Nokia and Sony Ericsson target the U.S. with a new set of unlocked phones. But without the hefty subsidies the carrier, whether they will ever be able to crack the U.S. market?

There is no doubt that when it comes to features, Nokia and Sony Ericsson a new US-ready phones can easily compete with the hot new phones on the market.

Nokia, N97, touch-screen phone that supports both 3G and Wi-Fi, has a 5-megapixel camera and 32 GB of memory. This is clearly a competitor for the new Apple iPhone 3G S and Palm Pre.

In the Sony Ericsson W995a, also 3G and Wi-Fi phone is switched on, comes with 8.1-megapixel camera, brilliant screen, good player, and the media, such as stereo Bluetooth, and GPS. In terms of features and functionality, this phone can compete with other high-end feature phones like LG enV3, which is sold in Verizon Wireless or memories Samsung T929, sold for T-Mobile USA network.

But even if these phones may be able to compete, they are not sold by a wireless operator, which means that they are not subsidized, which makes them too expensive for most of the major clients. In N97 the proposed retail price is $ 700, and Sony plans to begin selling W995a for $ 600.

Meanwhile, AT & T charges $ 99 for the 8GB iPhone 3G, $ 199 for the 16GB iPhone 3G S, and $ 299 for 32 GB iPhone 3G S. In exchange for the subsidy, AT & T requires customers to enter into a two-year service contract. Cost of services that includes voice and data services, it is at least $ 70 a month. But regardless of whether the device is subsidized or not, but you have to buy a voice and / or data, depending on the type of device they buy.

“In the U.S. market, the price is a very important factor in determining which phones people buy,” said Do Stofego, an analyst with market research firm IDC. “Why pay $ 500 or more for the phone when you can get the iPhone for $ 100? Of course, you must agree to two-year service plan, but I think that this balance most consumers with OK.

Up until recently, to unlock your phone - the phone, which can be used on multiple carrier networks - have been available only in “gray” markets where Americans have bought phones from overseas. Now the manufacturers sell them on their websites, in their retail stores and through several major retail chains such as Best Buy. Nokia opened several retail shops in the U.S., and Sony Ericsson sells unlocked phones Sony electronic retail channels.

As part of its push to address the U.S. market, Nokia and Sony Ericsson also to make sure that they sell phones in the United States operate in frequency bands used by AT & T and T-Mobile, the two major GSM carriers in the United States, although the operators have a built-GSM networks as carriers in Europe and parts of Asia, not all GSM networks operating at the same frequency, which means that some unlocked GSM phones purchased in Europe or Asia will not work in the U.S. GSM networks.

Another advantage to buying American convenient unlocked phone is that Sony Ericsson is currently offering guarantees to customers who buy them to unlock your phone Sony United States through retail channels. The Company does not guarantee for the phones to other countries and led to the U.S. through the gray market.

The road for unlocked phones
Despite these efforts to create a stronger retail presence of these unlocked phones, the market remains small. In the United States, only about five percent of phones sold every year are unlocked and something other than a carrier. This greatly differs from other markets. Throughout the world, unlocked phones accounted for about 50 percent of phones sold. In Asia, about 80 percent of cellular phones are sold independently of the carrier. And in Europe, approximately 70 percent of cellular phones are sold unlocked.

There are several reasons for this difference. On the one hand, two of the four major nationwide U.S. mobile phone operators in the United States use CDMA, which does not use SIM cards, which can be used interchangeably between phones. Most of the world’s mobile phone carriers to use GSM, which make use of SIM cards. And because the reason people buy unlocked phones to swap out SIM cards for use in other carrier networks, phones made by manufacturers such as Nokia and Sony Ericsson, which is focused on the development of GSM phones can be used only for two of the Big Four national wireless network in the United States: AT & T and T-Mobile.

But the biggest reason that unlocked phones are not removed in the United States, is the fact that they are much more expensive than to buy locked phones, which are subsidized, and typically require a two-year service contract.

Nevertheless, Nokia and Sony Ericsson the opportunity to see the U.S. market. A consumer-oriented, they are likely to buy your first smartphone. Steve Medina, products and business manager of Sony Ericsson unlocked phone, said that the unlocked phones in the U.S. call for a very niche market of tech savvy consumers.

“Unlocked phones are not for all consumers,” he said. “They are really on the phone addicts and geeks. It may seem crazy to some people that someone would drop $ 600 or $ 700 for the phone. But you’ll be surprised how many actually do.”

Medina said a lot of people buy unlocked phones, or frequently travel internationally, and they lived in Europe and Asia, where people tend to buy unlocked phones at full retail price. For these consumers, Medina said, the benefits of an open phone far outweigh hefty price.

Swapping SIM cards
The greatest interest in the unlocked phone is that users can simply pop in the SIM-card to obtain services. And unlike GSM phones purchased via the U.S., these phones do not require special code to unlock to change the SIM card.

Medina said that this is an important distinction because, when the wireless subscribers of AT & T and T-Mobile to unlock their phones, blocking software is still on the phone. The code used to lock the device just overrides that software. What does this mean that when the phone is upgraded, they can be relocked, forcing consumers to once again override the lock code.

Another big interest to buy unlocked phone is that all the functions that the manufacturer has included in the phone will not work. U.S. cell phone carriers sometimes disable certain functions on the phones they sell. And with many phones, they often integrate their own software and branding on the phone.

But, as Medina points out, unlocked phones are not for everyone. In addition to the cost, unlocked phones are often difficult to configure. Users must configure their messaging functions, and Internet functionality into their phones. Phones are sold through carriers have already pre-configured to perform these functions.

And when the carrier is upgrading its network and sends automatic updates to the phone network unlocked, users should treat information about their own. And if there is another problem with the phone or service, the AT & T and T-Mobile service can not help because he or she is not prepared to deal with these particular phones.

While the Sony Ericsson in Medina said that it is unlikely that unlocked the market will grow relative to the total market of mobile phones in the U.S. right now, he believes that, ultimately, U.S. consumers will buy unlocked phones.

“We believe that at some point, the U.S. market will become more similar to European and Asian markets, where unlocked phones are the norm,” he said. “The U.S. wireless market will grow at the end of the carrier led to a market that is more open. And consumers will choose the phone, then select a carrier.”

But until the mobile carriers continue to subsidize the phones, most consumers will choose for a subsidized phone, but do not pay, not subsidized by the phone.

“The problem in the United States is that people have been trained to buy on price”, Stofega said.

Government intervention looms?
But not all hope lost for Sony Ericsson and Nokia in its quest to crack open the market of unlocked cell phones in the United States, these companies can get a little help from the government. Congress and the Federal Communications Commission is already investigating the exclusive deals between carriers and wireless phone makers. And some officials even questioned the carrier’s practice of switching off some of the functions.

It is difficult to say if either FCC and Congress will actually do something to limit this practice, which could help open the market in unlocked. While the move, as this will certainly increase consumer choice, it can also drive up costs for consumers. In view of the consequences, and the fact that phone companies have a powerful lobbying organization in Washington, it seems unlikely that government intervention will happen in the near future.

Despite this, the Government introduced unpopular rule by calling the company earlier. For example, a cellular telephone company, currently requires that consumers take their numbers with them when they switch carriers, which is a step, which was originally very unpopular with the carriers.

The best solution to unlock your phone at cracking the market for phone manufactures to develop new business models that will keep consumer costs low, but still reward the carriers and phone manufacturers. Medina suggests that Sony Ericsson may subsidize the cost of their phone charges for mobile games and applications. This model, which also works in the gaming console market. And there are already signs that consumers are hungry for mobile applications. The success of Apple Store in the App is proof of that.

But the price is a big factor in the success of such a plan. Through the App Store, consumers are already due to receive an application for free or for 99 cents.

“Right now unlocked phones is not likely to turn to the main market,” Sony Ericsson in Medina admits. “Whenever you have a subsidized model, it will always be cheaper to buy unsubsidized products. But there are different ways to solve this problem, and we believe we now have a strong offering for the core mobile phone enthusiasts who want the flexibility of open phone. But we are also considering other revenue streams to subsidize unlocked phones. “