Lumia 900’s – “Normal life cycle management process” aka ‘price cuts’

In the UK, we’re very much used to phones being subsidised on contract. Subsidised is good for some people as part of the monthly payments on text/calls/internet goes towards the cost of their phone so that it is a small fraction, if not free (unless it’s an iPhone, which was one of the first, if not the first in the UK to be on contract yet still be so expensive). Being free on contract is quite normal for the UK and something I thought was weird for the US to still pay for the handset, again until iPhone arrived in UK, e.g. SGSIII, OneX and Lumia 900 are all available free on similar if not identical plans. Are they giving phones away? No.

The manufacturer works with the network provider and shares the revenue from the contract. Anyway, a common trend is that after a few months on contract, prices of those phones gradually drops (or, if in the UK the line rental may get cheaper).  It’s a common thing, and if  you’re a savvy buyer, you would have found it at a much cheaper contract from the beginning.

I haven’t been paying attention to the news that the Nokia Lumia 900 had dropped in price to $49. It was already briefly mentioned when the pink lumia 900 arrived, and I didn’t think much more of it (especially since it was available for a penny in some places). Some places are reporting that the price drop reflects the news that the Lumia 900 can’t get upgraded to WP8. If true, that would be as expected by some. Others suggested it’s because of weak sales, and skewing the time frame into ‘weeks’ instead of the reality of 3 months.. That could also be true and we’ll find out in a few hours what the precise Q2 performance has been.

Nokia however says that’s part of the normal lifecycle. Some headlines do sound more dramatic –  “slashed in half” when really, the price dropped by $50 on contract because the phone is subsidised.

WPCentral  posts a study by Strategy Analytics who came to the conclusion that

the charts show pricing from launch and appears to demonstrate that it is quite normal for smartphone up-front prices to decline in the first 3 months after launch

Strategy Analytics

It’s not that much of a wonder why the price of the Lumia 900 was that low from the beginning. I had always felt it was a 2011 handset in terms of specs and was priced accordingly, though in terms of overall user experience it was great value for the end consumer. Perhaps that’s why it did better than expected according to AT&T.

Anyway, we’ll find out shortly how the 900’s stats actually went; whether this might be PR fluff or whether their defence is justified.

Cheers John for the tip!

Category: Nokia