Nokia to Sell $20 105 Phone in Europe to Recover from 21% Plunge in Basic Phone Sales

Finnish phone manufacturer Nokia is going back to basic phones in the light of its weak market position against the now more famous smartphone brands from Apple and Samsung.

To make up for the 21 per cent decline in its mobile phone sales, Nokia is set to sell soon in Europe the $20 Nokia 105.

The very basic unit, which was launched a few weeks ago in India and Indonesia, features pre-loaded games, a color screen, FM radio, a speaking clock and flashlight. It is priced 97 per cent lower than the latest model of the iPhone. It also features 35 days of standby battery life and resistance to dust and water damage.

Although its Lumia 920 is generating rave reviews, in reality, sales of the device is weak that Nokia had to make a parody of the Apple-Samsung long-standing feud to better push the high-tech device.

Nokia is apparently returning to its roots of selling basic phones despite smartphones being the fastest growing market segment. Stephen Elop, chief executive officer of Nokia, said the 105 aims to capture the bulk of the lower-end market which comprises more than 50 per cent of cellular phones sold globally.

The Finnish firm used to dominate the market until the entry of Asian phone makers such as ZTE and Huawei of China and Samsung of South Korea which gradually ate the larger slice of the affordable phone market.

Nokia used to account for over 50 per cent of the mobile phone market until the introduction of the iPhone in 2007 which opened the door to smartphones. However, of the 336 million cellular phones that Nokia sold in 2012, only 10 per cent were smartphones and the basic model sales contributed 31 per cent of Nokia's revenue as against the 18 per cent contribution of the more popular smartphones.

Nokia just reported a Q1 net loss of $357 million, which is an improvement compared its $1.2 billion loss for the same quarter in 2012.

However, the growing popularity of the smartphone cannot be disputed based on the over 80 per cent plunge in Nokia share prices while Samsung stocks gained 154 per cent.

In shifting back its focus to lower-end phones, Nokia reasoned that consumers who would purchase a 105 would likely stick with the Nokia brand when they eventually upgrade devices in the years to come. Tech analysts agree that the strategy to concentrate on low-end but high-volume segment of the mobile phone market is a smart move on the part of Nokia.