* Lumia 900 software problem could cut data connections
* Software update due on or around April 16
* Customers buying phone for $100 to get $100 call credit
* Says problem not related to Windows Phone or network
* Nokia shares down 0.9 pct, while broader market up
By Tarmo Virki
HELSINKI, April 11 Nokia has found a
software bug in its Lumia 900 smartphone, its answer to Apple's
iPhone, and is effectively giving the model away until it is
fixed, blunting its bid to turn around its fortunes in the
Nokia's first 4G phone, which it markets with the strapline
"an amazingly fast way to connect", can occasionally lose its
data connection as a result of the bug, Nokia said.
Though still the world's biggest volume maker of cellphones,
Nokia lost the top spot in the lucrative smartphone market last
year to Apple and Google, in part due to its
weak performance in the United States, where its smartphones
have slipped to less than a 1 percent market share.
The Lumia 900, which uses Microsoft's Windows Phone
software, is currently only available in the United States and
is key to its comeback there.
"It's like they stalled their engine when everybody is
looking at them at the start of their race," said Gartner
analyst Carolina Milanesi.
It is the third Nokia phone to run the Windows operating
system since it ditched its own Symbian system last year, and
only went on sale in the United States through AT&T on
April 8. It is due for a wider global launch this quarter. The
model won several awards at the Consumer Electronics Show in Las
Vegas when it was launched in January.
Nokia said a software update to fix the problem, which was
"a memory management issue" related to phone software, not to
hardware, the network or the Windows operating system, would be
available around April 16.
It is offering anyone who has bought a Lumia 900 phone, or
who buys one by April 21, a $100 credit to their AT&T bill. The
operator sells the phone for $99.99 with a two-year contract.
"I must say I have not encountered anything, but I have been
impressed by their forthright, aggressive, and undoubtedly
costly response," said Boston-based analyst John Jackson from
CCS Insight, who uses the Lumia 900.
Though one analyst who asked not to be named said it would
only cost Nokia at most $10 million on likely sales in that
period, it will be a big disappointment to a company struggling
to revive its brand. Its share of the global smartphone market
tumbled to 12 percent in the fourth quarter of last year from 30
percent a year earlier.
"To have a memory issue causing disruption to what was
otherwise, apparently, a fairly good launch, with prime time ads
and reasonable reviews, is the last thing they needed -
particularly in the U.S.," said Tim Shepherd, analyst at
Nokia's share price has dropped more than 50 percent since
it unveiled the swap to Microsoft in February 2011 as sales of
the Windows phones have yet to compensate for the decline in
sales of its older models. Its shares were down 0.5 percent on
Wednesday at 3.806 euros at 0948 GMT, while Europe's top shares
were up about 0.6 percent.
Nokia created the smartphone industry in the late 1990s with
its Communicator models and was the undisputed leader until
Apple's iPhone entered the ring in 2007 and Google's Android
system was released in late 2008. In late 2010 it replaced its
chief executive with Stephen Elop, who headed Microsoft's
business division, and later switched to the Microsoft Phone
system to arrest the decline.