Nokia Goes All In With Windows Phone in North America

Nokia revealed a bold move Wednesday as it announced its North American operations will stop selling cellphones based on its Symbian operating system and introduce from now on only smartphones based on Microsoft Windows Phone 7.

The head of Nokia’s U.S. subsidiary, Chris Weber, broke the news in an interview with the Wall Street Journal‘s AllThingsD.

The move means Nokia will stop selling in North America all Symbian-based handsets. This includes both smartphones and feature phones — inexpensive mobiles running simpler operating system versions like S40.

While Nokia will stop selling Symbian phones in North America, it will continue to support the users who already have the mobiles, Nokia spokesperson Karen Lachtanski told the E-Commerce Times.

Carrier Disfavor

“Nokia has a lot of history in the U.S. It just hasn’t been a successful history, unfortunately,” ABI Research’s Mobile Devices Analyst Michael Morgan told the E-Commerce Times.

Nokia, he maintained, catered disfavor with U.S. carriers by selling low-priced cellphones. “Using those low-priced handsets allowed them to circumvent the need for carrier subsidization,” he said. “The handsets were cheap enough to go directly into the pre-paid market.”

While Nokia’s spin on its exclusive move to Windows Phone 7 in North America is that it allows the company to make a clean break with its past and a fresh start for its future, Morgan argued that the Finnish handset maker may be trying to impress North American carriers that it’s turning over a new leaf.

“There’s a bit of a political play here,” he said. “They’re saying to the carriers that they’re going to stop circumventing and putting out these cheap handsets that don’t get subsidized through your channel.”

Moreover, losing the feature phone business won’t have much impact on Nokia’s North American business, according to Morgan, who estimated that feature headsets represent only 2 to 5 percent of Nokia’s business on the continent.

“They can lose it and not blink an eye considering what they’re losing in other places at this point in time,” he declared.

RIP Feature Phone?

Furthermore, the handwriting is on the wall for feature phones in the United States, according to IDC Senior Research Analyst Ramon Llamas. “A lot of people are abandoning their feature phones and moving to smartphones,” he told the E-Commerce Times.

Other handset makers are changing their portfolios to reflect that change, he continued. “Nokia is the only one that’s making a clean break,” he said. “Everybody else is stuck in the middle of a transition.”

The U.S. market is heading rapidly toward being a smartphone-only market, agreed Gartner Analyst Nick Jones.

“We’ll see very low-cost Android devices — (US)$100 and below — over the next few years, which will make feature phones irrelevant in the U.S.,” he told the E-Commerce Times. “By 2015 we expect over 80 percent of the handsets sold in the U.S. will be smartphones, so the feature phone market is evaporating.”

“Symbian is a dead platform,” he added. “So as Symbian had very little traction in the U.S. and it’s being abandoned, it makes no sense to spend any time and effort on it.”

Needed Boost for WinPho7

Nokia’s decision to place all its North American eggs in the Windows Phone 7 basket is not only important for the Finnish firm, but for Microsoft as well, maintained Rob Sanfilippo, research vice president for Directions on Microsoft.

“I think that Microsoft’s partnership with Nokia is critical to the success of the Windows Phone platform, so Nokia’s move to focus on Windows Phone in North America is a good sign for the platform,” he told the E-Commerce Times.

“Windows Phone 7 is a great product,” he said. “However, the delivery of superior technology may not be enough to gain substantial share in the complex smartphone market. Other factors such as market momentum, OS licensing, operator affinities, developer mindshare, and customer-perceived ‘coolness’ have driven smartphone sales trends.”

“The Nokia partnership is the only potential catalyst for Windows Phone success,” he continued. “If Nokia’s transition to Phone 7 goes smoothly and quickly, and Nokia is able to preserve its customer base, Phone 7 could be given the boost it needs to achieve sales numbers similar to iPhone and Android-based phones.”