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Nokia's Windows Phone Slowly Gaining Traction

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Nokia CEO Stephen Elop Now Has A First Quality Phone To Sell (Photo credit: Wikipedia)

There is still uncertainty about the course Stephen Elop has charted for Nokia but it has always made sense to me.  For Nokia to have become a me, too Android phone supplier made no sense at all. Microsoft offered money and support so he took Nokia from its "burning platform," ditched Symbian and started over.   One can argue that MSFT is so challenged itself with its present leadership that it hasn't provided the support one might have hoped for.

Late last year. I was forced to replace my long inadequate HTC smart phone  with its two hour battery life. That device was like a bag phone from 20 years ago: a mobile phone that worked well if connected to an electrical outlet. I opted for the Lumia 920 and have not been disappointed. It runs all day and all night certainly living up to the advertised 10 hours of use. It's bright yellow color is easy to find in my handbag. And it is highly reliable.  

I have called ATT a couple of times to get tech support on how to use features on the phone.  The techs report that they get very few calls and even fewer complaints about the phone.  I dropped my phone on the street yesterday and couldn't get it to reboot.  I stepped into a nearby ATT store and the salesman solved the problem in a few minutes by popping the frame back into place for me.  He, too, said the Lumias are rarely returned for any problem at all.

ATT was first to sell the Lumia 920 in the United States but hid the phones in the stores and did little to support them.  Verizon is now introducing the Lumia 928 which has some improvements over the 920.  It is thinner, lighter and offers a metal case.  ATT will soon have them on offer too but when is not yet clear. Maybe this time around, ATT will not hide the phones and any promotional literature that would encourage you to buy one.

Recently I took a very long road trip in my car from FL to NY.  As I was "speeding" along I 95, from time to time the phone kept bonging.  I couldn't figure out if I was going under an overpass or what was happening. So I called ATT to get help on the issue when I got home. I guarantee that you probably don't have a phone with this feature.

Nokia bought  Chicago based Navtec a number of years ago for its first class mapping and gps system. The excellent Navtec Navigation system embedded into the phone  allows you to avoid buying the $9.95 per month navigation system that ATT offers.  Little did I know that  the Navtec GPS and mapping system is so sophisticated that it knows what the posted speed limit is wherever you are driving.  There is a setting in the gps function that allows you to be "reminded" when you are going more than a set amount of miles per hour over the speed limit. They even allow you to set one number for areas where the speed limit is under 50 and another margin of excess for over 50.  Apparently, I was exceeding the default limit when on the highway and that was the constant bonging noise I was hearing.  You can, of course, turn this feature off but if you are really zooming along, it might help you to avoid a  speeding ticket. There are some other hidden features that I am still discovering. There is a talking feature like Siri called Maluuba.

The only thing the phone lacks is hundreds of thousands of apps.  Many developers don't find the market size for the Windows devices sufficient yet to spend dollars developing apps for this market. But, most of us have no more than 100 apps, if that, on our phones and you are likely to find weather and similar apps you really use a lot. 

It took me awhile to get used to the tiles but now I like the way the phone is organized. The graphics are excellent and easy to read.  And I am happy to see that in the latest quarter, 70% of all Windows Smartphones sold were from Nokia.  A slow head of steam is developing. NOK  at 3.2% share just surpassed Blackberry as the third player in the Smartphone market with its 2.9%  share. Nokia sold 7 million phones in the quarter, up 133% from its paltry showing last year vs. Blackberry's decline to 6.3 million units from 9.7 million last year.   Google 's Android system clearly dominates with a 75% share. Apple is second with a 17% share at 37.4 million units, a gain of only 6.6% this year as the bloom is off the brand. 

Even as detractors mock the Windows phone as heavy, I must say I am happy with the product and don't think it is any heavier than the one I had before it which required a protective cover. 

Several months ago when I wrote Apple is so 2010, the Apple fan boys came out of the woodwork to ridicule the very idea that I could be right. Not only are the phones losing their cache, but investors have fled as well.  Over the latest twelve months, Apple is off 25% and Nokia is up 39%.  In 2013, Apple is down 18.5% ytd and Nokia is off 6%ytd.  Tim Cook is facing a loss of brand cache and Nokia is trying to find its way.  If it can get over the marketing hurdle, then Nokia should start to do much better in the U.S. where it has had  no market position whatsoever and hasn't had for serveral years.

Elop saw clearly the problems he faced.  It takes time to execute a turn around.  The product is excellent. The marketing is poor and the marketing partners like MSFT and T have been missing in action.  Nokia needs exactly what Motorola did years ago when Chris Galvin recruited Chief Marketing Officer Geoffrey Frost to create an edgy face for the brand.  The "Hello Moto" campaign was enormously successful and put MOT at the top of the cell phone heap. Frost died suddenly the very week he was promoted to Executive Vice President in November 2005. A figure like Frost is what NOK needs to give his brand the stature he needs to break through the clutter. So far, that has been lacking.  Now Elop has the phone and he needs to let people know how excellent it is.

Joan E. Lappin CFA   Gramercy Capital Mgt. Corp

Mrs. Lappin, Gramercy Capital and its clients own shares in Nokia at this time.

For information about our firm: info@gramercycapital.com. To follow Joan at Forbes click on the button at the top of this article. or on Twitter@joanlappin