In a bid to regain some lost ground in emerging markets,
) decided to expand its low-end touch screen device portfolio with
three handsets. The three sets will be called Asha 305, Asha 306
and Asha 311 priced at €63, €68 and €92, respectively.
Asha 305 is expected to be shipped this month while the other
two will hit the market in the second half of 2012. Looking at the
growing popularity of touch screen phones, Nokia integrated its new
low-end Asha series of handsets with a swiping screen interface
(currently being used in Nokia's old S40 smartphones).
These low-end dual-sim feature phones have done extremely well
for Nokia in the past few quarters, especially in the emerging
economies of India and China. However, in the last quarter of 2012,
feature phone volume decreased 16% to 70.8 million units. Mobile
device volume fell by 62% in China alone compared with an overall
decline of 24% globally.
The decline in device volume sales was mainly due to the
availability of low cost smartphones from Samsung and ZTE. Another
factor that affected the sale of Nokia handsets in China was the
change in distribution policy by the Chinese government. The
Chinese government has forced local telecom companies to offer
handsets at subsidized rates to the subscribers, thereby protecting
the local vendors and customers from paying a high price to foreign
mobile phone manufacturers. This regulatory measure implemented by
the Chinese government is increasing price wars in the country.
Therefore, Nokia is taking a two-pronged approach to alleviate
some of the pressure it is under. The first is a focus on
relatively low-end touch-screen feature phones. The second is a
) to adopt the latter's Windows Phone 7 operating system in its
While Nokia's measures are commendable if long overdue, the
success of the initiatives remains to be seen. Asian players are
very competitive and have captured significant mindshare. So
regaining share from them wont be easy. On the other hand, the new
Window-based Lumia handsets have been slow to take off. Therefore,
there is a good bit of uncertainty regarding Nokia's fortunes over
the next few years.
Currently, Nokia has a Zacks #5 Rank, implying a short-term
Strong Sell rating on the stock.
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