Nokia likely to launch cheaper Lumia phones this year: Analysts

The world’s biggest mobile phone maker Nokia is likely to cut prices of its Windows phone or Lumia devices in the coming months as it tries to survive an army of cheap Android phones, most industry analysts believe.

According to them, even the average selling price of Nokia Lumia devices of 220 euros (Rs 15,000) during the just concluded first quarter of 2012 was below the expectations of most analysts.

Many analysts also believe that Nokia simply cannot compete with cheap Android phones (Rs 8,000 range) with its S40 operating system, and will continue to lose market share through most of this year.

“Nokia is facing intense competition in low end smartphones and high end feature phones, especially in key markets like India and China,” pointed out Liberum Capital in its note on Nokia’s 4th quarter results.

It pointed out that the Chinese operators are subsidizing Chinese manufactured low end Android devices which are crowding out Nokia’s traditional retail channel.

“Nokia is responding to this increasing price pressure at the low end of the smartphone market by launching lower priced Windows-based smartphones such as the Lumia 610 as well as upgrading their high-end touchscreen feature phones to provide basic smartphone functionality.

“However, it is still very difficult for the company to compete on price in these segments,” it pointed out.

Similar thoughts were echoed by Citigroup analysts as well.

“..we do not believe S40 is as competitive as Android in terms of user experience and we continue to expect Nokia to lose market share to whitebox vendors and Samsung in China, Middle East and Africa and India,” it pointed out.

Like others, Citi too expects Nokia to soon launch cheaper Lumia variants.

“We expect to see more aggressively priced lower end Windows Phone Devices in 2H12 (sub $150) to compete against the Emerging Market Android threat. This is likely, in our view, to cannibalise higher end Mobile Phone Asha devices,” it added.

Nomura too predicted disappointment ahead for Nokia unless it gets its act together in the low-priced smart-phone segment, now almost totally dominated by Android.

It called for a fundamental revision in the company’s mid-tier platform. Currently, the company has been attacking the mid-tier market with its S40-based Asha devices and others.

“CEO Elop suggested that the company would address some of its product gaps in Q2, having previously cited an all-touch-based feature phone as a material product gap. These comments .. suggest Nokia is set to launch a new feature phone chipset platform in June.

“If the software is a basic S40 refresh, investors may be disappointed. To really make Nokia competitive against cheap Android phones, Nokia has to launch a fundamentally updated software platform that is designed from the ground up to be touch-enabled, in our view,” it pointed out.

It also said that it expected Nokia to launch a greater variety of Lumia models in the coming months, as it persuades Microsoft to allow different types of hardware on the Windows Phone platform.

“When Microsoft designed WP, it imposed very rigid hardware specifications. This means that current WP devices can only use 8GB of internal storage, have limited camera capabilities, relatively poor screen resolutions, etc.

“We suspect that Nokia has prioritised an easing of these restrictions when helping Microsoft develop WP8. Consequently, we believe that there is a high likelihood of Nokia bringing some of its strengths in imaging, for example, from Symbian to Windows.

“Combined with increased flexibility across the board, we expect Nokia to launch a much more diverse range of Windows Phone devices in Q4 2012 that may look much more competitive than the current range of Lumia devices,” it said.