1 Reason Nokia's Fate Isn't Completely Sealed
Feb 28th 2013 6:00PM
Updated Feb 28th 2013 7:00PM
It's no secret that Nokia isn't in the best position to dominate the smartphone industry any time soon, but that doesn't mean some of the company's recent moves aren't promising. Nokia's strengths are in its low-cost phones for emerging markets, which just might keep the company afloat.
How low can you go?
This week Nokia introduced four new phones at the Mobile World Congress, and three of them are available for less than $200. Nokia's new Lumia 520 is currently the company's lowest-priced smartphone at $180, but earlier this week The Wall Street Journal reported CEO Stephen Elop hinted at the conference that an even cheaper Windows Phone could debut later this year. If Nokia were to pursue that idea, it may be one of the best decisions it's ever made.
Last year, executives from mobile carriers in developing countries asked the GSM Association, a collection of mobile operators worldwide, to pursue a smartphone in the $50 price range for emerging markets. These areas need capable phones that don't come in at the high price points -- and Nokia may be the best company to bring it to them. Right now, Android devices lead the way in low-cost smartphones. That's one of the reasons why Android dominates the global smartphone market share with about 68%, and Apple's premium iPhone has about 19%.
Nokia's $180 Lumia 520 isn't expensive, but it's not as cheap as some emerging markets consumers need in order for them to upgrade to a smartphone. Nokia has always offered low-cost feature phones for consumers, and now it has two new phones that could help bridge that gap. The Nokia 301 will sell for about $85 and features a 3G connection and built-in apps like Facebook and Twitter. The company also introduced the Nokia 105 that the company said is for several billion people in the world who don't have mobile phone.
Nokia is using these phones to meet emerging markets where they're at, while providing new features like social media that they may haven't had in the past. Growing mobile markets like India have a lot of potential for companies like Nokia, and with competitors like Apple and BlackBerry only claiming about 5% of India's smartphone market share, Nokia has room to introduce smartphone-like phones like the 301 and even a cheaper version of its Lumia line.
Right phone, right price
Smartphones are the obvious future for mobile communication but there's still a huge demographic that can't afford one and needs a cheaper option. If Nokia can sell its low-end phones to those consumers, and possibly launch a smartphone priced less than its $180 Lumia 520, the company may tap into a market that companies like Apple have yet to enter.
With all the low-priced Android devices on the market, it's going to be hard for Nokia to elbow its way into some markets, though. But Nokia knows how to sell cheap phones, and it already has massive brand recognition in many emerging markets. Investors need to see the company build on markets that aren't yet loyal to Android-based phones. Nokia has the most potential for growth in markets where consumers don't yet have a smartphone, but can afford a cheaper Nokia version.
Nokia is fighting for smartphone relevance and the company has bet its future on the Windows Phone OS. If Nokia creates a cheaper version of Lumia Phone running the Windows OS, it could open up vast new markets for its smartphone line. But the company has an uphill battle as it fights in markets dominated by Apple and Android. To help investors determine the opportunities and risks facing Nokia, Motley Fool analyst Charly Travers has created a new premium report on the company. To get started, simply click here now.
The article 1 Reason Nokia's Fate Isn't Completely Sealed originally appeared on Fool.com.Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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