Boston, MA 08/11/2014 (wallstreetpr) – When Nokia Corporation (ADR) (NYSE:NOK) sold its handset business to Microsoft Corporation (NASDAQ:MSFT) for about $7.4 billion, several changes in the way phones are made and presented to users were expected to take place, and even some were publicly announced. In those announcements, mostly coming from Redmond, Microsoft said it would do away with feature phones inherited from Nokia. However, that seems to have changed following the latest move by the company.
Low-Cost Phone
In the latest development, Microsoft launched a basis Nokia phone that is also cheaply priced in apparent efforts by the company to retain feature handsets in its portfolio. It launched Nokia 130, which is being offered for about $25. The phone supports videos, MP3s and FM radio. However, it lacks Internet connectivity and according to Microsoft, that is a good device to target the emerging markets.
In a recent interview, Jo Harlow, the vice president of the phone unit at Microsoft Corporation (NASDAQ:MSFT), said retaining of the feature phones on their product list comes as a result of the fact that they don’t have any other product or project to reach the emerging markets and countries where smartphone penetration is still slow. He noted that even with the feature phone, Nokia 130, for example, customers in those markets can still be part to Microsoft’s ecosystem by opening Microsoft accounts.
Market Reality
In post-Nokia Corporation (ADR) (NYSE:NOK) acquisition, Microsoft was expected to reduce the feature phones to “device support” only while stopping production of such phones. The company was also expected to fully integrate its Window Phone software in the smartphones it manufactures. However, the latest move suggests that market reality can sometimes outweigh business plan.
Microsoft inherited many feature phones from Nokia Corporation (ADR) (NYSE:NOK) and even those that fell on the smartphone category ran on Google Inc (NASDAQ:GOOG)’s Android OS. However, Microsoft appeared determined to manufacture phones that run on its Windows Phone OS. The adoption of Windows Phone is severely is inhibited by the popularity of Android and Apple Inc (NASDAQ:AAPL)’s iOS operating system.
