Nokia to Sell Lumia on Multiple Chinese Networks, Elop Says

Nokia Oyj (NOK1V) will sell its Lumia Windows Phones for multiple networks in China, Chief Executive Officer Stephen Elop said.

Nokia announced versions of its Lumia 800 and Lumia 610 handsets to run on China Telecom Corp. (728)’s network based on the so-called code division multiple access standard, and it is also working on products for standards used by China Unicom Hong Kong Ltd. (762) and China Mobile Ltd. (941), Elop said.

“It’s obviously a very important date in our largest market,” Elop said in a telephone interview today from Beijing. “As we did in the U.S. in terms of targeting very specific capabilities for the U.S. market, we’re very excited to show today the same type of approach to China.”

Nokia is bidding for a share of what will soon be the world’s largest smartphone market as Chinese consumers shift from older feature phones. The ability of the Microsoft Corp. (MSFT) software to integrate social networking platforms including Renren Inc. services, Tencent Holdings Ltd. (700)’s QQ and Sina Corp.’s Weibo, as well as Nokia’s maps, will help the company stand out against competition from Apple Inc.’s iPhone and handsets running Google Inc.’s Android, Elop said.

“Our goal is to do as well or better than we’ve done in this market historically, noting however that this is a time of transition,” Elop said. “It’ll be a significant effort, it’ll take some time to do but we clearly have very large aspirations for our future in China.”

Nokia rose 3.6 percent to 4.14 euros at 2:35 p.m. in Helsinki trading.

Mapping Capability

China accounted for 21 percent of Nokia’s devices and services revenue last year.

“The experience on Lumia is very distinct from the experience being offered by Android,” Elop said, citing the way social networking software shows updates on the home screen. “We have unquestionably the best collection of mapping and navigation capabilities in this country because we’ve had licenses to do these services jointly with a Chinese company for a number of years.”

Sami Sarkamies, an analyst at Nordea Bank, said in an e- mailed report that “today’s announcements should guarantee strong quarter-on-quarter momentum for Windows Phones in the second quarter.”

‘Competitive System’

The world’s most populous nation was still Nokia’s biggest market last year, even as revenue for greater China fell 18 percent as users were attracted to cheap Android smartphones competing against mid-priced Nokia devices. Nokia ended the year with a 12.7 percent total market share in the fourth quarter, just ahead of Samsung at 12.2 percent, said Sandy Shen, a Gartner Inc. analyst.

“Today is a big day for mobile consumers in China that will mean improved choice,” China Telecom Chief Executive Officer Wang Xiaochu said. “Besides Android and Apple we now have another competitive system.”

The Nokia Lumia 800C will be available “very early” in April for 3599 yuan ($571) and the Lumia 610C in the second quarter at a price to be disclosed later, Elop said. During the second quarter, the 900, 800, 710 and 610 will be available for China Unicom’s network, which uses a slightly different standard, WCDMA. The company is also working on devices for the TD-SCDMA standard used by China Mobile.

China Mobile

“We are working closely with all three operators in China,” Nokia Executive Vice President of Sales Colin Giles said. “We see China Mobile as a very important partner for us and will look at ways we can develop more devices for them.”

The iPhone isn’t available with a service contract on the China Mobile network and the company’s TD-SCDMA mobile broadband network is incompatible with the device. China Mobile has 15 million iPhone users on its 2G and Wi-Fi networks, the company said this month.

Nokia unveiled the Lumia at the site of the Yongdingmen city gate built during the Ming Dynasty in 1553 and rebuilt in 2005.

“Like Yongdingmen, Nokia has a long and symbolic history and in recent years we’ve had to embark on a reconstruction of our own,” Elop said at a press briefing.

The company will promote the Lumias at 200,000 retail outlets in China, Giles said. He revamped Nokia’s sales operations in China after a build-up of inventory at resellers helped trigger a profit warning in May.

Microsoft Relationship

“We’re very focused on making sure that the new distribution systems are properly aligned with the product launches, that people are ready for the new launches, that pricing levels are stable, that inventory levels are correct, that people are making money with our products,” Elop said. “Substantial portions” of the marketing budget in China are earmarked for Lumia, he said, without giving amounts.

Nokia lost more than 60 billion euros in market value since the introduction of the iPhone as it failed to keep up with newer touchscreens.

Last year, Elop announced Nokia would adopt Microsoft’s Windows Phone as its main smartphone software, retiring its Symbian and MeeGo platforms. He brought out four models starting in October, and made deals for the handsets with more than 80 carriers including AT&T Inc. and Vodafone Plc. The Microsoft relationship is still a partnership, Elop said in the interview.

“There’s no discussion about mergers or anything like that,” Elop said in the interview.

China Factories

Chinese customers bought 77 million smartphones last year, about as many as Nokia sold worldwide, according to Gartner. That’s set to rise to 140 million this year, passing the U.S., the Stamford, Connecticut-based researchers said.

Nokia has two factories in China and research units that are working on adding smartphone-like capabilities to its low- end phones as well as adapting Lumias for China. Nokia’s planed factory in Vietnam isn’t intended to take volumes from China, Elop said in the interview.

“As new product lines ramp up we expect Vietnam to help us distribute to various regions of the world where we need to extend our supply chain,” he said.

--Diana ben-Aaron, Ed Lococo. Editors: Robert Valpuesta, Kim McLaughlin, Kati Pohjanpalo.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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