Is Nokia Preparing for a Smartphone Backlash?


At its latest handset introduction, Nokia seemed to be bucking the phone-making industry trend of showing off whatever is a company's splashiest high-end product and instead taking the low and middle roads.

In other words, instead of hyping its latest state-of-the-art smartphones at the Mobile World Congress in Barcelona, Spain, Nokia brought out four realistically priced state-of-the-wallet devices. And only two of them were smartphones.

Nokia's new mid-market 3G smartphones are the Lumia 720 and Lumia 520. They both run Microsoft's Windows Phone 8 operating system. The main differences between them are display size, camera resolution, battery life, and price: $331 for the 720, and $185 for the 520.

For comparison, a top-of-the-line 4G LTE Lumia 920 was priced at $836 at the time of its introduction.

Nokia plans on rolling out these two phones first in Hong Kong and Vietnam (and Singapore for the 720) by the end of the first quarter of 2013 before bringing them to China, Europe, the rest of Asia, Africa, and India. It did not mention bringing them to the U.S.

For the two much less expensive phones Nokia announced at the Mobile World Congress, the Nokia 301 and the 105, the company obviously has taken to heart the sales figures of its Asha line of feature phones versus those of its Lumia smartphones. For the fourth quarter, Nokia sold 9.3 million Asha phones compared to 4.4 million Lumias.

The 301 and 105 are supposed to give what the company called "aspirational Lumia experiences" for first-time cell phone buyers, and Nokia is making sure that buyers can afford these stepping stone handsets. The 105, a feature phone, is priced at $20 -- and that's retail, not a subsidized price. The 301, a feature phone that can stream video, is priced at $86.

Nokia said first markets for the 105 would be China, Egypt, India, Indonesia, Nigeria, Russia, and Vietnam, before expanding to the rest of the world.

Nokia's re-emphasis on the lower end of the cell phone market comes after it saw its own smartphone sales fall 53.6% in 2012 over the previous year. If it can't be totally competitive with Apple and the Android phone makers like Samsung, then it's got to get back to what made it once the world's largest cell phone maker: selling basic phones in the emerging markets.

Nokia's been struggling in a world of Apple and Android smartphone dominance. However, the company has banked its future on its next generation of Windows smartphones. Motley Fool analyst Charly Travers has created a new premium report that digs into both the opportunities and risks facing Nokia to help investors decide if the company is a buy or sell. To get started, simply click here now.

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