Nokia's plan to fight cheap Androids: Low-cost Windows devices, more S40 innovation

Nokia's plan to fight cheap Androids: Low-cost Windows devices, more S40 innovation

Summary: Nokia will use a Windows Phone-S40 pincer movement to tackle the threat posed by low-cost Androids, particularly in China.


All eyes are on the performance of Nokia's Lumia smartphones in the West, but an equally large question is whether Nokia's Asha 308 and 309 S40-based touchscreen handsets can withstand the onslaught of very low-cost Androids.

Nokia Asha phone
Nokia Asha phone

In its financial results published on Thursday, Nokia said it had sold 9.3 million of full touch Asha devices in the fourth quarter of 2012, up from six million in quarter before. But several analysts on Nokia's earnings call questioned whether the uptick would be short-lived in the face of more sub-$100 Android devices hitting the market.

Nokia's line of touchscreen Asha 308 and 309 devices have done well in India, Russia and Pakistan, but, unless the pace of innovation on the S40 can match that of Android, several analysts noted these strongolds could go the way of China, where sub-$100 Androids are gaining popularity.

According to Nokia chief Stephen Elop, Asha consumers were responding well to the "lower overall total cost of ownership" the line offered, thanks to features such as technologies to optimise data consumption, along with its core apps, like Facebook, dual-SIM Ashas for India, and longer battery life than low-cost Androids.

Elop refrained from divulging the developments in store for S40 platform, but said Nokia would continue to tackle Android at the low-end on two fronts: by bringing Windows Phone devices to lower price points, while innovating on the S40 and focussing on low-cost production. Elop pointed to its new facility in Vietnam as one example of developments that will underpin the move.

"We are innovating with Microsoft around Windows Phone and are focussed on taking that to lower and lower price points. You will see that over time compete with Android," said Elop.

"But at the same time, and we've said consistently -- and you're just beginning to see it in the Asha line with the full touch products -- that we will continue to innovate around Asha smartphone line in order to compete with the very lowest levels of Android."

Despite recent (wrong) reports that Nokia was open to considering using Android in future, a few factors make that unlikely, even as a replacement for its low-end S40 Asha line. Besides Nokia's Windows Phone agreement for Lumia devices – under which Microsoft pays Nokia $1bn a year - building low-cost phones running Android would put it in the same position as Asia's largest ODM manufacturers that build whitebox Android devices. Over the past two years, Microsoft has struck deals with around half of all ODMs to take out licences for patents it alleges Android and Chrome infringe upon. While terms have not been disclosed, some reports suggest these have been as high as $15 per device.

Although there's no synergy between the S40 platform used by the Asha and Windows Phone used by the Lumia line, Elop said Nokia's pitch to Windows Phone developers was "an opportunity to make their applications visible and marketed to a very much larger customer base than virtually any ecosystem".

Topics: Nokia, Android, Microsoft, Mobility, Windows Phone

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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  • forget win phone

    MS would do better if they just would offer(extort) their "convenient licencing package" for the other half of ODMs if they are getting up to $15 phone. This reports that MS is actually paying Nokia $1Bn/year to use windows phone.
    I really think they have no chance against android anyway.
  • Nokia's plan to fight cheap Androids: Low-cost Windows devices, more S40 in

    they used to own the chinese and the indian cell phone market. they just blink and lost the market to competition. hope they regain some of their lost glory ...
  • Budget Feature Windows Phones Please!

    I wish there was a way MS and Nokia could develop a handset with a new version of Windows OS designed with the look and feel of WP7.8/8 but the functionality of a low end android handset. Something with minimal internal storage with the need for MicroSD, a 3.2-5mp camera, 800mhz processor, Wi-Fi, standard 3G connection etc but for well under £100 or $130. With a little work they could filter apps that would work with the above hardware and create a limited app store with a selection of 5,000-50,000 apps.

    This could be WP 7.7. Boasting an array of unique WP features catered to budget feature phone users such as the option of the standard 1-9 text message buttons, physical accept/reject buttons.

    Basically a completely trimmed down WP OS to act as the perfect step into the smartphone world for users who just want to test the waters, perfect for users buying PAYG phones for their kids and ideal for the not so tech savvy users.
  • Nokia will NEVER survive a fight ...

    ... for the scraps of the scraps at the bottom of the barrel.

    They saturated the market with crapware phones before .... but that was when there were only a few crapware vendors. Today, the market is saturated with crapware and Nokia is no longer in an economical position to survive the fight. They don't have the money to have loses or work without any margin.