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Nokia pins hopes on cheaper Windows smartphone

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POSTED February 27, 2012 8:01 p.m.

 

BARCELONA, Spain (AP) — Struggling cell phone maker Nokia kicked off the world's largest mobile phone trade show Monday by unveiling a new low-cost Windows smartphone that operators could give away free to customers, and another aimed at snap-happy consumers demanding better photo quality.

Chief executive Stephen Elop told reporters at the Mobile World Congress in Barcelona that the new phones — a low-price euro189 ($254) smartphone that runs on Windows software and a handset with a high-resolution 41 megapixel camera — demonstrate "the actions necessary to improve the fortunes of Nokia."

"With great products for consumers, I think the rest will fall into place," Elop said.

In many countries, cell phone companies subsidize the sale of smartphones to customers who sign contracts. The low price of the new phone means their out-of-pocket costs would be low, even if they give the handset away.

But shares of Nokia Corp. closed down more than 6 percent at euro4.06 ($5.44) on the Helsinki Stock Exchange after the announcements, wiping out gains made Friday when investors had hoped the Finnish company would map out bolder plans to claw back market share.

Nokia has lost its once-dominant position in the global cell phone market, with handsets running on Google's Android software and iPhones from Apple enjoying booming popularity.

The Finnish company is attempting a comeback with smartphones using Microsoft's Windows software in what Elop has called a "war of ecosystems."

"We will accelerate our global reach with new mobile devices and services," Elop said.

Nokia launched its first Windows Phone in October, eight months after Elop announced a partnership with Microsoft Corp., in a major strategy shift for the firm. Nokia said it would gradually replace its old Symbian software in its smartphones with the Windows operating system.

Malik Saadi, an analyst at the London-based Informa Telecoms & Media, said the introduction of the budget Lumia 610 budget smartphone meant Nokia was closer to having entry-level smartphones equipped with Windows Phone 7 mobile software and that the company would "finally open innovation and differentiation in a market that was otherwise dominated by Android."

Neil Mawston, a London-based analyst for Strategy Analytics, said Nokia's new PureView 808 high-resolution camera phone was impressive — but that markets were expecting more.

"Technologically it is 'wow' but they have integrated it into a Symbian phone which is viewed as, rightly or wrongly, yesterday's technology, whereas I think there was some expectation that it might be in a Windows phone which is tomorrow's technology," Mawston said.

The new phones were introduced less than three weeks after Nokia announced plans to stop assembling cell phones in Europe by the year-end as it shifts production to Asia and to cut another 4,000 jobs — its latest attempts to cushion itself from stiff competition in the smartphone sector. The job cuts follow nearly 10,000 layoffs announced last year.

Once the bellwether of the industry, Nokia has lost its dominant position in the global mobile phone market, with Android phones and Apple's iPhones overtaking it in the growing smartphone segment. It's also been squeezed in the low-end by Asian manufacturers making cheaper phones, such as ZTE.

Nokia became the leading handset maker in 1998 and reached 40 per cent market share in 2008, but the company has gradually lost share since then — falling to below 30 per cent last year.

 

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