When the premiere Windows Phone 8 handsets arrive on U.S. shores later this year, they could be too costly to woo new buyers.
Details about the pricing and availability of Nokia’s upcoming Lumia 920 and 820 Windows Phone 8 handsets have emerged. Europe was first to get the numbers on Thursday.
The unsubsidized cost of the higher-end Lumia 920 is around $800 U.S. — based on Thursday’s exchange rate, and prices vary slightly between European countries. That’s noticeably more than the unsubsidized cost of competing Android phones like the Samsung Galaxy S III, and price-wise, puts the Lumia 920 on par with Apple’s new iPhone 5. The middle-tier Lumia 820 is around $650 unsubsidized.
European pricing is always higher than U.S. pricing, and carrier subsidies will undoubtedly bring these prices down when the phones hit the market. But these early numbers indicate that Nokia’s flagship Windows Phones will likely cost the same as the phones from the more established manufacturers like Apple, Samsung and HTC, all of which sit around the $200 mark in the U.S.
This is problematic for Nokia, once the leading phone-maker in the world, that is now struggling in the smartphone market. It needs a high-profile hit to break its downward slide. And the best way to guarantee a hit is to undercut your rivals on price.
“If Microsoft and Nokia want to see significant adoption, they must simply make the devices cheaper,” says Random Salad Games co-founder and Windows Phone developer Jake Poznanski.
Microsoft’s nascent smartphone OS is currently struggling, commanding only a meager 3 percent market share. Redmond execs have publicly stated that consumers just aren’t aware of the Windows Phone platform, and that Windows Phone 8 will change this. Microsoft and Nokia — the two companies buddied up on Windows Phone development last year — have high hopes for these new Lumia handsets, and they expect them to boost adoption of the Windows 8 platform.
But pricing will play a key role in whether smartphone buyers will take notice.
“There are two types of buyers: One that buys on price and one that buys on brand,” Queens University business professor John Pliniussen told Wired. He says buyers will either come in with a budget and look for certain functionality, or fall back on brand alliance and buy a familiar phone, like the iPhone, for a premium price.
But when it comes to Nokia, Pliniussen says the Lumia prices don’t make sense. “I think what they’re hoping is for it to be the Porsche or the Lamborghini of smartphones. The problem is, the brand has no caché.”
Nokia Germany is pricing the unsubsidized Lumia 920 at 649 euro (around $836) and the Lumia 820 at 499 euro (around $642). Nokia Italy has announced slightly lower pricing, with the Lumia 920 at 599 euros (around $771). In Russia, the Lumia 920 will cost 24,990 rubles (or $803) and the Lumia 820 will be 19,990 rubles (or $643). The phones will be available in Q4, or more specifically, November.
Some comparison: an unsubsidized Samsung Galaxy S III costs $550 in the U.S., 449 pounds (around $728) in the U.K., and usually between 490 and 530 euros (around $630 to $682) in Italy and Germany. The new iPhone 5 starts at $650 unsubsidized in the U.S. In the United Kingdom, the iPhone starts at 529 pounds (around $857).
As prices for competing phones indicate, the Nokia Lumia line will likely cost less in the U.S. than Europe. And for people getting two-year contracts, it would not be surprising if the Lumia line is subsidized to a point where it costs the same as other high-end smartphones — typically around $200.
Poznanski says he “suspects that Microsoft and Nokia will ensure a post-subsidy cost exactly on par with the iPhone 5 and Galaxy S III, and we will continue to see a slow but steady growth of Windows Phone.”
That’s an optimistic outlook, but professor Pliniussen says even if the pricing ends up the same as the more popular phones, that hardly means consumers will come clamoring for the Lumias.
“But why buy a 920? What is the lipstick on this that justifies [the price]? The case isn’t prettier. It doesn’t purr. I don’t see it. That’s why it won’t work,” he said.
“Windows Phone 8 has the same functionality. That won’t work. No one cares. You have to have something that kills Apple or Android. This doesn’t kill it, this is just different,” Pliniussen says.
And that’s the tune that both Microsoft and its hardware partners have been singing: Windows Phone 8 is different. The devices are different, colorful. But now that Nokia is giving people a sense of pricing, “different” might not be enough to give Windows Phone 8 the push it needs.