Can Nokia Undercut Rivals with Microsoft Powered Smartphones?

Nokia Corporation (NYSE:NOK) believes it can undercut its smartphone rivals through its Microsoft Corporation (NASDAQ:MSFT) Windows phones.

In remarks by Nokia’s Chief Executive Stephen Elop, he said the company will look to increase its smartphone volume before improving margins.

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In February, the company announced a Microsoft software smartphone strategy in an effort compete with Apple Inc. (NASDAQ:AAPL) and Google Inc.’s (NASDAQ:GOOG) Android. Last month, the company launched two models with the software and priced them at at EUR $270 and EUR $420 euros ($365). This is less expensive than most of the other Window phones but higher than the Android phones, which sell around EUR $100-150.

Elop said to Reuters, “You see us pricing the devices so that that we can get what we think will be a good volume.”

The company hopes the Window platform will increase interest among consumers and developers first, then the company will differentiate the models with higher profit margins. In addition, the phone could be launched with lower prices.

As for Microsoft, Nokia’s new phones could help them on the market share front as the Windows Phone platform — used now by Nokia (NYSE:NOK), Samsung Electronics and HTC — saw a third quarter market share of 1.5 percent. Meanwhile, the Android platform’s market share more than doubled to 52.5 percent in the third quarter with Apple handling 15 percent of this.

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