While Nokia (NYS: NOK) was struggling to get some respect in the smartphone marketplace with its Microsoft (NAS: MSFT) Windows Phone-powered Lumia line of phones, it lost some share in what had been its core business: selling inexpensive feature phones to emerging market customers. That end of the business fell 16% in the first quarter.

Respect for the Nokia/Microsoft collaboration will take a while to build, but Nokia is already addressing the desirability problem with the mid- to lower-end of its product line. To better compete in that segment, the Finnish phone maker will have to slug it out toe-to-toe with Samsung, which earlier this year surpassed Nokia as the world's No. 1 mobile phone maker.

Samsung has been selling lower-end touchscreen feature phones for several years. Though not smartphones -- they don't have an operating system with the advanced features of Android, iOS, or Windows Phone -- the touchscreen gives them the look and feel of a smartphone.


So, Nokia has come out with a line of phones, the Asha, which, like the Samsung Star and Champ line of handsets, fall somewhere between smartphone and feature phone (aka, dumbphone). The Asha line will have three-inch touchscreens, and some will offer dual-SIM capability. And these will be the first non-smartphones from Nokia with touchscreens, a feature now seen as almost mandatory in a handset if it is to seem at all fashionable.

The first Asha to go on sale, the model 305 is the cheapest at $79. It will be available later this month. For comparison, the least expensive Nokia Windows Phone, the Lumia 610, sells for $236.

To appeal to the lowest end of the cell phone continuum, Nokia announced last month the Nokia 112 and 110. Those phones will have a non-touch 1.8-inch screen, but will have web browsing and dual-SIM capability, along with Bluetooth connectivity and a camera. The cost will be less than $50.

Nokia executive Juha-Pekka Sipponen told Bloomberg that the lines between the high-end and low-end markets are becoming muddier, and there is plenty of room for growth. "This blurred market will continue to exist. There is quite a lot of runway ahead -- 3.2 billion people still don't have a mobile phone," he said.

Until Samsung's surge, Nokia had held the title of world's largest seller of cell phones for the last 14 years. With the Asha, the company hopes it can get its touch, and its throne, back.

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At the time this article was published Fool contributor Dan Radovsky owns share of Nokia. The Motley Fool owns shares of Microsoft. Motley Fool newsletter services have recommended buying shares of Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Microsoft. The Motley Fool has a disclosure policy.
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