Nokia’s (NYSE: NOK) new flagship smartphone, the Lumia 900, will not carry a premium price in the U.S. The smartphone’s retail price will be as low as $99.99 and AT&T (NYSE: T) will begin to sell the handset on April 8. The Lumia 900 has features that should make it a reasonable rival to high-end Samsung models and the Apple (NASDAQ: AAPL) iPhone, but it may carry a price so low that the public does not view it as a premium product. That is the irony of Nokia’s push into the U.S. smartphone market. The Lumia 900 has such a low price that it could be considered “cheap,” even though its price point has been set to draw the highest end consumers who want “value.”
The Lumia 900 has most of the features that an expensive smartphone needs. Its screen is 4.3 inches. It works on the AT&T 4G network. It operates on a 1.4 GHz processor. It has sophisticated video and photo capture technology. Its battery is powerful enough to support seven hours of talk time.
The Lumia 900’s price is the same as Research In Motion (NASDAQ: RIMM) BlackBerry products. The BlackBerry is a smartphone that has quickly fallen out of favor. The Lumia 900 also has the same price as Motorola’s (NYSE: MMI) Atrix. Motorola is another smartphone company that has recently lost market share.
The most popular smartphones AT&T sells have prices of $199.99 or above. This includes the iPhone at $399.99 and the Samsung Galaxy Note, which retails for as much as $299.99. Samsung probably will pass Nokia in global handset sales, based primarily on smartphone market share, sometime this year. Nokia has held the top spot for years.
The launch of the Nokia Lumia 900 may be looked back upon as an exercise in branding. Premium brands from firms like BMW, Louis Vitton, Gillette and Gucci carry premium prices. Consumers often connect high quality with high prices. It obviously is not always the case, but it is more the rule than the exception.
The Lumia 900 may be priced so near the bottom end of high-end smartphones that AT&T customers see it as a competitor to mediocre mid-level phones. That makes it the rival of handsets that are not premium products. Nokia will enter the U.S. nearer to the low end of the smartphone market than it is to the top end. And, that could kill sales.
Douglas A. McIntyre
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