Are Nokia’s New Phones Enough?
Nokia (NYSE:NOK) has been struggling to compete in the smartphone market for a while. The company’s partnership with Microsoft (NASDAQ:MSFT) to release the Lumia 920 and 820 running Windows Phone 8 was met with skepticism. Nokia received a downgrade from BMO Capital — a new price target of $2 per share — on the idea that Windows Mobile “will not become a meaningful player in the smartphone market.” To combat this, on September 25, Nokia announced the Asha 308 and 309, mid-range phones slated to sell for around $99.
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The phones will have touch screens and run on Nokia’s Series 40 software, not the Windows 8 platform. “Although they don’t get as much attention as its smartphones, mobile phones play a key part in Nokia’s future,” says Nick Dillon, an analyst at Ovum. “Mobile phones account for the majority of Nokia’s revenue today and they are also vital for building loyalty with potential smartphone users in the future.”
With Apple’s (NASDAQ:AAPL) iPhone 5 flooding the high-end market this month, the Lumia 920 announcement has pretty much been drowned out. Google (NASDAQ:GOOG) is also pushing a new line of Motorola Droid RAZR phones that will participate at the higher price point. With rumors of an October 21 release date, the competitor hype may die down in time for consumers to get excited about the Lumia’s advanced camera, augmented reality apps, and in-house maps — but the high-end market isn’t all the company has to worry about.
“The new Asha devices are essential to defend Nokia from a raft of low-cost Android alternatives,” said CSS Insight analyst Geoff Blaber. Android enjoys over 50 percent of the mobile platform market. Nokia looks worse for the wear in the face of this competition. The company is closing plants and laying off workers to try and cut costs, and shares are down over 46 percent this year to date.
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