Microsoft Corporation (NASDAQ:MSFT) is sick of playing second and third fiddle to mobile rivals. Tech giants like Apple Inc (NASDAQ:AAPL), Samsung Elect Ltd(F) (OTCMKTS:SSNLF), and Google Inc (NASDAQ:GOOG) are all eating Microsoft’s lunch in the age of mobile devices, and that needs to change.
Not yet a year into his job, CEO Satya Nadella is making an aggressive move, hoping that the effort will entrench MSFT as a global player in the handset market for 2015 and beyond.
But how exactly does MSFT plan to combat seemingly invincible foes like AAPL and GOOG?
The Nokia 215: Internet-Connected and $29
Microsoft is betting big on emerging markets, announcing today that its newest phone, the Nokia 215, costs just $29. Hailed on Microsoft’s site as “our most affordable Internet-ready entry-level phone yet,” the phone is rolling out in the first quarter of 2015.
But it won’t be everywhere.
The Nokia 215 and Nokia 215 Dual-SIM will only be available in the Middle East, Africa, Asia and Europe. North and South Americans, as well as Australians, are apparently out of luck.
Microsoft — trying desperately to play catch-up to AAPL and GOOG, which each enjoyed exposure to the lucrative mobile hardware/software combination — bought Nokia’s devices and services business in 2014 for $7.2 billion.
After the Nokia deal closed, Microsoft said it was happy to have “Nokia’s smartphone and mobile phone businesses, its design team, most of its manufacturing and assembly facilities and operations, and sales and marketing support.”
That certainly sounds nice, and MSFT went on to rave about many other various benefits it would reap from the Nokia acquisition — but the unveiling of the Nokia 215 today reveals what Nokia’s greatest utility is.
Microsoft doesn’t want to put its name on a $29 2G phone sold in some of the world’s most challenging and volatile markets. But Nokia had good brand recognition even before MSFT bought it, so if MSFT can subtly penetrate the emerging markets by being price competitive with up-and-comers like Xiaomi — one of 5 Home-Run IPOs to Watch for in 2015 — it’s better for Nokia to cheapen its brand than Microsoft.
This App Lets You Kill Two Birds With One Stone
The phone itself packs quite a few features into that low price. Not only can you surf the web “through Bing Search,” or check the weather with “MSN Weather,” the Nokia 215 is bluetooth compatible, comes in a variety of colors, has a camera, a built-in MP3 player, a torchlight, and a battery life of between 21 and 29 days.
More interestingly, MSFT’s new phone comes with Facebook Inc (NASDAQ:FB) and Facebook Messenger pre-installed with instant notifications, “so you’ll never miss out on the latest from your friends.” We are also reminded that Twitter Inc (NYSE:TWTR) is “easily accessible” on the phone if you were worried about getting your social media fix.
It’s here that the not-so-obvious ulterior motive behind a low-cost MSFT smartphone for the masses becomes clearer. Some of the world’s largest tech companies — Google and Facebook in particular — have increasingly focused on global internet access as the next step in the corporate growth process.
Google — which is already the top search engine in the world with a market capitalization above $350 billion — has, in a very Google-y way, launched a web-by-balloon project called “Project Loon” to spread internet to rural areas. The techies over in Mountain View are also investing more than $1 billion in satellites for the same purpose.
Facebook has opted to use satellites and drones in its quest to spread the internet and grow its customer base.
Microsoft is doing the same thing with the release of the incredibly cheap Nokia 215. And with consumers in remote parts of the world now able to cheaply have the internet at their fingertips, they can Bing to their heart’s desire.
As of this writing John Divine was long shares of AAPL stock, GOOG stock, and GOOGL stock. You can follow him on Twitter at @divinebizkid.
