Nokia, Microsoft Aim to Shore Up Market Share with a Budget Smartphone

One of the newest Nokia smartphones running Windows, the Lumia 610, is aimed at emerging markets

Nokia (NYSE:NOK) has seemingly gone in reverse in terms of marketing strategy with its Lumia phones, its new line of smartphones running on Microsoft‘s (NASDAQ:MSFT) Windows operating system.

Rather than start with modest, affordable machines before moving up to technological powerhouses, Nokia started at the top. The first devices to debut were the Lumia 710 and 800, relatively affordable, capable handsets when compared to machines like Apple‘s (NASDAQ:AAPL) current iPhone and Motorola‘s (NYSE:MMI) Droid RAZR. But both the 710 and 800, and their even more advanced sibling, the Nokia 900, are still very pricey in the world market that was once Nokia’s bread and butter.

The Lumia line needs its Nokia 1100, a cheap, durable alternative to sell in emerging markets. That will be the key to Nokia and Microsoft’s success in regions where high-end devices are well beyond the means of most people. On Monday, they announced that very device: The Lumia 610.

A competitor for Android

Priced at around $252 with no service contract, the Lumia 610 will be the cheapest Windows phone out there and among the most affordable smartphones. It is a full $100 cheaper than the Lumia 710. The screen isn’t quite as nice as the one in beefier Lumia models, but as Nokia vice president Ilari Nurmi told All Things Digital shortly after the company’s presentation at the Mobile World Congress, the Windows experience will be the same. For smartphone users with tight budgets across the world, that’s a step up from the stripped-down Google (NASDAQ:GOOG) Android experience on budget Android phones.

The disparity between the two should prove to be Nokia’s saving grace. NPD Group In-Stat predicted earlier this month that cheap Android handsets will control 80% of the combined African, Indian, and Chinese smartphone markets by 2015. Motorola and Samsung (PINK:SSNLF) will be the biggest companies to benefit from that market domination, but it will also help smaller Android handset makers, like ZTE (PINK:ZTCOY) in China and Micromax in India. Those markets were the ones that made Nokia the international powerhouse it used to be 10 years ago, and it’s those markets that help the company maintain its place today, albeit as the declining leader of the mobile phone market.

Recapturing emerging markets

The Lumia 610 was made specifically to recapture those markets, places where the Nokia 1100 cellphone once ruled and where Symbian-powered smartphones have been all but replaced by Android phones. The Lumia 610 not only clicks on price, but also language support. Nokia promises that the device will support more languages than current models of Lumia when it ships sometime in the second quarter.

For Nokia and Microsoft to really tackle the world smartphone market, though, the product price may have to drop even further. In-Stat predicts that the average price of budget Android models will be around $150 by 2015, and it will be that price point that wins the market for budget competitors. Even at $252, the Lumia 610 may be too expensive to achieve ubiquity.

Nokia used to control an 81% share of the Indian mobile market, a market that represented $5.1 billion in revenue just four years ago. That share disintegrated to 48% by late 2011. The company needs a cheap phone to recapture that market, as well as the Indonesian, the Chinese, and the many African markets. The Lumia 610 is a good start on that road to recovery.

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.


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