Lumia 920: Nokia bets on new smartphone to beat iPhone, Android

Microsoft chief executive Steve Ballmer talks about the Microsoft chief executive Steve Ballmer talks about the new Nokia Lumia 900 smartphone during a CES news conference. (Jan. 9, 2012) Photo Credit: AP

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Nokia Oyj unveiled two smartphones using Microsoft Corp.'s new Windows Phone software, betting on the devices to win back sales lost to the iPhone and Android handset makers.

The Lumia 920 has a 4.5-inch (11-cm) screen and an 8.7- megapixel camera with a so-called floating lens that uses software for image stabilization, Nokia Chief Executive Officer Stephen Elop said Wednesday at a news conference in New York. The Lumia 820, whose screen measures 4.3 inches, has an 8-megapixel camera without the optics software. Both will go on sale in the fourth quarter of this year.

Nokia is counting on its partnership with Redmond, Washington-based Microsoft to help boost sales and return the company to profitability after falling behind its rivals. The Espoo, Finland-based phonemaker has identified the U.S. as a market where it has to win back users and gain momentum in its attempted global comeback bid.

"Today is a very important step, and there are more important steps ahead," Elop said yesterday in an interview. "There's no single turning point. We need to succeed with this and take it to the next step." Nokia fell 2.2 percent to 2.24 euros at 5:16 p.m. in Helsinki. Microsoft gained 0.4 percent to $30.50 in New York.

Head Start The announcement of the Lumia models gives Nokia a brief head start before two top rivals present their own newest handsets. Motorola Mobility, a unit of Google Inc., is planning to unveil one of the first full-screen phones in the U.S. later today in New York, according to a person familiar with the plan. Apple Inc., maker of the iPhone, is planning its own introduction on Sept. 12.

"The U.S. is very important," Elop said. "These trends we've seen in our industry have been starting here and moving east." Nokia, whose credit rating was cut to junk this year by the three biggest rating companies, has announced more than 20,000 job cuts and closed production and research sites in an attempt to put the company on profitable footing. Nokia, whose U.S.

market share peaked at 32 percent in 2001, accounted for about 2 percent of smartphone purchases in the second quarter, according to Strategy Analytics. The iPhone and devices using Google's Android software combined for about 90 percent.

Recent Rebound Nokia has declined almost 70 percent in Helsinki trading since Elop announced the Microsoft partnership in February 2011. They have rebounded recently, rising from a 16-year low reached on July 18 on speculation the company can recover. The company hasn't reported a profit for five quarters.

The growth of the $219.1 billion smartphone market has aided Nokia. Even as momentum slowed to the lowest in almost three years, global smartphone shipments climbed 32 percent to 146 million units in the second quarter, according to Strategy Analytics.

While Lumia sales have been dwarfed by competitors, early shipments have exceeded some analysts' estimates. Nokia sold 4 million of the devices globally in the second quarter, doubling from the first quarter and beating the 3.8 million analysts on average projected. Nokia is expected to sell 3.4 million Windows-based phones this quarter and 5.9 million in the fourth quarter, Sandeep Deshpande, a London-based analyst at JPMorgan Chase & Co., wrote in an Aug. 30 e-mail.

Nokia will go through a "transition period" in the third quarter, with Lumia 900 handset sales slowing as consumers anticipate the new models, Elop said.

Shipments Doubled While Microsoft has seen shipments of Windows Phones more than double, they remain tiny, with its 5.4 million units sold in the second quarter representing a 3.5 percent share of the market, according to researcher IDC.

"Nothing in the space is going to change dramatically overnight," said Michael Gartenberg, an analyst at Gartner Inc. "What Microsoft and Nokia need to do is continually show evolution and innovation. They've got all the pieces and parts to stand out from the market. Now they have to explain why different is better. They're going to have to spend a lot of time, effort and money explaining that to consumers."

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