Microsoft CEO Steve Ballmer with Nokia CEO Stephen Elop.
The Nokia story over the last few years has been pretty dark. Declining market share. A late entrance to the modern smartphone era. And so on.
But there's some good news, especially now that Nokia will soon be part of Microsoft if and when the $7 billion deal is finalized. Nokia's shipments of its Lumia phones, the devices powered by Microsoft's Windows Phone 8 operating system, are growing quarter over quarter.
In its Q3 earnings report today, Nokia said it shipped 8.8 million Lumia phones. That's up from the 7.4 million it shipped in Q2. Nokia says a lot of those shipments come from the Lumia 520, a budget-friendly Windows Phone that costs as little as $100 without a contract.
This is a good sign for Microsoft and its Windows 8 OS. Windows Phone 8 has teeny tiny market share (about 3%-5%, depending on what survey you look at), but that market share has been growing year over year. Plus, there's a lot of potential for Microsoft to solidify its position as a strong third place behind Android and the iPhone now that BlackBerry's new BlackBerry 10 devices have proven to be major duds with consumers.
So, how's Microsoft doing this?
A lot of it is because of cheap phones.
And by cheap, I don't mean crappy phones. I mean affordable phones like the Lumia 520 mentioned above. Windows Phone 8's strength comes from the fact that even cheaper devices with the OS have all of the same software features as top-tier devices like Nokia's Lumia 1020. And unlike Android devices, all Windows Phone 8 devices get software updates almost as soon as they're available, ensuring users have the latest and greatest features.
Meanwhile, Apple refuses to budge on pricing. It's still selling its iPhones for hundreds more (unlocked) than Nokia sells a lot of its cheaper Lumias for. Many have criticized Apple for not making a "cheap" version of its iPhone so it can snap up some more market share. Meanwhile, Android device manufacturers have been able to pump out alot of cheap phones that cost next to nothing, which is why Android controls about 80% 0f the smartphone market.
Right now, Nokia is pretty much the only company that's serious about making Windows Phones. HTC hasn't made one in nearly a year. Samsung has a few, but it spends most of its time promoting its Galaxy-branded Android phones that it makes a lot more money from.
The next challenge for Microsoft will be using Lumia phones to prove Windows Phone 8 is a viable platform that other manufacturers should build into.
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