Nokia Unveils Low-Priced Phones Amid Intensifying Global Competition

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BARCELONA -- Nokia on Monday introduced two new low-priced basic cellphones, plus two lower-priced versions of its flagship Lumia Windows smartphone -- part of an effort by the former market leader to compete amid an intensifying price war in handsets.

The four new phones -- the Lumia 720, Lumia 520, Nokia 301 and Nokia 105 -- will help Nokia maintain and perhaps build on its position as the No. 2 maker of cellphones worldwide behind Samsung and fend off challenges by two Chinese manufacturers, Huawei and ZTE, analysts said.

The Lumia 520, selling for €139, or about $183, in Europe and $179 in the United States, is priced 25 percent less lower Nokia's least-expensive smartphone, the Lumia 620.

"I think that with the Lumia 520, Nokia is really going to take the Windows 8 operating system to a much bigger, mass market," said Pete Cunningham, an analyst at Canalys, a research firm in Reading, England. "I would expect their volumes of Lumia shipments to now start increasing slowly, but they still have a way to go."

Samsung overtook Nokia last year as the leading global maker of cellphones, amassing a 23 percent market share. Nokia's market share slipped to 17.9 percent from 24 percent during 2012, according to the market research firm IDC. Apple ended the year in third place at 9.9 percent, followed by ZTE, with 3.6 percent, and Huawei, with 3.3 percent.

The new handsets, which the company unveiled at the Mobile World Congress industry convention in Barcelona, reinforced Nokia's strategy of targeting the least-expensive but fastest-growing parts of the market. The Nokia 105, the company's new basic, entry-level phone, will sell for €15 -- less than the price of a pizza in some countries.

T-Mobile U.S.A. has agreed to sell the Lumia 520, a 3G phone with a 4-inch touchscreen, in the United States starting in the second quarter, Nokia said.

In 2012, the global market for cellphones that cost $250 or less grew by 99 percent from its level in 2011, and accounted for more than half of all cellphones sold worldwide, according to IDC. The upper-end segment of smartphones costing more than $250 grew by only 23 percent during the same period.

"Nokia is targeting the right end of the market with new, inexpensive phones," said Francisco Jeronimo, an analyst with IDC in London. "This is where the growth is."

Nokia, the global market leader in smartphones as late as 2007 before Apple produced its first iPhone, trailed the likes of Blackberry, LG and Motorola with a roughly 4 percent market share in the fourth quarter, according to IDC. Huawei and ZTE, the No. 3 and No. 5, each sold more than twice as many smartphones as Nokia.

This year for the first time, more consumers around the world will buy a smartphone than a simple, basic cellphone, according to IDC.

Stephen Elop, the Nokia chief executive, said the new, lower-priced Lumia handsets would give the company a full array of smartphones it had been lacking.

"These are less-expensive devices, but they will move in much larger volumes," Mr. Elop, a former Microsoft executive, said during an interview.

Mr. Elop said Nokia was committed to making some of Lumia's unique features, such as digital lenses that allow users to enhance their own photos, available throughout the entire Lumia lineup, instead of reserving the most advanced features for the most expensive handsets.

The Nokia-Microsoft alliance that was announced two years ago in February 2011, Mr. Elop said, is gaining momentum. He dismissed the possibility that the company would eventually abandon its software partnership with Microsoft for another operating system, such as the Android system made by Google.

"There's no doubt in my mind that that was the right decision" to choose Microsoft, Mr. Elop said. The alliance with the world's largest software maker has set Nokia apart from handset makers relying on Android, Mr. Elop said, preserving an identify and edge for Nokia and its products.

With the Lumia line of smartphones expanding, Nokia can begin to sell Microsoft phones increasingly to businesses, which may already be reliant on Microsoft Windows and e-mail services in their operations, Mr. Elop said.

"Being able to bring those all together I think is a very powerful force," he said. "And it's something that's just beginning."

Nokia sold 4.4 million Lumia smartphones in the fourth quarter, up from 2.9 million in the third quarter. Mr. Elop declined to say how sales of Lumia had develpoped in the first two months of the year. But he suggested that the three new handsets introduced over the last three months would help sustain sales momentum.

The Lumia 920, 820 and 620 are new devices that will translate into new sales, he said. "All of those things will contribute to what we hope to see in the future," he said.

In the fourth quarter, Nokia generated an profit of €202 million, compared with a loss of €1.1 billion a year earlier.

The Nokia 301, a mid-range feature phone, will be introduced in the second quarter and sell for €65. The 3G handset can display streaming video and comes with a 3.2 megapixel camera and panoramic, wide-angle lens. The Nokia 105 will eventually replace the entry-level Nokia 1280, which sold more than 100 million units in the past two years.

The Nokia 720, which will be sold initially in Asia and Europe, is a 3G handset targeting social media users. The phone, which will sell for €249, comes with 8 gigabytes of internal memory and an SD-card slot for additional storage. China Mobile has agreed to sell the handset in China starting in the second quarter, Nokia said.

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This article originally appeared in The New York Times.


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