Nokia exploring revenue split with European carriers for Windows Phone 8 devices

According to the Financial Times (subscription required), Nokia is exploring deals with European carriers for its upcoming Windows Phone 8 devices that would allow carriers to exclusively launch one of Nokia’s Windows Phone 8 flagships. This is in contrast to the current model of releasing a device to multiple carriers at the same time to open the doors to more potential customers, and is akin to Apple and AT&T’s exclusive partnership for the iPhone which ran from 2007 to 2010.

The attempt by Nokia to recreate the excitement of the original iPhone launch is a bold one, and perhaps more than a bit misguided. When Apple introduced the iPhone, they were among the first companies to bring a touch-screen smartphone, and was widely seen as a smartphone that could penetrate beyond the customary enterprise customers. In the five years since the iPhone, hundreds of similar devices have launched, and the smartphone market has become much more saturated, and only Apple and (arguably) Google have managed to generate much excitement for smartphone launches of their iPhone and Nexus phones, respectively.

Such a partnership would encourage carriers to promote the new device, as the selected carrier would be a key stakeholder in the process. Nokia’s reported deal would bring profit (and, presumably, loss)-sharing to the carrier, providing a financial incentive for high sales figures and disincentives for lackluster device sales.

Nokia’s decision is exacerbated by the struggles of the Windows Phone platform, which while growing in recent quarters still only amounts to a 4% market share in the US (Nokia represents 0.3%), despite being sold alongside perennial favorites Android and iOS for over two years now. Given Nokia’s proposed risk-sharing strategy, which carriers would actually be willing to take on that risk for a platform that has failed to show significant growth in an ever-crowded and already highly penetrated market?

Several industry analysts see Windows Phone eventually making a dent in Google and Apple’s market share, though those models likely depend on the devices being readily available on multiple carriers. Nokia’s decision to have carrier-exclusive devices could shoot itself in the foot, as customers who want to stay with their carriers have a multitude of smartphone options, and are unlikely to switch carriers for any phone, especially one that runs Windows.

We’ll likely see more details of a Nokia-carrier partnership emerge later this year, as the first Windows Phone 8 devices are slated to go on sale in October. Do you think Nokia’s partnership brings the potential for success, or will it quickly be abandoned for the more customary mass carrier distribution model?

[via Financial Times, Engadget]

  • Please don’t be Vodafone. One can only hope our handset people are smarter than those tying themselves to this sinking ship.

  • roharr

    I have a Lumia 800 and I am very pleased with it. I believe that many more would select a Nokia with Windows Phone if they really tried it. Now consumers hear on the news that Nokia is struggling and conclude that Nokia is making bad phones. Nothing could be more wrong!

    However, I am not sure a one carrier strategy is a good choice. Many stay with there carrier first and select their phone second. I think Nokia would do better if they exploit the full set of Wndows 8 devices (PCs, Pads, etc) and stress the benefits for customers to select a plattform that can run the same software on all devices.

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