Nokia pressed to cut new phone’s cost
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Mobile operators in the UK have put pressure on Nokia to reduce the price of its next smart phone to boost sales in the wake of lacklustre take-up of its flagship phone launched last year.
Nokia plans to introduce a smart phone called the Lumia 710 in the next few weeks in the UK as it begins to build up a range of devices in the market. The phone, which went on sale in the US on January 5, uses the Windows operating system under the partnership struck with Microsoft earlier this year to restore the company’s fortunes in the high-end smart phone business.
The Finnish telecoms company has held discussions with UK operators about selling the Lumia 710, which could be launched as early as next week. However, two people with knowledge of the discussions said that Nokia had been asked by operators to lower the suggested price in order to boost sales given the slow take-up of its first, more expensive, phone in the UK.
Operators wanted a budget offering since the Nokia brand is still known by many for lower-cost, reliable handsets in the UK. Two sources said that the phone was now likely to be sold on contract plans of about £20 a month, less than the initial £25 recommendation by Nokia.
One source said: “There is always a bit of pushing over price and in particular if the handset maker is seen as weaker. The Lumia range needs a boost.”
The lower price could cause a potential conflict should Nokia attempt to launch another entry-level phone, however, as has been rumoured for the forthcoming Mobile World Congress in Barcelona at the end of February. Nokia declined to comment.
The first Windows phone from Nokia, the Lumia 800, was priced to compete with high-end rival devices from Apple and Samsung and failed to crack the UK top ten handsets by sales in the run up to Christmas. Nokia should provide the first official data on sales of the Lumia at its results on January 26.
A premium handset is seen by analysts as crucial to regain ground lost to Apple and Samsung, whose high-margin devices dominate the smart phone market. Nokia is starting from scratch with the Windows platform and analysts expect it to take time to build its brand again.
Morgan Stanley last week said its data points from the supply chain suggested only a moderate increase in Lumia shipments in the first quarter. However, it added that “simply being credible at this stage is a victory”. It estimated that Nokia would sell 37m Windows units in 2012, which could represent 60 per cent of the Windows phone market. Nokia has had favourable reviews of its first US phone, the 900, announced at the CES trade show in Las Vegas this month. It also launched the 710 in the US, which was available under contract at $49.
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