Minor Glitch Drops Price on New Nokia Windows Phone to $0

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Nokia Lumina phoneA software glitch in some of Nokia's (NOK) new Lumia 900 smartphones is leading to a sweet $100 wireless bill credit.

The Lumia 900 hit AT&T (T) on Sunday as the flagship phone for Microsoft's (MSFT) Windows Phone mobile operating system. Apparently, some of the earlier production units have a memory management issue that's resulting in a loss of data connectivity. A smartphone that doesn't surf the Web isn't all that smart, but Nokia is quickly remedying the situation.

Customers who are having connectivity problems can swap their old Lumia 900 devices for updated ones at local AT&T stores, or they can wait until Monday and simply download the update that fixes the problem. There's nothing wrong with the hardware.

The interesting twist here is that Nokia is giving all of its buyers -- even those who have perfectly fine Lumia 900 phones -- a $100 credit on their AT&T wireless bills. That's not too shabby for a phone that costs only $99.99.

Nokia is offering the break even to customers who have yet to buy the device. Anyone picking up a Lumia 900 by April 21 is eligible for the bill credit.

A Fine Line Between a Costly Blunder and Sheer Genius

It all seems too convenient. Wireless carriers offer free phones tethered to two-year contracts all the time, but they're never the top-of-the-line handsets. The Lumia 900 -- at least for the next several days -- will be effectively free after offsetting the $99.99 price with the $100 bill credit through AT&T.

The memory management glitch is real, but one has to wonder whether Nokia and Microsoft are brilliantly milking this development as a way to justify a price that will turn heads. After all, updated phones are available at stores now. The download solution will be available on Monday. Why should someone buying a perfectly good Lumia 900 toward the end of next week be getting it practically for free?

There are plenty of reasons why the market will take the Lumia 900 seriously, but the biggest reason is that Microsoft and Nokia have a lot riding on this model.

Microsoft has a lot of ground to make up if it wants Windows Phone to compete with Android and iPhone's iOS. Finland-based Nokia has seen its handset market share plummet. Both companies have balance sheets flush with cash, so taking a promotional hit makes sense.

Quick Recovery

Nokia knows that it may not have a second chance here. When Apple's (AAPL) iPhone 4 hit the market with a buggy antenna two years ago, folks still snapped up the tech giant's newest smartphone. However, that was Apple. It has already proven itself.

The flagship pairing of Nokia and Windows Phone on Lumia 900 wouldn't have recovered if the companies had simply ignored or played down the connectivity glitch.

Nokia -- perhaps with some financial assistance from either Microsoft or AT&T -- is willing to buy its way out of this jam. It'll probably work.

Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of Microsoft, Nokia, and Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.


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hemipwr54

$0 Still to much!

April 13 2012 at 2:44 PM Report abuse +1 rate up rate down Reply
omerguy40

Makes you really want to rush out and get a Windows phone????

April 13 2012 at 1:44 PM Report abuse -1 rate up rate down Reply
g5user1usa

Nokia is the only one that needs to worry if the Lumia 900 flops. Nokia seems to be losing more smartphone market share and share price. The company is still a mess. Microsoft doesn't have a worry in the world. They have more money than they know what to do with thanks to their Windows and MS Office gravy train which includes all the suckers who routinely upgrade those software products. This little smartphone glitch doesn't hurt Microsoft at all and probably will have no immediate affect on the WP7 platform which is already next to nothing. I wouldn't be surprised if Microsoft doesn't help Nokia fail to some degree so Microsoft can buy Nokia for pennies on the dollar and have its own little cellphone business.

April 13 2012 at 8:35 AM Report abuse rate up rate down Reply