Nokia plans to undercut Windows rivals with volume focus

Nokia plans to undercut its Windows Phone rivals to give its new smartphones a foothold in the market before trying to improve margins, its Chief Executive Stephen Elop said on Wednesday. Nokia unveiled a strategy shift to use Microsoft software on its smartphones in February in a bid to create a rival to Apple and Google’s Android, and launched its first two models using it last month. Currently Nokia two new Windows Phone models are priced at 270 euros ($365) and 420 euros, excluding subsidies and taxes – cheaper than most other Windows Phone models on the market – but well above prices of mass-market Android devices which sell for 100-150 euros.

Making the WP7 experience affordable and focusing on volume

“You see us pricing the devices so that that we can get what we think will be a good volume,” Elop told Reuters in an interview on the sidelines of an industry conference in Barcelona. Nokia hopes this will boost interest in the platform among consumers and developers, allowing the company later to focus on more differentiated models with higher profit margins. Windows Phone platform, used also by Nokia rivals Samsung Electronics and HTC, saw its market share shrinking to a mere 1.5 percent in the third quarter, according to research firm Gartner. At the same time market share of Google’s Android platform more than doubled to 52.5 percent and Apple controlled 15 percent of the market. This week Nokia has started to sell its first Windows Phone model, the Lumia 800, in Germany, France and Britain. Earlier this week a survey of research firm IDC showed Microsoft’s efforts to get back into the mobile game have impressed developers, and it has emerged as the third platform after Apple and Android.

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“What we hear from developers (is) they recognise the commitment we have made,” Elop said. “We need to ship volume of devices to further attract them.” Elop, who took over as the first non-Finnish chief executive of Nokia 14 months ago, has cut more than 10,000 jobs at the Nordic company which has struggled to battle mobile industry newcomers Google and Apple in the smartphone market. He said the company was shifting more into the constant improvement mode after major restructuring. “We are trying to shift more into the mode of finishing restructuring – make sure people are well focused,” he said.

Reuters