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

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

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!