Nokia to compete with rivals with cheaper models

Nokia logoFirst it was reported that Apple was about to go into production with a line of cheaper iPhones. Now it appears Nokia is preparing to tackle the budget end of the market.

The one time undisputed king of the smartphone world, Nokia has now lost out to Samsung as the globe’s biggest smartphone company.

While the Finnish multinational has been very much concentrating its efforts on competing with the likes of Samsung’s Galaxy range and Apple’s iPhone to make more high-end products, it is now looking at expanding its focus.

The firm has, over the past two years, concentrated on developing its Lumia range, launching a top-of-the-range 920 model last November, which has so far proved slow to take off.

According to reports, new Nokia models will be unveiled at the Mobile World Congress in Barcelona. The cut-price phones will be aimed at taking market share from the likes of Huawei and ZTE. A new lower price model of the Lumia is also expected to be revealed at the industry event.

Earlier rumours had suggested that Nokia would also unveil a tablet in Barcelona but, according to sources quoted by news agency Reuters, the company is not quite ready for that yet.

So far, Nokia has refused to comment on any speculation.

But what is clear is Nokia does need a change in strategy in order to remain a major player. The firm, which has a history dating back to 1865, has been struggling to compete with Apple and Samsung’s high-end offerings while at the same time losing share to Chinese rivals in the low-end of the market. According to latest figures, sales of basic phones fell by more than 20 per cent last year to 9.4bn euros.

Hakan Wranne, an analyst at Swedbank, said: “What they have to do is increase share in the growing smartphone part and also defend market share in the other. In order to not continue to lose share in the overall market, Nokia has to put forward competitive low-end smartphones.

“What’s happening now is that the US and Europe, the big smartphone markets, are really approaching saturation where customers will be upgrading to another smartphone or just replacing one that’s broken. That’s not a growth market.”

Latest statistics show Nokia’s market share in the higher-end smartphone business stands at just five per cent, compared to the combined share of Apple and Samsung, at 52 per cent.

While Nokia sold some 4.4m Lumia handsets in the fourth quarter, financial analysts say those sales will have to be more than doubled along with a move to offer more models at the mid-range in order to convince investors that it can remain credible.

Already, Nokia has been working to expand its Asha phones, which give users some access to the internet but which have fewer features than some of the top-range smartphones. The firm hopes its strategy will work by encouraging those who buy a mid-range Nokia to eventually upgrade to a more advanced phone while sticking with the Nokia brand.