mocoNews - No US Carrier Partner Yet For Nokia's Flagship N97

Dianne See Morrison
Friday, May 29, 2009; 11:00 AM

Will Nokia (NYSE: NOK) ever crack the US market? The Finnish handset giant's upcoming flagship phone the N97 has not yet been picked up by any American carrier, meaning that it goes on sale in June for the hefty, non-subsidized price of $699, roughly $400 more than the iPhone and the Pre, which it is supposed to compete with. Walt Mossberg who interviewed Nokia chief Olli-Pekka Kallasvuo at the D7 conference wanted to know what the company's problem was in the US, where its market share has withered from a high of 28 percent in 2004 to around 8 percent. Kallasvuo said that the company was working on making more US-centric products that specifically catered to the American market, and hoped US carriers would eventually recognize and embrace their efforts.

But what exactly is not to American tastes with the N97? Why is the N97 getting no American love, despite Mossberg calling it "pretty cool" and other early reviews of the device comparing it favorably to the Palm (NSDQ: PALM) Pre, the iPhone and the Blackberry Storm? Kallasvuo himself cited the remarks of AT&T's chairman and CEO Randall Stephenson that phones were becoming more and more important to consumers, and yet AT&T (NYSE: T), one of two US networks that the phone can work on, hasn't picked up the N97. (Kallasvuo said he was "working on" Stephenson).

CCS Insight Analyst John Jackson believes that the N97 faces several challenges in the US. First, the timing is not favorable, especially given the impending launch of the Palm Pre and the new iPhones that are reportedly coming out. Further, Jackson said the wholesale price for the N97 is right around $500, making it "comparatively expensive."

More on the N97 US challenges after the jump.

Then there's the question of positioning. Jackson said that the phone, despite stacking up favorably against its rivals, does not have any clear "fit" in AT&T's portfolio, which aside from the iPhone, already includes several Blackberry models. (AT&T's Stephenson said he also wanted the Pre.) Nokia's one success recently was getting its E71 device picked up by AT&T, which Jackson calls a "tactical win" for the handset maker. The difference though was that the phone was customized to AT&T, where it's known as the E71x, and where the carrier was able to differentiate the device from its other phones by positioning it as a thinner, sleeker version of a Blackberry.

Things may have been different if Nokia's brand presence in the US was in a stronger, clearer position. Forrester analyst Charles Golvin says that the Nokia brand has something of a split personality among American consumers. "There's a small cadre of very knowledgeable users that recognize Nokia for its very advanced phones that are very feature rich, but most mainstream consumers see it a low end brand," says Golvin. If Nokia's brand was on a better footing, perhaps carriers would have felt more obliged to pick up the N97.

So is there anything Nokia can do to retrench in the US market? Unfortunately for the handset maker, there's no "switch to flip" or "immediate tactic" it can pursue, according to Jackson. As for its strategy of trying to localize their devices to the US market, it's the right one says Jackson, but is a "marathon" rather than a sprint, for the handset maker. Jackson believes it won't be a "tragedy" for Nokia if the N97 never gets a US carrier partner, if it can get its other products, and especially its more mid-range QWERTY phones picked up.

Still, Jackson and Golvin both caution that it is too early to write off a US carrier partnership for the N97. Rumors are circulating that T-Mobile, the other network that the device could work on, may end up carrying it. Moreover, AT&T didn't launch the E71 until months after Nokia originally debuted the device. Though it's too early to say how the E71x is doing, Jackson said, "My expectation is that it will be a very successful device."

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