Microsoft is reshaping its handsstrategy as Google introduces its Android One phones. Microsoft is dropping the iconic Nokia brand name from some models, culling the popular Asha range and looking to aggressively cut prices of smartphones, apart from launching its 'First' category of feature phones priced under $40 (Rs 2,400) in a bid to target the billion first-time buyers in emerging markets such as India.
This aggressive pricing strategy is aimed at reviving the handset maker's share in key markets and bridging the gap between its Windows operating system (2.5% market share, as per IDC) with market leader Android (84.7%) and No. 2 iOS from Apple (11.7%) worldwide.
The strategy rejig comes as Google launches Android One devices in collaboration with top Indian handset makers Micromax, Karbonn and Spice, which between themselves had about 30% of the country's fast-growing smartphone market at the end of June, according to IDC. These handsets are expected to cost less than $100. Others like Firefox have introduced smartphones for as little as Rs 1,999, again with Indian handset partners.
"We're just beginning a refresh of the entire portfolio," Chris Weber, vice president of mobile device sales at Microsoft, told ET. "We aim to push the price point of Windows phones significantly lower - we certainly see that happening on the Android ecosystem - without impacting quality and experience."
Microsoft, which bought Nokia in April for $7.5 billion, has made several changes to the strategy of selling devices, including shutting down Nokia X smartphones and the Asha range, which was split between feature phones and smartphones and also competed on price points.
While customers who bought these devices will still get aftersales and service support, Microsoft will not launch any further products under these banners. At the same time, Nokia X designs that were on its roadmap will be converted into Windows Phones.
Over the next 12-18 months, Weber said, Microsoft will work on pushing the price points of Windows smartphones lower than those available in the market. At the same time, it will drive innovation in the affordable flagship area and combine design, software and services from Microsoft at the high-end, which will trickle down the portfolio.
Jo Harlow, corporate vice president for phones at Microsoft, said that there are still a billion people globally who don't have mobile devices and 2 billion who don't have access to the Internet on mobile devices, which is what the company intends to target. "On the 'First' side, we will continue to introduce new devices - First Bing, First Internet devices, First mobile phone devices," Harlow added.
Microsoft launched the 'First' set of ultra-affordable mobile phones in early August with Nokia 130 priced at Euro 19 or Rs 1,498, which will be soon brought to India, and recently added the Nokia 225 Internet-enabled feature phone. These devices run on the Symbian 30+ operating system.
"Microsoft needs a strong portfolio of smartphones in the $80 to $150 segment to emerge as a strong challenger and potentially lead the smartphone market in India," said Jayanth Kolla, co-founder and partner at telecom research firm Convergence Catalyst. "Their success will depend on how rapidly they'll be able to bring the Lumia portfolio to replace the outgoing Nokia Asha and Nokia X range of devices."
The company launched its first set of smartphones in the new 'affordable flagship' tier - Lumia 830, 730 and 735 - earlier this month in Berlin. Nokia Lumia 830, which has been priced at Euro 330 without subsidy and taxes, is likely to be launched for about Rs 30,000 in India. The Lumia 730 dual sim and Lumia 735 LTE, priced at Euro 199 and Euro 219, are expected to be sold for under Rs 20,000 here. All three smartphones will be launched in the global markets by the end of this month and will begin selling in India some time in October, company executives said.
As Microsoft continues Nokia's assimilation into the company, it will stop using the Nokia brand name for its smartphones. "We will transition to Microsoft as soon as we can," said Harlow. "But it's not strategic, it's purely execution that makes the timeline," she said, when asked whether the company had internally decided on a timeline to change the brand to Microsoft.However, Harlow added that Microsoft will continue to use the Nokia brand on its 'First' category of feature phones for the next 10 years, which will be targeted at consumers buying mobile phones for the first time.
Commenting on the differences in the working ways between the two companies after the merger, Harlow pointed to "a huge culture change," adding that the speed of product delivery from conception has increased as now the companies work more coherently. "In the past, we would think about hardware and then go to Microsoft to seek the software enablers. Now we spend time with services, application and OS teams to think about what are the things we can bring together to the market and the choices on hardware we would make to make the experiences great," she said.
While customers who bought these devices will still get aftersales and service support, Microsoft will not launch any further products under these banners. At the same time, Nokia X designs that were on its roadmap will be converted into Windows Phones.
Over the next 12-18 months, Weber said, Microsoft will work on pushing the price points of Windows smartphones lower than those available in the market. At the same time, it will drive innovation in the affordable flagship area and combine design, software and services from Microsoft at the high-end, which will trickle down the portfolio.
Jo Harlow, corporate vice president for phones at Microsoft, said that there are still a billion people globally who don't have mobile devices and 2 billion who don't have access to the Internet on mobile devices, which is what the company intends to target. "On the 'First' side, we will continue to introduce new devices - First Bing, First Internet devices, First mobile phone devices," Harlow added.
Microsoft launched the 'First' set of ultra-affordable mobile phones in early August with Nokia 130 priced at Euro 19 or Rs 1,498, which will be soon brought to India, and recently added the Nokia 225 Internet-enabled feature phone. These devices run on the Symbian 30+ operating system.
"Microsoft needs a strong portfolio of smartphones in the $80 to $150 segment to emerge as a strong challenger and potentially lead the smartphone market in India," said Jayanth Kolla, co-founder and partner at telecom research firm Convergence Catalyst. "Their success will depend on how rapidly they'll be able to bring the Lumia portfolio to replace the outgoing Nokia Asha and Nokia X range of devices."
The company launched its first set of smartphones in the new 'affordable flagship' tier - Lumia 830, 730 and 735 - earlier this month in Berlin. Nokia Lumia 830, which has been priced at Euro 330 without subsidy and taxes, is likely to be launched for about Rs 30,000 in India. The Lumia 730 dual sim and Lumia 735 LTE, priced at Euro 199 and Euro 219, are expected to be sold for under Rs 20,000 here. All three smartphones will be launched in the global markets by the end of this month and will begin selling in India some time in October, company executives said.
As Microsoft continues Nokia's assimilation into the company, it will stop using the Nokia brand name for its smartphones. "We will transition to Microsoft as soon as we can," said Harlow. "But it's not strategic, it's purely execution that makes the timeline," she said, when asked whether the company had internally decided on a timeline to change the brand to Microsoft.However, Harlow added that Microsoft will continue to use the Nokia brand on its 'First' category of feature phones for the next 10 years, which will be targeted at consumers buying mobile phones for the first time.
Commenting on the differences in the working ways between the two companies after the merger, Harlow pointed to "a huge culture change," adding that the speed of product delivery from conception has increased as now the companies work more coherently. "In the past, we would think about hardware and then go to Microsoft to seek the software enablers. Now we spend time with services, application and OS teams to think about what are the things we can bring together to the market and the choices on hardware we would make to make the experiences great," she said.
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