Picture: REUTERS
Picture: REUTERS

NOKIA, which has seen its share in the basic handset market dwindle while it focused on developing smartphones, on Monday launched a €15 phone to shore up its position in the market.

Nokia’s market share in smartphones has fallen to about 5%, while Apple and Samsung together control over half the market. The company also unveiled a €65 phone with some internet access and lower-priced versions of its Lumia smartphones, filling the gaps in its product line-up between its high-end Lumia devices that run Microsoft software and mid-tier Asha feature phones.

The Finnish firm hopes the new phones will increase sales in emerging markets and help it regain its once-solid footing at the cheaper end of the market, where it makes most of its handset revenue. Sales of basic phones fell at least 20% last year to €9.4bn.

"That is a key part of our approach to competition, particularly in a country like China," said CE Stephen Elop at the Mobile World Congress in Barcelona.

"There’s a very large number of inexpensive and largely undifferentiated devices. We believe we have to offer differentiation at each price point."

The entry-level Nokia 105, its lowest priced device yet with a colour screen, was aimed at first-time buyers in markets such as South America, Africa, Russia and Asia-Pacific, he said.

The phone shows Nokia, once the undisputed leader in the cellphone industry, trying to fend off growing competition at the low end from Asian rivals such as Huawei and ZTE.

IDC research director Francisco Jeronimo said it would probably be the cheapest phone available in the world from a major brand when it goes on sale later this quarter.

"The pressure is now on Chinese vendors. Why will any consumer in the world buy a cheap Chinese phone when they can have the same price with better quality at a well-known brand?"

Nokia also lowered the entry point of its Lumia smartphones with a new model, the Lumia 520, priced at €139.

A new lower entry point for the Lumia 520 would enable Nokia to better compete with mid-tier Android devices, analysts said.

Feature phones, in the middle market between high-end smartphones and cheaper basic phones, are seen as increasingly crucial, even though many consumers in developed markets are moving on to smartphones.

"In short, the company can still cash the feature phone market with around 5% margins even though it is shrinking," said Inderes analyst Mikael Rautanen.

The IDC’s Jeronimo said the new products, which include the Lumia 720 smartphone with the same camera lens as the 920, gave Nokia a comprehensive range, leaving little excuse for poor sales. "If Nokia does not improve its market performance with these devices, then they will never do, without a radical change in its portfolio strategy."