models have been available for several months.

Despite criticism from the European carrier €œskeptics,€ U.S. analysts say the Lumia 900 represents Microsoft and Nokia just getting started. In addition to marketing dollars, selling more Windows Phone handsets may also require patience and time.

€œI see the Lumia 900 as the first step for Nokia,€ Gartner Research Vice President Carolina Milanesi has told eWEEK. €œThis is not the device that will make Nokia, but it will be the device that gets Nokia back into the game. There will be other devices before the end of the year, and Nokia and Microsoft need to build momentum in time for the holiday season so that by then consumers are familiar with Lumia and the offering.€

Indeed, patience, time and marketing dollars.