AT&T helped raise Apple's iPhone from its infancy to becoming the most popular phone in the world. How can AT&T now take its love away from iPhone and shower it on the new baby from Nokia, Lumia 900, running Microsoft Windows?
Sherlock Holmes would have replied, ‘It is elementary, my dear Watson.’
AT&T had an edge because it had an exclusive on iPhone from launch in 2007 to last year. Now that edge is lost. It does make sense for AT&T to regain the edge, at least partially, with Lumia 900.
Google's Android did not offer any viable options for AT&T. Lumia 900 was the only choice.
Ad Age reported that AT&T is spending $150 million to launch Lumia 900. This sum is more than AT&T spent to launch iPhone. The report makes sense to me because AT&T needs to repeat the success. However, The Verge contradicts Ad Age and claims that the budget for Lumia 900 is nowhere near $150 million.
Instead of squabbling over the budget, our research at the Arora Report has focused on what really matters – which phone salespeople at AT&T stores are pushing.
Based on the data we have gathered, my conclusion is that AT&T is doing a spotty job pushing Lumia in its sores. In some stores, salespeople are very knowledgeable and doing a great job selling Lumia. In other stores, salespeople make negative comments about Nokia and Windows.
Considering that about 80% of the people buy their phone from a carrier, the efforts of AT&T have positive implications for both Nokia and Microsoft.
Nokia lowered its earnings projections today. As a result the stock is down. Nokia suffered further embarrassment due to identification of a software bug that prevented some Lumia 900 customers from connecting to the Internet. Nokia is deploying a software fix and any AT&T customers who buy the Lumia before April 21 will get a $100 rebate from Nokia, making the phone free.
Lumia 900 is not much of a threat to Apple. Lumia 900 is likely to take share away from Android phones, however. Investors in Apple stock should be cognizant that forces are beginning to line up in a fashion that ultimately will work to the detriment of Apple.
Nokia is the dark horse here. From an investment perspective, Nokia offers excellent risk-reward for aggressive investors. On the downside, this four-dollar stock can go to two dollars, but on the upside even moderate success with Lumia can set the stage for follow-up products. If Nokia manages to get a measly 10% share of the smart phone market, I think the the stock has the potential to increase fivefold in price.
For background on Lumia 900, please see Steve Ballmer Willing To Pay $230 Per Phone To Beat Apple, Google
About Me: I am an engineer and nuclear physicist by background. I have founded two Inc. 500 companies, and have been involved in over 50 entrepreneurial ventures. I am the chief investment officer at The Arora Report, which publishes four newsletters to help investors profit from change. Please feel free to write me at Nigam@TheAroraReport.com.
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Full disclosure: Subscribers to The Arora Report are long Apple from $131 and have taken partial profits at $360, and $525. We are also long Nokia.
