Nokia debuts smarter feature phones

Shiv Putcha/Ovum
17 Nov 2011

At Nokia World 2011, Nokia announced a new product range called Asha that is targeted at emerging markets. The company announced that it would release four models based on its Series 40 (S40) platform, the Asha 200, 201, 300, and 303.

The prices of the phones will range from €60 ($80) to €115. “Asha” is a Hindi word meaning “hope”, but it also refers to aspirations and the drive to achieve them. Aspiration is an important factor in emerging markets, and Nokia is seeking to exploit this with its Asha product line.

While the announcement of the Asha product line was overshadowed by the launch of the Lumia smartphone, we believe that it is a significant advance for Nokia in their quest to reach their “next billion” users. The Asha feature phones will also build on the “halo effect” generated by Nokia’s recent success with dual-SIM phones in emerging markets.

The timing of the launch is important, and it shows that Nokia is aware that its strength still lies in feature phones. Nokia is increasingly dependent on its feature phone business, with the proportion of its total shipments made up of feature phones rising from approximately 75% in 3Q10 to 85% in 3Q11.

These figures demonstrate that Nokia needs to continue to drive feature phone sales while building bridges to “smarter” experiences. The company cannot afford to get caught between the iOS/Android smartphones at the high end of the market and the inexpensive devices made by Chinese vendors at the low end. While Nokia’s scale advantages mean that it is better positioned to compete with the Chinese-made devices, a more serious long-term threat is from low-cost Android devices. Nokia’s ability to successfully defend its dominance in the feature phone market will depend on its ability to quickly upgrade S40 and establish its developer ecosystem for the new platform.

The launch of the Asha range is timely as Nokia’s traditional strength in feature phones is under threat from inexpensive Chinese-made devices and the increasing affordability of Android smartphones. While Nokia can leverage its scale advantages to combat the threat from the Chinese vendors, low-cost Android smartphones represent a more serious long-term challenge.

To combat the threat posed by inexpensive Android smartphones, Nokia needs to upgrade S40 from a simple realtime operating system to a smartphone-like OS. Nokia’s strategy for this is twofold. Firstly, it is rumored that S40 will be upgraded to the Meltemi OS, which is likely to be a simplified version of MeeGo. This will allow Nokia to expand its delivery options of apps beyond the current method of embedding apps on S40 devices. Secondly, Nokia will try to convince the developer pool to create content and apps for the Nokia Store using the Qt framework, which promises to allow smooth and quick porting of apps to the S40 platform.

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