Nokia sets return to US smartphone market

Nokia will re-enter the US smartphone market next month with its first Windows-powered smartphone, the Lumia 710.

The device, a low-cost handset aimed at the nearly 150m Americans who have yet to purchase their first smartphone, will go on sale on January 11 and cost $50 with a new two-year service agreement with T-Mobile USA.

The handset is also one of the first in a new wave of devices to use the new Microsoft Windows Phone 7.5 software dubbed “Mango”.

Under Stephen Elop, Nokia’s new chief executive, the Finnish company has pinned its future on the success of smartphones powered by the new operating system, and on re-establishing its presence in the US after losing market share to Apple’s iPhone and smartphones powered by Google’s Android.

While the Lumia announcement on Wednesday had been widely expected, some analysts expressed disappointment that Nokia had chosen first to launch an entry-level smartphone in the US, rather than the higher priced and more sophisticated Lumia 800 which is already on sale in Europe.

In addition, analysts noted that Nokia will need to partner with T-Mobile USA’s larger rivals, Verizon Wireless, AT&T and Sprint Nextel, if it is to establish a sizeable market position in the US, a market where it has struggled for years. Mr Elop said recently that Nokia will introduce Windows Phones with “multiple carriers” in the US.

Microsoft’s new Windows phone operating system has received positive reviews from early users, but the company acknowledges that one of its biggest challenges is to persuade smartphone buyers who are now accustomed to the iPhone or Android-based handsets to “give Windows Mobile a try”.

Microsoft and Nokia are expected to invest heavily in marketing the Lumia and other new Windows handsets already in the pipeline, as well as encouraging developers to build new apps for the devices.

Company officials believe Microsoft’s renewed push into the mobile market will be helped by mobile carriers in the US and elsewhere who want an alternative to Appel’s iOS and Google’s Android and fear the growing market power of the two companies. They say Google’s decision to buy Motorola Mobility has spurred renewed interest from rival handset makers in Windows Mobile.

According to the NPD market research group, US smartphone sales represented 59 per cent of all handset sales in the third quarter, an increase of 13 percentage points since third quarter 2010.

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