Cheap Nokia smartphones aim to undercut Apple, Samsung

A sign stands outside the headquarters of Nokia

A sign stands outside the headquarters of Nokia Oyj in Espoo, Finland. (July 1, 2013) (Credit: Bloomberg News)

Nokia Oyj, the second-biggest maker of mobile phones, unveiled cheaper handsets today to meet consumer demand for fast connections to the Internet.

The Nokia 207 and 208 are candybar-shaped phones that let users connect to speedier third-generation networks, the company said in a statement. They come with Nokia’s Xpress Browser that compresses data and will include social applications such as WhatsApp, Facebook and Twitter. Both handsets will cost $68 and are expected to start shipping this quarter. The third model is a dual SIM version of the Nokia 208.

The company said the new models are its “most affordable 3G devices yet.” As Nokia strives to catch up with Apple Inc. and Samsung Electronics Co. in smartphones priced at more than $500, the Espoo, Finland-based company is also trying to boost sales of more basic handsets that sell for a fraction of the price, a category that accounts for most of its device business.

Nokia’s first-quarter sales slumped 20 percent as competition from Asian manufacturers of phones that run Google Inc.’s Android software hurt demand for the company’s cheaper models. Chief executive Stephen Elop said the decline in its mobile-phone business was primarily caused by competition and Nokia was preparing “aggressive moves” to respond. It unveiled new software to power its Asha mobile phones in May.

Cash Sources

Of the 336 million handsets Nokia sold last year, only about 10 percent were smartphones. Basic models accounted for 31 percent of Nokia’s revenue, versus 18 percent for smartphones. Network equipment made up most of the balance.

Nokia reported April 18 that it sold about 11 million fewer mobile phones in the first quarter than analysts had projected, with basic phones plunging 21 percent to 55.8 million units. A failure to revive the low-end business would leave Nokia without an important source of cash to develop devices to challenge competitors.

The phonemaker this week said it plans to buy Siemens AG’s share in the six-year Nokia Siemens Networks joint venture for 1.7 billion euros, giving it full access to the phone-equipment maker’s cashflow.

Nokia Siemens today won a contract worth at least $200 million to build a fourth-generation wireless system for Russia’s biggest mobile-phone company OAO Mobile TeleSystems.

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