Nokia in Windows talks with operators

23 Jul, 2012

Nokia is considering ripping up its traditional mass marketing strategy when it unveils its new Windows 8 smartphone in the autumn, in an attempt to recreate the excitement around Apple's exclusive launch of the original iPhone in 2007.

The Finnish group has entered negotiations with European operators about forming an exclusive opportunity to launch a smartphone using the Windows 8 platform from Microsoft.

The launch of the new phone is seen by analysts as crucial to Nokia's future. The company is under considerable pressure, having struggled to dent the dominance of Apple and Samsung in the high-end smartphone market with its initial product range launched last year.

Nokia's usual sales approach – which relies on trying to get as many phones in as many hands as possible across all channels immediately – would be ditched in favour of partnerships that would help create dedicated support for its smartphones, initially through one or two networks in Europe.

These relationships will also offer the operator a financial stake in the success of the range, said one person with knowledge of the talks, which Nokia hopes will incentivise them to give the devices as much support as possible through retail channels and in special offers to their customers.

Operators that have held talks with Nokia include France Telecom, although no deal has yet been struck. The person said that talks were still exploratory, which meant that Nokia could still pursue other strategies should agreement not be reached. Any deal could also involve the joint procurement initiative with Deutsche Telekom, according to one informed person, and feed through into their UK joint venture, Everything Everywhere. All parties declined to comment.

Many European operators are already keen to help establish the Windows phone range as a third credible competitor alongside Apple's iPhone and Samsung's Android ranges, whose market dominance allows them to take almost all of the profit from the sale of handsets, according to one executive at a leading operator. An offer to share in the potential profits by helping to establish a successful range is therefore attractive to the networks, who complain of growing weakness in negotiations with the dominant phone makers.

Even so, the phones offered by the major networks also need to reflect what their customers want to use, which so far has rarely been the Windows phones. Sales numbers of Nokia's Lumia Windows phone range doubled in the second quarter to 4m, better than analysts had expected, but are still dwarfed by sales of equivalent high end phones from Samsung and Apple.

The strategy rethink also reflects recent successes in the US, where it struck a similar sales agreement solely with AT&T.

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