Nokia Corporation (NYSE:NOK) has been taking it on the chin over the last coupe of years, there is no arguing that. The company is struggling to stay relevant in the overall world mobile-phone market, having five straight quarters of losses. But with so much negativity surrounding the company, why hasn’t it folded? One basic reason, and it not only keeps the company alive now but may play a role in a possible revival – the basic phone.
The Asha line of phones by Nokia Corporation (NYSE:NOK) , a basic $39 phone as sold in the United States, has been a huge hit in emerging economies like India and China – which have a very high population but not a lot of money to go around. Nokia shored up it market share in the basic-phone market to 35 percent in the most recent quarter, which is the best penetration for the company in two years. And with added features like quicker Web browsing capability as well as online games, the Asha line has been geting solid reviews and the basic phone market has been the one profitable area for Nokia Corporation (NYSE:NOK) and it is selling more units each quarter.
“Nokia’s Asha models are selling quite well and that is good news for them since it gives the company a bit more time to get its smartphone business on track,” said Teemu Peraelae of Alfred Berg Asset Management in Helsinki. The Nokia basic phone outsold its smartphone brothers by a 7-to-1 margin last quarter (70 million to about 10 million). And if the smartphone does not take off with the implementation of Windows Phone 8 by Microsoft Corporation (NASDAQ:MSFT), then Nokia at least would have a strong share of the basic-phone market on which to lean – but the relevancy of Nokia in developed markets would likely be drastically reduced without a good high-end smartphone, like the Lumia.
But at least all is not lost when it comes to Nokia.