Will the Nokia portfolio win over the world?

Analysis

Will the Nokia portfolio win over the world?

Jennifer Scott

Nokia has somewhat fallen from grace in recent years. It used to be the handset in everyone’s pockets and the biggest market share holder. But with the might of the iPhone, the rise of Samsung and the Chinese low-end manufacturers all gnawing away at its business, it has been tough times for Europe’s only major phone manufacturer.

There was no beating Nokia when it came to feature phone sales but the lure of smartphones seemed too great for the company to ignore.

It made the decision in 2010 to ignore the allure of Google Android and team up with Microsoft as the global software giant unveiled its mobile operating system – Windows Phone 7 – to the world. The hope was Nokia could leverage the operating system to build up its own smartphone business and become the third ecosystem executives thought the world needed behind Apple and Android.

But sales have been slow. Last quarter saw just 4.4 million of its flagship Windows Phone handsets – the Lumia range – shipped, coming nowhere near to the 120 million Android handsets sold or even the 27 million iPhones bought by a smartphone-savvy market.

What has been a success story, however, are its lower-end devices which seem to have been making a comeback. The Asha range offers basic features anyone would expect on a smartphone but at closer to a feature-phone price and this has appealed to millions, especially in emerging markets. Over nine million were sold last quarter and there is no escaping the smile on CEO Stephen Elop’s face when he talks about their success.

It seems the penny dropped at Mobile World Congress. Elop took to the stage and launched four new devices, two feature phones and two smartphones, to fill in the gaps of price points and with a big philosophical push of bringing its high-end smartphone capabilities into affordable hardware.

One such device was the Nokia 105 which will cost just €15 for a full-colour screen and over a month’s worth of battery life. Elsewhere came the Nokia 301, which adds extra functions to offer up to 3.5G internet connections and Nokia’s Xpress Browser.

At the smartphone end, there wasn’t a new flagship launched to take over from the Lumia 920 but two more devices – the Lumia 520 and Lumia 720 – offered Windows Phone 8 software and top-end features in the camera technology or music services for lower prices, slotting around the existing budget Lumia 620 device.

It is a different tactic to its competitors. Apple focuses on one daunting handset to take on the market. Samsung may have a couple of handsets but the real focus is building on its Samsung Galaxy fan base. Huawei is following the Apple route of one smartphone a year and while BlackBerry is promising more handsets at more paypoints, it is also stripping back its manufacturing and ensuring a smaller, more focused portfolio.

Analysts have mixed feelings about the move. Some think the focus on low-end plays well with the fact emerging markets are booming and there is clearly going to be an audience for the entry level devices. But others are concerned at how Nokia can boost its revenues when it is selling handsets for a mere €15, even if they are selling well.

Broadening the Lumia range is clearly trying to appeal to a wider audience but again, will it just take customers away from the top-end smartphone they may have bought instead? Or will it warm them up to Nokia's and Windows Phone 8, ensuring a new customer loyalty?

There are a number of questions that have been left unanswered by Nokia about its overall strategy and instead it likes to cheerlead new devices and new markets rather than talk about the fact it is falling behind in the race after years at the top of the mobile manufacturer league table.

The devices are all expected to launch by the end of the second quarter so we wait keenly to see how the third quarter results for 2013 turn out for Nokia and if this expanded range pays off.


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