AT&T Inc. (NYSE:T) is offering the Nokia Corporation (NYSE:NOK)’s flagship smartphone, the Lumia 920, for $99 and the mid-range Lumia 820 for $49.99 to consumers who will sign up for a two-year contract.
The price of the Nokia Lumia 920, powered by Microsoft’s Windows Phone 8 operating system, is cheaper than the price offerings its competitors – Apple’s iPhone 5 for $199 and Samsung’s Galaxy Note II for $299 from AT&T Inc. (NYSE:T) on the same two-year commitment.
Chris Weber, EVP for the Global Sales and Marketing division of Nokia Corporation (NYSE:NOK), explained that the price offering for the Lumia 920 is lower than expected, because AT&T Inc. (NYSE:T) decided to subsidize some of the costs in order to encourage more consumers to subscribe to its network and commit on a two-year contract. He said, “Carrier subsidies are always a carrier decision, but they help bring the product to an extremely compelling price point.”
AT&T further boosted the competitiveness of the Lumia 920 by offering the wireless charging dock free of charge to consumers who will purchase the smartphone early. The offer will be available for a limited time.
Avi Greengart, analyst at Current Analysis, believes that Nokia Corporation (NYSE:NOK) cares more about selling a large volume of its smartphones to establish a customer base and increase its market share than generating higher profit.
Greengart also cited that the only reason for a possible failure to sell the Nokia mobile devices, despite the aggressive pricing, is the lack of interest among consumers on the Windows Phone 8 operating system. Furthermore, he noted that AT&T’s offer to include the wireless charger for free is a big advantage for Nokia against HTC. He said, “This is a valuable accessory that AT&T Inc. (NYSE:T) and Nokia Corporation (NYSE:NOK) are throwing in the box for free. I would think this will make it more difficult for HTC, because they have a product with a smaller display and less unique features.”
AT&T will start accepting preorders for the Lumia 920 & Lumia 820 on Wednesday. The phones will be available on November 9.
During the third quarter, this year, Nokia reported €969 million, or $1.24 billion in earnings losses. The Finnish mobile device manufacturer hopes to recover from its financial difficulties through the success of its new smartphone models. Based on the latest date from Strategy Analytics, Nokia’s share in the smartphone market was only 4 percent during the third quarter.