Nokia smartphones “too expensive” says Telefónica handset chief

Nokia’s high end smartphones are “too expensive” according to the European general manager for devices at international carrier Telefónica. Simon Lee-Smith told that Nokia’s premium devices are “not yet at the right price point,” adding: “If Nokia wants to sell in volume, they need to bring out devices which are cost-competitive.”

Lee-Smith said Nokia was “beginning to listen” to its carrier customers and that he expected the Finnish vendor to deliver devices in the new year that are “more commercially effective”. He said the problem related to products that have been available for some time, such as the N8 and N9, as well as the recently announced Lumia800, Nokia’s new flagship WP7-based smartphone.

At Nokia World last month Nokia CEO Stephen Elop said that the Lumia 800 would retail for €420, pre-tax and pre-subsidy.

The vendor also used Nokia World to unveil a rejuvenated emerging market proposition based around feature phones heavy on functionality but low on price. “I hope they’re successful with that,” Lee-Smith said. “They need to be able to subsidise their high end smartphones, because they’re too expensive.”

Device vendors generally have unrealistic expectations of what carriers and consumers will pay for smartphones, Lee-Smith said. “All device manufacturers seem to think that a €400-plus device is the norm. Well, it isn’t. Customers and operators won’t pay that cost for a device which doesn’t differentiate sufficiently.”

Simply improving the specifications of smartphones is not sufficient, he added, saying that operators in general, and Telefónica in particular, won’t pay premiums simply because vendors are delivering phones with bigger screens or higher resolution cameras. “Let’s not let the technology and cost curve ahead of the demand curve,” he said.


  1. Avatar Anders Borg 07/11/2011 @ 2:17 pm

    “because they’re too expensive.”

    Like iPhone-expensive or Android-expensive?

    iPhone is still above 400 Euros, so Nokia is free to compete on the high-margin biz, provided they also provide less expensive phones. Otherwise they won’t compete with iPhone nor Android.

  2. Avatar Michael Prince 07/11/2011 @ 4:54 pm

    Mr Lee-Smith, your beef is with Apple, not Nokia. My understanding is that the 4S is around 475 euro before subsidies.

    Your customers are demanding iPhones, so you are forced to pay the premium. If the Lumia becomes popular, you can sell it less expensively, with less subsidy. The issue in my mind is that Apple is really capitalizing on their position and are getting extremely favourable (to Apple) terms from the carriers. Its made worse with guys like this in charge that won’t let Nokia play with the same rules. They want Nokia to be their saviour from Apple, but Nokia want to make money too, not be the cheap ‘also-ran’.

  3. Avatar Franky 08/11/2011 @ 9:05 am

    Microsoft phones haven’t set the world alight, why should Nokia expect to charge a premium for a platform that hasn’t warranted or justified a premium? Particular when it’s latest hardware isn’t exactly cutting edge, lacking in features and using recycled MeeGo designs?

    Sounds to me like the operators are talking sense, they know their customers and they know the score in terms of what sells and what doesn’t.

    *IF* Windows Phone becomes a successful platform to the point where it is demanded by customers prepared to pay a premium, then and only then will Nokia be able to compete with Apple on price. Maybe this will happen in a couple of device generations by which time Nokia will be creating new designs for WP7 not recycling old designs, and using cutting edge hardware and can nudge up their ASP.

    Until then Nokia needs to accept it’s making up lost ground and should sell it’s current products at highly competitive prices, ie. significantly lower than Apple, and even flagship Android devices. Maybe even sell at a loss, I’m sure Microsoft will be willing to support bottom line.

  4. Avatar tim deluca-smith 08/11/2011 @ 12:29 pm

    The operator community also needs to take some responsibility here. It has spent years cultivating a nation of consumers that associate operator value with price. ‘Free’ [subsidized] phones have become expected by the mass market and the operators only have themselves to blame for flogging the subsidy horse in a bid to grab market share for so many years. Consumers have almost no idea about the true value of the devices (wholesale price of an iPhone is $600). Problem is, it’s not easy to turn that ship around and operators are now stuck spending months recouping their subsidy investment before breaking-even on a customer.

    I’d defend the Nokia price point. Android has the low-cost smartphone market covered by ZTE / Huawei etc, Apple sits at the top end – Nokia is well positioned price-wise against Samsung and some top-end HTCs in the middle.

    Wholesale price of the iPhone is US$600

  5. Avatar bob 08/11/2011 @ 3:34 pm

    Mr Smith here has some major issues with all manufactures,
    He wants less technology on the phones to make them cheaper. Manufactures listen to this then get blasted by the media for being slow, not being able to do, this and that due to limitations.
    As someone pointed out before, he real issue is with Apple, they charge well more than 400 euros for their phones, demand for early upgrades for the customer to their next phone, tell the operators how to sell their products, basically just want to operator to run their stores as they see fit.
    If Telephonica wishes not to get into the head end of the market then that is their choice, he should just buy cheaper products and push away all the high end phones in order to save. It will then be up to the customers to decide if they want to have any service with his company. Instead of complaining about costs, just get your free sample of the Lumia 800, or whatever high end phone he wishes to choose and move on ( as i am sure he has had a tester unit for months now)

  6. Avatar Le_Marc 10/11/2011 @ 5:53 am

    this guy is looking for profit in all the wrong places. No manufacturer will obey to this rants just because he is expecting to make more money out of phones (hardware). If he is being pushed by Apple well too bad. Thats how Apple works and he just expects Nokia to hear his cries and give a special price to Telephobica (it`s Telefonica i know). Wrong place to cry. Nokia will laugh to his face. He just wants more profit for the company i hope fires him soon.

  7. Avatar Ignacio Lopez 24/11/2011 @ 7:41 pm

    Nokia and Microsoft want to be Apple.

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