Nokia may have found a great new niche

Nokia Emerging Markets Strategy

All Western brands are struggling to get traction in what is shaping up to be an epic battle against the Asian Android vendors that have started churning out relatively highly specced new models at rock bottom prices. Vendors like Apple, HTC and Nokia put in dreadful spring performances in China, where their current models’ price ranges simply aren’t working. Soon we’ll find out what the pricing of Apple’s budget iPhone will be and whether it stands a chance to make serious inroads in China. But Nokia just announced a model that might have a chance to do some damage in Asia. The Lumia 625 effectively copies the product concept that has worked like a charm for Huawei, Micromax, Karbonn and their ilk in recent months.

Asian vendors have been churning out hits like the Micromax Canvas 2 Plus relying on a simple concept: a sub-$200 price, a 5-inch display and an 8-megapixel front-facing camera. This combination of a rock bottom price and fairly impressive specs has been achieved by cutting corners judiciously. That Micromax 8-megapixel camera actually has a lot worse picture quality than 8-megapixel cameras of leading vendors and the display has a pixel density of just 200 pixels per inch despite its large size.

Nokia’s Lumia 625 happens to have a 4.7-inch display with a coarse, 200 PPI density combined with a 5-megapixel camera. So it gets close to matching the specs of devices like Canvas 2 Plus. The price of the Lumia 625 is under $300 without subsidies, so it can’t quite compete with its Asian rivals. Nokia must depend on its brand strength and camera quality to try to justify the price premium.

One challenge here is the way smartphone prices continue heading south. The Lumia 625 at $290 seems like a compelling price for a Nokia phablet, but India vendor Karbonn has now started selling the comparable A7 Star at close to $100. It features a 4.5-inch screen and a 5-megapixel camera. The scary Asian smartphone price erosion mill keeps turning.

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