It Costs $450 In Marketing To Make Someone Buy a $49 Nokia Lumia

benfrog writes "According to market-share estimations compared to marketing dollars, it costs nearly ten times as much to sell the Windows Phone-based Nokia Lumia as it does to buy one. Other analysts agree with the low sales numbers."

Re:Subsidized price

[fullback]

Unfortunately, the stupidity actually is real, painful, intense and relentless. It's boundless, infinite and beyond the realm of understanding. It burns.

iphone "killers": Samsung/Sprint Instinct, $100mil

[neurocutie]

This sort of epic failure is hardly unique. For example, in the early days following the debut of the Apple iPhone, vendor and carriers tried to fight the success of the AT&T/Apple iphone. One of the first such iphone "killers", notable for its total failure, was the Samsung Instinct, released by Sprint. It was actually a dumb "featurephone", although in those days, the iphone was also not considered a smartphone.

The low $199 price of the iphone really caught most carriers off guard -- the standard pricing for smartphones in those days was around $350 *with* contract. So the Instinct's original pricing of $179 had to be lowered to $129. Sprint HEAVILY marketed this thing, with many ads showing the "advantages" of the Instinct over the iphone. Hesse, CEO of Sprint, spent $100mil on marketing the Instinct.

However the Instinct (or In-stink as its customers would come to call it), was really a terrible product -- terrible web browser, lame features, AND worse, required Sprint's brand new, and very pricey (for Sprint), data plans.

Sprint refuses to release real sales numbers, but estimates by analysts were in the 350K range -- perhaps after a year it might have hit 500K. So that is at best $200 of MARKETING COSTS for each Instinct sold.

Hesse would never again stink that much into marketing a phone. Indeed some blame that burn episode for Sprint's rather poor marketing of the Palm Pre, a much better device that never was really given a proper chance...

Microsoft killed Nokia

[EzInKy]

Yeah, I know I'm just stupid open source open source hardware jerk but when asked, which is quite often, which phone to buy I always say avoid anything related to Microsoft. Now admittedly my personal anomosity goes way back to Gate's letter against hobbyists using his software without ponying up pennies to him. Still today though my advice to everyone is to not buy anything that requires you to pay monies past the original transaction.

Re:Subsidized price

[UnknownSoldier]

What's *really* weird is that the iPhone has some of those same limitations and yet it is wildly successful ...

I wonder what the key differences are ?

(I already have an idea, just curious what the /. crowd thinks...)

Re:Too Soon

[SurfsUp]

Nokia was a giant in the cell industry but has been slipping lately.

Slipping? That's an understatement. Go check out the 1 year graph [google.com]. You can't even see today's price because it's lost under the markers at the bottom.

Re:Subsidized price

[spiffmastercow]

in europe we make it a sport not to buy any product that advertises too much, like nokia did in europe :D it doesn't work on us anymore.

Then what's with all the Heineken-only bars everywhere? I had to go kinda far out of the way to get a good beer when I was there (this was in France, Belgium, and the Netherlands)

Re:Subsidized price

[Antonovich]

In the US. Here in France we now have competition. You know, that thing you are supposed to have in a free market? Before the three incumbents happily fixed prices and had to pay massive fines - not enough to get them to stop though. Now a fourth player (Free) has entered and true to their history, they have completely turned the market on its head. Overnight you got 20€/month contracts (unlimited national calling and to landlines in 40 countries, 3GB data with no usage restrictions - yes that means torrents! NO minimum period, 16€ if you get it with quad-play) with no phone supplied. Want a nice phone but can't afford to shell out 400-700€ in one go right now? Fine, get a 20€/month contract, put down 100-150€, and pay the rest per month over 12, 24 or 36 months (not everyone offers all options but most offer a few). It's completely honest - if you want to change provider that's fine, you just need to finish paying your interest-free loan in a lump sum. The other operators now offer similar deals - they had to. Say what you like about consumerist capitalism - if you want cheap, high quality communications then you need a truly free market and it will happen!

Win 8 Phone?

[Necroloth]

I presumed the lack of volume is due to Win 8 phones coming out end of this year? The older win7 phones can't be upgraded to win8 due to hardware limitations ... they'll only get up to win7.8 update and the apps for win8 may not work with the older version. So with this in mind, why would you buy a win7 phone right now?

Re:Subsidized price

[WoLpH]

I guess you really haven't gotten the point then.

The Heineken logo (not sure what the point of the thing is) can be found on just about any bar. But 99% of them (at least in the Netherlands) will serve you a plethora of different beers. I personally haven't seen a bar/cafe where they sold Heineken only.

The only thing the Heineken logo tells me is that there is _a_ bar at that location. I'm sure not drinking that stuff..

It's worse

[dutchwhizzman]

Heineken and a few other breweries are the only ones that will give a loan to the owner of the bar, since bars and clubs are a high risk investment and most banks won't get involved. Because the breweries aren't banks, they don't have to hold themselves to a lot of regulations that forbid banks from controlling their loaners too much. This means that the breweries often end up owning the building after a previous business goes bankrupt and now most bars and clubs are effectively owned by the breweries. Once they figured out this method, they started to actively buy real estate that houses bars, restaurants and clubs. The real kicker is that those bars pay more for their beers than you and I pay for the same beers in the super market. The innkeepers have to pay rent, make a living and pay their staff, so variation is hard to find and prices are inflated due to the lack of competition this sort of practice brings. Add to that the high alcohol tax and it's no wonder that bars and clubs are such a high risk investment....

Re:Unfortunately, Nokia has no Steve Jobs

[wvmarle]

Dumb phones are still going, but how long they will last is anyone's guess.

Well, basically, I think they will last for a very long time.

At least until a smart phone becomes cheaper than a dumb phone - which imho is possible considering a smart phone doesn't have all those mechanical buttons a dumb phone has. And a dozen or so buttons may very well be more expensive to produce than a single touch screen display.

And even then there will likely always remain a market for simple phones that do one thing, and one thing very well: making phone calls.

Re:Unfortunately, Nokia has no Steve Jobs

[TheRaven64]

The marketing department of Apple, Inc. did not need to "sell" their wares as much as their peers in other companies (like Nokia or RIM, for example), as Mr. Jobs himself had done most of the selling.

Ah, that must be why Apple posters seem to be everywhere, if you turned on a TV any time in the last five years you had a good chance of seeing at least one Apple advert, and every major film in the last decade or so has had gratuitous Apple product placement.

Re:Unfortunately, Nokia has no Steve Jobs

[Rufty]

I want a phone that can stay in my car, turned off, and work after three months, for emergencies.

Claimed to last, turned off, for 15 years. [spareone.com] It's on my list of gadgets to get.