Is AT&T's sales force prepared to sell the Nokia Lumia 900?
AT&T is spending a bundle to promote the Nokia Lumia 900, but its own retail sales associates may be the weak link in promoting its flagship Windows Phone.
The Nokia Lumia 900 may be topping the charts at online retailer Amazon, but a quick check of AT&T stores in Manhattan right after the launch shows that AT&T, Nokia, and Microsoft still have a long way to go in educating AT&T's salesforce on how to sell the device.
The newly launched Windows Phone topped the cell phone bestseller list on Amazon on Monday, the day after it went on sale. The sales momentum online is a positive early indicator that the smartphone may be a hit. But the scene at AT&T retail stores in New York City, where Nokia and Microsoft had hosted big promotion events, painted a much different picture, as some sales associates had little knowledge of the product and were reluctant to recommend the device.
When I walked into several AT&T retail stores on Monday posing as a first-time smartphone shopper, the banners and posters promoting the new Lumia 900 were prominently displayed. But when I asked for advice on buying a new smartphone, sales associates in five different stores in Manhattan actually recommended the Apple iPhone and not the carrier's latest "hero" device.
Even when I prompted them to tell me more about the Lumia 900, none was willing to recommend it to me for purchase.
"Windows Phone is alright," said an associate in a store on the Upper West Side. "But it's no iPhone."
It shouldn't come as a huge surprise that these sales people are still pushing the iPhone. After all, the iPhone is the single most popular smartphone in the U.S. And AT&T until February last year had been the only carrier in the U.S. selling the device since its launch in 2007. AT&T's long history with the iPhone may be one reason that sales associates are so familiar with the device and comfortable recommending it to customers.
But AT&T is sinking a lot of resources into promoting the new Lumia 900. In fact, AT&T's head of devices recently told CNET that it was the biggest launch the company has ever done for a new smartphone. It's also partnering with Nokia and Microsoft, which put together big marketing events in cities, such as New York, Chicago and San Francisco, for the kick-off.
While the Lumia 900's early success online is seen as a good sign, the reality is that retail store sales are far more important.
"Winning the point of sale is critical to the success of the Lumia 900," said Ramon Llamas, senior research analyst at IDC. "That's where the salesperson can educate potential customers about what Windows Phone can do. It's where they explain why it's different from the competition."
Llamas said he also checked out a handful of AT&T stores on Monday in Massachusetts where he lives. Like me, he found that many of the sales associates he spoke with were unable to articulate what makes Windows Phone different from its competitors. And the salespeople he talked to recommended Google Android phones, like the Galaxy Note. But he said he found one sales associate who was an enthusiastic backer of Windows Phone and was able to explain the benefits of the device. Still, he admitted that this one salesman seemed to be the exception and not the rule.
"It's definitely going to take more than one person to spread the word," he said. "But it's still early."
Nokia's head of North American sales said in an interview with CNET that he had called on five AT&T stores in Chicago on Monday to see how they were doing. And he was pleased with the execution.
"We're seeing great consumer buzz and excitement," Chris Weber said, declining to provide a sales figure.
"We're very pleased with AT&T's execution of the promotion and the hero status," he said. "There's always room for improvement, but overall, I'm very happy."
Greg Sullivan, senior product manager at Microsoft for Windows Phone, said Microsoft and Nokia have worked closely with AT&T to train sales representatives. He said he's encouraged by the strong sales on Amazon and also by the growing awareness of Windows Phone among consumers. But he admitted that more needs to be done to educate the AT&T sales force.
"We are working to get as many sales representatives trained as possible and to give each of them some hands-on time with the device," he said. "There are thousands of retail stores and even more authorized dealers throughout the country. Educating all these sales associates is not something that can be accomplished overnight. And we can't get to 100 percent on launch day. But we're making steady progress."
Sullivan said that Microsoft will continue to offer training sessions for sales associates as it works to get AT&T retail staff more familiar with the device and the operating system.
AT&T declined to comment for this story. It also refused to provide information about how it educates its sales representatives to sell new devices, citing competitive concerns.
I'll admit that my informal survey of five AT&T stores in Manhattan was unscientific, and the sample size was too small to draw definitive conclusions. AT&T has more than 2,200 company-owned retail stores throughout the U.S., in addition the certified resellers that also sell AT&T service and devices. Still, my mini survey offers a glimpse of the challenges the companies face as they promote this device and the Windows Phone ecosystem in general.
Nokia and Microsoft are fighting an uphill battle. Apple and Google Android dominate the market in terms of smartphone operating systems. And Google Android device makers, such as Samsung and Motorola, have been flooding the market with one 'hero' device after another. And they too have been gaining market share. And even though the smartphone market is not quite mature, Apple and the Google Android ecosystem have a good headstart.
The biggest opportunity that Nokia and Microsoft have for breaking into the smartphone market is the first time smartphone buyer. But this is also a challenge at the same time, since these buyers may rely more heavily on the advice of a sales associate. And unlike the first-time smartphone buyer, the sales associate is already familiar and entrenched in one or both of these other smartphone ecosystems.
One of the key differentiators of the Lumia 900 is that it has many high-end features, such as support for AT&T's new 4G LTE network, an 8-megapixel camera, and a sharp 4.3-inch screen at an entry level smartphone price. Priced aggressively at $99.99, the device is an easy sell to people who have never owned a smartphone before or to those looking to abandon their old BlackBerry devices.
First-time smartphone subscribers are a particularly important target audience for the Lumia 900 and Windows Phones, because they likely won't be bringing any legacy content with them. In other words, they haven't already invested in dozens of apps from the Apple App store or Google Market. Their digital music and videos may also be free from the clutches of other ecosystems, such as Apple's iTunes. This may also be true for BlackBerry customers, who are less likely to have their device loaded with apps or other digitally protected multimedia content. So making the switch to a new platform, such as Microsoft should be easy.
By contrast, once subscribers purchase a smartphone and start acquiring apps and other content for their phones, it becomes more difficult and requires more effort to switch ecosystems.
The good news for Microsoft and Nokia is that there are still plenty of customers in the U.S., who have never purchased a smartphone. In fact, Nielsen recently said that a little less than half of all mobile subscribers in the U.S. own a smartphone. This leaves 50 percent of the market wide-open for Windows Phone.
And with BlackBerry maker Research In Motion losing market share each quarter, analysts believe Windows Phone has a great opportunity to scoop up new users. In fact, by 2015, IDC predicts that Windows Phone will be the second largest OS worldwide on smartphones with 20 percent of the market. At the end of 2011, IDC said Windows Phone had only 5 percent of the market. Android is expected to dominate with 45 percent of the market. And Apple is expected to have roughly 15 percent of the worldwide market.
In order for Windows Phone to achieve this growth potential, it must appeal to first-time smartphone customers. But it also must impress the sale associates, who are the ones recommending which device to buy. And in my small survey, it seems like AT&T's in-store sales teams may not understand the device well enough to be able to identify who the target customer should be.
This became clear to me when I walked into the AT&T stores and told each associate I encountered that I had never owned a smartphone but was looking to buy my first one. I explained I didn't have any preconceived ideas about which device I wanted to buy. I told them I was a PC user, who knew little about cell phones and was looking for something easy to use. My main objective for owning a smartphone was to access email, surf the Web and check Facebook.
While all these activities could be easily achieved with a Windows Phone, associate after associate first pushed me to toward an iPhone and then suggested an Android device as my second option.
"For your first smartphone, you should get an iPhone," an assistant manager at an AT&T store told me. "When you get bored with that, you should try an Android phone."
When I asked him about the Lumia 900 and the Windows Phone OS for someone such as myself who had never had a smartphone, he told me he thought it was too complicated. He admitted he hadn't used the Lumia 900 much. He had only gotten the device a couple of days before the launch on Sunday.
Microsoft's Sullivan said that the company is aware of the challenges it faces in getting the retail sales team familiar with the devices. But he said that Microsoft and Nokia are in this market for the long haul. He said that contrary to the hype in the media, neither Microsoft's nor Nokia's success in the U.S. smartphone market hangs solely on the Lumia 900.
"Some folks want to create drama around this narrative that this one phone will make us or break us," he said. "They say that if it doesn't top the charts, it's over. That may make good copy, but that's not reality. We are in this market for the long term, and we'll do what it takes to make it a success."