Can Cheaper Phones Help Nokia Corporation (ADR) (NOK) Regain Former Glory?

Page 1 of 2

Nokia Corporation (ADR) (NYSE:NOK)’s CEO, Stephen Elop, has tipped the company’s hand again, indicating that they intend to push the price point of their phones even lower in an effort to compete. To that end the company has announced two more phones in their Lumia lineup, the 720 and 520. These phones are priced at $329 and $180 respectively before carrier subsidies and should help Nokia gain a wider audience. Nokia is no stranger to inexpensive phones; in its heyday inexpensive, widely available phones were the foundation of its success. It seems Nokia is prepared to compete on all fronts with its flagship Lumia 920 showing strength on the premium end and a willingness to develop handsets for the lower end.

Nokia Corporation (ADR) (NYSE:NOK)The two-pronged approach is likely spurred by experience and the success of inexpensive Android devices in the developing world. Google Inc (NASDAQ:GOOG)’s open-source approach to Android makes development a bit more tenable and fosters a proliferation of Android devices. This also plays well in markets that lack the mobile subsidies enjoyed in the US, propelling Android to global dominance. If Nokia Corporation (ADR) (NYSE:NOK) hopes to regain ground, it has to tackle Android’s global price advantage.

Both additions to the Lumia line are targeted for emerging markets, though Elop emphasized they were hesitant to sacrifice capabilities in favor of lower prices. Neither is equipped with LTE support, but the targeted markets themselves largely don’t either, so that’s a non-issue. Both phones adopt the brightly colored and uniquely shaped visage of the Lumia line, as well as Microsoft Corporation (NASDAQ:MSFT)’s Windows Phone OS. Clearly some sacrifices were made to reach such a low price point for the 520, which while promising, seems decidedly barebones next to the 720. The 720 has a better camera (with a flash), larger screen, and the ability to support wireless charging. Neither device is going to wow consumers used to getting the latest and greatest, but they certainly pack enough technology to satisfy low-end smartphone demand.

Even though the phones lack LTE support, T-Mobile has already committed to carrying both in the US, though they will not be launched until the next quarter. While T-Mobile is still a distant fourth place competitor in the US mobile market, it will provide additional visibility for the Lumia line.

Nokia’s continued push towards price competition has implications for the mobile market, highlighting consumer price sensitivity as the smartphone experience becomes more commoditized. Even Apple Inc. (NASDAQ:AAPL) , which arguably leads the premium end of the market, has been rumored to be exploring lower cost devices. Major analysts have also been weighing in, announcing expectations that Apple will pursue lower-priced devices.

Katy Huberty of Morgan Stanley met with Apple CFO Peter Oppenheimer and walked away with several points that confirm the validity of low-cost options. The two biggest were the success of the iPad Mini and the continued demand for the iPhone 4. In Brazil and China, 50% of iPad Mini purchases were by customers new to Apple’s ecosystem. This demonstrates that lower priced devices that deliver an experience similar to their premium siblings can help extend a brand.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!