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Verizon may be ready to cast its lot with Microsoft and its Windows Phone platform.
Verizon Chief Financial Officer Fran Shammo, speaking on a conference call today, said he was “fully supportive” of Microsoft and talked about the need for a third mobile ecosystem in the industry.
That Verizon shifted from its previously lukewarm stance on Windows Phone to today’s comment underscores the increasing need for wireless carriers to wean themselves off of their dependence on Android and iOS, which are the two dominant smartphone platforms. Apple, in particular, has been able to extract hefty subsidy payments from the carriers, forcing them to look elsewhere for alternative hit devices.
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Verizon’s marketing heft and large base of basic phone customers could be a boon to Microsoft and Nokia, which have been at the forefront of the recent Windows Phone push. While both are putting their resources behind the Lumia 900 launch at AT&T, having a presence at the two largest carriers in the U.S. would greatly enhance its chance of success.
“It hints that there’s a Nokia device that could appear on the Verizon network in the near future,” said Todd Rosenbluth, an equity analyst at Standard & Poor’s.
Verizon believes that it can drive the adoption of Windows Phone devices just as it drove sales of Android with its Droid franchise.
“We created the Android platform from the beginning and it is an incredible platform today that we helped to create, and we are looking to do the same thing with a third ecosystem,” Shammo said.
Verizon actually wasn’t with Android at the beginning. T-Mobile USA was the first carrier to offer an Android phone — the G1 from HTC. But Verizon struck a deeper partnership with Google, and its marketing clout helped turn the original Motorola Droid into a smash hit. The Droid’s early success and the resulting push of Verizon’s Droid franchise pushed Android into the mainstream.
Even to this day, people still believe Droid is synonymous with all Android phones, despite it being a Verizon-only brand. It wasn’t until AT&T was on the cusp of losing its iPhone exclusivity that it began embracing Android.
Just as Verizon’s desire to create a hit smartphone forced a partnership with Google, the dominance of Apple and Google may again convince the carrier to find a new ally in Microsoft.
The comments, however, come amid mixed results for Nokia and Windows Phone. In the U.S., the Lumia 900 appears to be holding up strong despite glitches with some of the phones. AT&T stores are reportedly sold out of devices. But in Europe, several carriers told Reuters that sales have been weak and that the devices are having a tough time competing against the iPhone and Android devices.
Nokia reported weak first-quarter results earlier today amid mixed sales of Lumia devices. The sales figure doesn’t include results from the Lumia 900, which launched in the second quarter.
Verizon’s desire to create a strong third smartphone platform marks a reversal of its recent ambivalence with Windows Phone. The carrier only has one older Windows Phone in its lineup, which is little more than an afterthought. Executives previously told CNET that Verizon was taking a wait-and-see approach with the platform.
AT&T’s early buzz with the Lumia 900 may have helped, but a likely stronger driver are the high subsidies Verizon has to pay Apple to carry the iPhone. The subsidy, which is the highest in the industry, keeps the iPhone 4S at $199.99 for consumers. But the more iPhones Verizon sells each quarter, the larger a hit it takes to its profits, a phenomenon that affects all carriers that offer the iPhone.
In the first quarter, the company’s earnings and revenue both rose, partly because of a decrease in the sales of iPhones. At 3.2 million iPhones, Verizon sold 1 million fewer in the period than in the fourth quarter, when the iPhone 4S had just launched. Still, it was a large number that required a large payment to Apple.
In comparison, Verizon sold 2.1 million 4G LTE smartphones, which represent a bulk of the non-iPhone smartphone sales from the quarter.
“They’d like a third suite of devices and operating system to be able to offset the subsidy issue,” Rosenbluth said.
Nokia Lumia 900 (photos)
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