Nokia succumbs to Android appeal in low-cost phone battle

Mon Feb 24, 2014 6:08am EST
 
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By Paul Sandle

BARCELONA (Reuters) - Nokia, soon to be acquired by Microsoft Corp, is turning to software created by arch-rival Google for a new line of phones it hopes will make it a late contender in the dynamic low-cost smartphone market.

Its first models, Nokia X, X+ and XL, rely upon an open version of the Android mobile software system created by Google that has become the world's most popular software used in smartphones.

The release of the phones just days before Nokia sells its handset business to Microsoft in a $7.2 billion deal, is an attempt to stay relevant in emerging markets, where low-cost Android phones are being snapped up by hundreds of millions of buyers.

Nokia Chief Executive Stephen Elop said the market had "shifted dramatically", and the group needed to address a sub-$100 segment that is set to grow four times faster than more expensive phones.

He told a crowded press conference at the Mobile World Congress trade fair in Barcelona that rather than being an 180-degree turn in its strategy of using Microsoft's Windows Phone for smartphones, it was a move that introduces the "next billion" users to Nokia's hardware and Microsoft's services.

"We see the X family being complementary to (Windows Phone) Lumia at lower price points," he said. "Even as you see Lumia push lower and lower, you will see us push lower with Nokia X below that."

But the strategy shift underlines the many missteps made by the Finnish company since Apple launched its ground-breaking iPhone in 2007.

Nokia was caught between a rock and a hard place - committed to using Microsoft's Windows Phone software but needing Android software to reach more cost-sensitive customers, CCS Insight's head of research Ben Wood said.   Continued...

 
A photo illustration of a man silhouetted against a Nokia logo in the central Bosnian town of Zenica January 23, 2014. REUTERS/Dado Ruvic