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Wednesday, November 16, 2011, 09:12 pm PT (12:12 am ET)

AT&T sees 'challenges' ahead as it plans to sell Nokia Windows Phones in 2012

An AT&T executive said Wednesday that his company is finalizing discussions with Nokia to begin carrying its Windows Phone smartphones next year, while also noting that he believes Microsoft will face "challenges" in attracting customers away from entrenched rivals Apple and Google.

Speaking at a Morgan Stanley conference in Barcelona, Glenn Lurie, AT&T's head of emerging devices, told Bloomberg BusinessWeek that details of the agreement between Nokia and AT&T were still being completed.

"We look at every promotional period separately and decide what we’re going to spend our dollars on and what we’re going to put our efforts in,” he said. “But nothing to announce there on that yet.”

Late last month, Nokia unveiled its first two smartphones running the Windows Phone operating system. The devices are the first in a close partnership between Microsoft and the Finnish handset maker that was announced early this year.

Lumia

Nokia's new Lumia 800 (left) and Lumia 710 are its first Windows Phones.


"The carriers are acting skittish and I think AT&T may not want to give Lumia a Christmas season slot,” the report noted independent industry analyst Tero Kuittinen as saying. For its part, Nokia has said it plans to release its Lumia phones in the U.S. early next year.

Microsoft rebooted its mobile operating system offerings with the release of Windows Phone 7 last year. However, the platform has failed to gain traction in the market, resulting in the company's share of smartphone sales dropping from 2.7 percent in the third quarter of 2010 to just 1.5 percent during the same period in 2011.

Given that Nokia is the world's largest handset maker by a wide margin, Microsoft's deal with the company is believed to have brought Windows Phone the critical mass it needs in order to take off. But, AT&T's Lurie warned during the conference that the software giant faces obstacles ahead of it, both for Windows Phone and Windows 8 tablets.

“I think we’re still going to see a lot of challenges,” he said on Wednesday. “I’m actually a fan of the Windows devices, I’m also very excited about Windows 8 on the tablet devices, but you’re still going to have a lot of people competing for that space.”

At the least, the partnership between the two giants appears to have attracted developers to the platform. According to a recent study from Appcelerator and IDC, 38 percent of developers are "very interested" in Windows Phone, up from 30 percent last year. When asked the reason for the increase, 48 percent pointed to the Microsoft/Nokia partnership. However, Microsoft will definitely have to come from behind even with developers, as 91 percent of respondents expressed strong interest in Apple's iPhone. The iPad was also a close second, attracting 88 percent of developers.