Nokia Corporation (ADR) (NOK) Bets On $20 Phone

Nokia 8
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Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is relying on a $20 handset to give it some market share after the company is terribly losing to competitors like Apple Inc. (NASDAQ:AAPL)’s iPhone and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930) in $500 smart phone segment, reports Bloomberg.

Nokia Corporation (ADR) (NOK) Bets On $20 Phone

The Nokia 105, which is priced at $20, and is 97 percent cheaper than the iPhone, has a host of features like preloaded games, a color screen, a radio, a speaking clock and a flashlight. Nokia 105 is the cheapest phone from the house of Nokia yet and is available in India and Indonesia from a couple of weeks. The phone will be soon seen in European markets, as well.

In the first quarter, Nokia sold approximately 11 million less mobiles than the estimated number from analysts. The sales of basic phones declined 21 percent to 55.8 million units. Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has been unsuccessful to mend its low end business that in turn affected its cash position, which Nokia is in dire need to develop and design the gadgets that can challenge the iPhone and Samsung handsets.

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In the high end phone segment, Nokia sold 5.6 million Lumia Phones in the first quarter, an increase from 4.4 million in the previous quarter.

According to Mika Heikkinen, a fund manager at FIM Asset Management in Helsinki, the decline in the sales of the cheaper and simpler phones is a critical situation for Nokia. “They have to get this under control”, he said.

Since the arrival of the iPhone and Samsung’s android based Smartphones, the market share of the Smartphones has been increased but even now the basic phones are capturing more than half of the mobile market. This segment, which accounts for hundreds of millions of phones each year, was the dominant territory of Nokia but lately it has got competition from ZTE Corporation (SHE:000063), Huawei Technologies Co. and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930). Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is confident about its 105 and estimates it to be profitable, but no detail was provided.

According to Jeronime, an analyst at IDC in London, Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) enjoys an upper hand in the production of handsets, and the number 2 mobile phone maker manufactured a greater of 600,000 phones in a single day from its all seven factories. The Chinese devices can manufacture phones as economical as Nokia 105 but will fail to provide the services and the features provided by Nokia.

The Finnish phone maker is confident about its cheaper phones like 105 and is seeking to gain a foot in the developing markets of India and China. According to the theory given by the company, customers who buy Nokia 105 in the cheaper phone category will go for brand Nokia when they will switch to Smartphones in future.