Has Nokia Found the Foil For Apple and Samsung?
Since Apple’s (NASDAQ:AAPL) iPhone came out, Nokia (NYSE:NOK) has been falling from the world’s good graces, but it hasn’t given up. The company that once held the largest share of the world’s phone market has a plan, and it starts small.
The smartphone competition has proved a bit much for Nokia to handle. With iPhones striking the fancy of consumers everywhere, and Samsung (SSNLF.PK) devices sweeping across the market with so many different price points that there seems to be almost no way it couldn’t take the number one spot in global market share, there was little room for Nokia.
Nokia even had its own smartphone operating system, Symbian, but it just didn’t have the pizazz of Google’s (NASDAQ:GOOG) Android or the sleek style of Apple’s iOS. By the time the company was putting Microsoft’s (NASDAQ:MSFT) Windows Phone at the front of its line of Lumia smartphones, Android and iOS had already become the talk of the town. That didn’t leave a lot of room for Nokia to work its way into the market.
Nokia will continue working on having a line of great smartphones, but that may not be its focus as it tries to squeeze its way back into prominence. Instead, its focus may be on a smaller, much-less-expected device that could plant the seeds for smartphone growth in the future.
For the past few weeks, a new Nokia device has been available in India and Indonesia. Soon it will be available in Europe, and its spread is likely to continue. The device is the $20 Nokia 105. It may not be a smartphone, but it could prove to be a smart move.
Although smartphones are some of the hottest products nowadays, they are not the most sold phones. According to Bloomberg, simpler phones like the Nokia 105 still account for more than half of the phones sold around the world today. This gives Nokia a big opportunity with the cheap and simple device.
The Nokia 105 features some preloaded games, texting capabilities, and is water and dust resistant. It could prove to be a great device for Nokia to tap into the major market of simpler phones. The company is still heavy in that market, as only 10 percent of the 336 million handsets it sold in 2012 were smartphones. Even with smartphones’ higher margins, basic phones accounted for 31 percent of Nokia’s revenue, versus 18 percent from smartphones.
The Nokia 105 could even be a strategy for its Lumia line to gain more popularity. If Nokia can target growing markets and establish strong brand recognition, future customers may come back to the company when they’re ready to make the switch from basic phones to smartphones. If Nokia can succeed at that in China and India, it could find a much bigger share of the mobile phone market in the coming years.
This may not scare Samsung terribly, as it hits a wide variety of price points. However, Apple may have to worry about this, as it has yet to hit the low price points and could be unable to keep Nokia from setting up wide base of low-cost devices that build up greater brand recognition.