It has a breakthrough camera, wireless charging and a gorgeous screen. And it’s headed to AT&T--and only AT&T. When I heard the news that the Lumia 920, Nokia’s flagship Windows Phone 8 device, was going to be exclusive to one carrier, I felt compelled to tweet the following. "I don’t think that’s good for Windows Phone adoption."
Of course, I don’t know the terms of this deal — the Verge’s Chris Ziegler tweeted back that AT&T may have refused to carry the phone unless it had the exclusive — but overall it’s a dumb move. Here’s why.
A Lumia 920 exclusive hurts Windows Phone.
According to IDC, Windows Phone devices have a whopping 3.5 percent share, barely up from 2.3 percent a year ago. By locking itself into AT&T, the premier Windows Phone device of the year won’t be made available to Verizon Wireless’ 94 million customers. Or Sprint’s 56 million. Or T-Mobile’s 33.2 million (before the MetroPCS deal). At a time Microsoft desperately needs a hero device to champion its platform, Nokia’s flagship should be made available to as many U.S. shoppers as possible.
Nokia and AT&T exclusive didn’t work the first time.
Remember all the fanfare for the original Lumia 900? Even though AT&T gave that device lots of marketing support and said it would be its biggest launch ever, it wasn’t enough to really move the needle in the U.S. In fact, I don’t think I’ve ever seen a Lumia being used in public. All I see are Galaxy S IIIs and iPhones. AT&T's lame commercials promised you would get the girl because of the phone’s curved edge, but neither that nor an aggressive $99 price could help. What makes Nokia think that things will be different this time around?
Carrier exclusives almost never work.
It’s the pretty rare phone that would cause someone to jump carriers. Consider that wireless churn rates, defined as the number of consumers who switch carriers, are extremely low with Verizon reporting just a .84 percent turnover for Q2 as compared to .97 percent for AT&T, 1.69 percent for Sprint and 2.1 percent for T-Mobile. We don't know how many of this tiny group of users left their carriers because they wanted an exclusive phone from another provider, but I suspect issues like service and pricing were bigger motivators.
In fact, other than the iPhone exclusive for AT&T, there have been very few exclusive devices that have been runaway hits. According to Avi Greengart, research director for consumer devices at Current Analysis, "Motorola’s exclusive with Verizon for the original Droid made that phone a success."
That’s true, but I think that phone was successful mostly because Verizon customers were clamoring for an iPhone alternative. Greengart added that more recently "the exclusive with Verizon has held Motorola back compared to Samsung and Apple, which broadened their own distribution."
Nokia is now outflanked by HTC
Nokia should be more worried than ever about the HTC Windows Phone 8X and 8S, which Steve Ballmer strangely called "signature phones" for Windows Phone 8. These colorful devices — which bare more than a striking resemblance to the Lumia 920 —will be available for AT&T, T-Mobile and Verizon.
Never mind the fact that the Lumia’s features are more compelling. Anyone interested in Windows Phone and not on AT&T will likely see the 8X as good enough.
It slows momentum for wireless charging.
One of the coolest features of the Lumia 920 is that it comes with Qi wireless charging capabilities. Not only is Nokia working with third parties to make cool accessories for wire-free juicing, it has partnered with Coffee Bean & Tea Leaf to put charging plates on tables in some of their cafes. Virgin Atlantic is also on board, although for now it’s limited to charging stations in the London Heathrow Clubhouse.
How is Nokia going to gather more support for this technology and make one of its chief selling points more compelling when the phone with Qi built in isn’t widely available? The lower-cost Lumia 820 will support wireless charging but will require a separate shell.
The Lumia 920 has a lot of potential and is easily the most exciting Windows Phone 8 device for the holidays. But by making this deal Nokia is entering the next critical stage of the smartphone wars with one hand tied behind its back.