Can Verizon Deal Help Nokia Rise From the Dead?
Nokia (NYSE:NOK) knows it’s time to stop the bleeding and become competitive again in the all-important U.S. mobile phone market. The Espoo, Finland-based company made a huge stride towards that goal Monday when it announced its products would be sold by Verizon Wireless (NYSE:VZ) again for the first time in three years.
Nokia struck the deal with Verizon – the U.S.’s largest wireless carrier – in an attempt to reassert itself into the country’s mobile industry that has recently been dominated by Apple’s (NASDAQ:AAPL) iPhone and the Google (NASDAQ:GOOG) Android smartphones.
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Nokia’s fall from relevance could almost be called catastrophic. The company controlled more than half of the global sales of smartphones before the iPhone and Android devices burst onto the scene. Now, Nokia accounts for about 4 percent of the global smartphone market — and an even smaller percentage, about 2 percent, of U.S. smartphone sales.
But the company knows the importance of the U.S. market, where most of the newest advancements in smartphone technologies are introduced and popular trends take foot, and teaming up with Verizon is the first step in re-entering the market. Verizon will start by selling Nokia’s Lumia 822, a device aimed at capturing some of the 100 million U.S. cellphone users who still have not made the switch to a smartphone.
“The U.S. is a huge market and one where Nokia has not seen any significant sales in recent years,” said CCS Insight analyst Geoff Blaber. The market is “essential for Nokia to capture if it’s to seize some high-margin business.”
The move also stands to benefit Microsoft (NASDAQ:MSFT), whose Windows Phone 8 operating software is featured on the Lumia 822. Nokia and Microsoft designed the device in the hopes of attracting U.S. corporate customers, who might be intrigued by the Lumia 822 as an upgrade from their familiar BlackBerrys.
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