Will Nokia Score a Big Win With a New Partner?
Psssst ... hey, you. Wanna hear the latest wireless scuttlebutt going around?
Well, even if you don't, I'm going to pass it on anyway.
First, Nokia (NYS: NOK) is supposed to be bringing its newest and baddest smartphone to the Consumer Electronics Show in Vegas next week. I'm talking about the Lumia 900, also known as the "Ace," the first Nokia handset running Microsoft's (NAS: MSFT) Windows Phone OS that will support 4G LTE.
Next, AT&T (NYS: T) is the U.S. carrier rumored to be launching Ace in March, at least that's what a blog post on BetaNews is reporting. The posting does not name sources, but goes on to say that AT&T, Microsoft, and Nokia will allocate $100 million for a marketing campaign to promote the Nokia Ace/Lumia 900 and give it a "hero" status. I'm not sure what that means, but it sounds like a take-no-prisoners attack on the iPhone/Google-zilla stranglehold on the smartphone market.
It's easy to see why Nokia and Microsoft want to go this route, but AT&T's motivation is not so obvious. If one looks at Verizon's (NYS: VZ) recent revelation that it sold twice as many iPhones during the fourth quarter of 2011 than the previous period, yet saw profit margins drop 5%, AT&T's rationale may become clear.
Apple (NAS: AAPL) charges such a premium to the carriers for the iPhone that the discounts they must give to subscribers takes a real chunk out of their bottom lines. Even though the Nokia phone won't be an immediate big draw (if a draw at all) for AT&T, the company would likely make a much larger profit on each Ace/Lumia subscription it can sign up.
Also, AT&T has just expanded its LTE coverage to 26 markets, up from 15. So, the more LTE handsets it can offer, the better.
We've been seeing a lot of Nokia/Microsoft cooperation with the rollouts of Nokia's Lumia smartphone line last fall, so maybe this last rumor is not so over-the-top. TechCrunch is reporting that Eldar Murtazin, a mobile industry watcher, has claimed via Twitter that Microsoft and Nokia executives will be meeting to work out a deal by which Microsoft would buy Nokia's smartphone operation.
Far-fetched? Remember, Nokia CEO Stephen Elop was the former head of Microsoft's business division.
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At the time this article was published Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of and creating bull call spread positions in Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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