Price Cuts, Life Cycle and the Woes of Nokia

When a global brand is forced to cut the selling price of its flagship product by 50% just three months after launch, you just know something is badly wrong!

That is what Nokia has done in the crucual US smartphone market. The price of the Lumia 900 Windows Phone (first released in April 2012) has been cut from $99 to $49.99.

Why? Nokia management point to the shortening product life cycle of smartphones. They claim that the 50% discount is

“part of our ongoing lifecycle management”.

Really? Despite winning “Smartphone of the Year 2012” when the Lumia 900 was launched, Nokia customers have proved harder to please. It sounds like Nokia may also have a stock control problem on their hands. The Guadian article reports an analyst estimating that:

“from April to June Nokia sold a total of 1.1m to 1.4m Lumia phones, of 2.2m shipped”.

That could mean up to 1.1 million Lumia 900 handsets out there in Nokia and distributor warehouses. no wonder the price has been cut!

But the final nail in the coffin for the Lumia 900 is the recent announcement from Microsoft - Nokia’s strategic partner - who said current Lumia 900 phones will be unable to run its new Windows 8 software, rendering them obsolete. With strategic partners like Microsoft, who needs enemies?

All of which is even more bad news for Nokia shareholders who have seen their share price fall by 95pc since November 2007. There just doesn’t seem to be any light at the end of the tunnel for Nokia…