So much hope has been pinned on Nokia’s comeback strategy — in which it has pivoted in the space of less than a year to develop a new line of smartphones based on Microsoft’s Windows Phone OS — that it was bound to be problematic when the phones finally hit the market: on the back of largely positive reviews of the device, Nokia (NYSE: NOK) is trying to convince the world that the first of its Windows phones, the Lumia 800, is selling well, while some analysts are casting doubt on that claim and taking down the share price in the process.
But there have been some that have also pointed out that the device is not unique enough compared to other Windows Phones — or even compared to previous Nokia devices, considering that the Lumia 800 was largely modelled on the MeeGo-Harmattan-based N9 that Nokia put on a limited release earlier this year.
It appears that Pacific Crest Securities analyst James Faucette is of the latter camp. In a research note, he wrote (via NY Times):
“With no breakthrough innovation, we believe Nokia’s new phones are unlikely to get traction in a highly concentrated high-end” market.
He also added that the phones were not priced in a competitive way — selling for €420 ($564), although as with other phones those prices can be hugely discounted when you buy the device with an operator contract — and that WP7 phones in general were not star performers. Gartner figures from last week, in fact, put Windows Phone share of smartphone sales at only 1.5 percent.
That led Faucette to cut sales of the device to 500,000 from his earlier estimate of 2 million.
Although Nokia has poured thousands of dollars into marketing efforts this time around, Faucette’s damning note has turned out to also be quite damaging: Nokia’s already-beleagured stock price yesterday saw declines of some six percent in trading.
Cue damage control today from Nokia. Last week, the company highlighted a note from Orange that claimed strong pre-sales orders of the Lumia 800 in the key market of the UK.
Today, Nokia took that one step further, and in a statement meant to directly contradict Faucette’s conclusions, the company noted (via Reuters):
“Lumia 800 sales in the U.K. are off to an excellent start…Based on earliest data the sales start of the Lumia 800 is the best ever first week of Nokia smartphone sales in the UK in recent history.”
Although Nokia has attacked their new strategy with gusto, the fact that its new handsets are not hitting the U.S. (or other key markets like China, which now apparently buys more smartphones than the U.S., according to Strategy Analytics) until 2012 is probably not helping resolve the question, either.
Ironically, when Apple (NSDQ: AAPL) took its time rolling out the iPhone people simply waited with anticipation, rather than skepticism, over how well it was selling in the markets where it was available.
So is the Lumia 800 selling well or not? And can reports of bad sales actually make an impact on how subsequent consumers react to the device?
More definitive answers to those questions probably won’t come until January, when Nokia is expected to report its next quarterly results. Even then, the company may not choose to break out Windows Phones from Symbian in its smartphone figures.
One thing, however, seems more clear now than ever: Nokia success is important not only for itself but, judging by the slow take up of Windows Phone 7 in the market, Microsoft (NSDQ: MSFT), too.