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Microsoft isn’t even pretending to have a coherent smartphone strategy

Microsoft Nokia 130 Analysis

Microsoft’s handset strategy is looking more convoluted with each passing day. A few weeks ago, Microsoft killed the Asha range of Nokia phones, which was largely viewed as an admission that it cannot compete with Android vendors such as Xiaomi and Micromax in the $60 to $90 price range. Asha models employed a Nokia-created operating system called Series 40, which gave these feature phones certain smart elements such as a reasonably sophisticated email system and support for downloading simple games and such.

But now comes the word that Microsoft still plans to continue the super low-end feature phone sales, with $25 models such as the Nokia 130 debuting soon. These budget models use the Series 30+ operating system and are so cheap that they avoid direct competition with the new wave of $100 Android smartphones. They are so simple that they don’t offer a camera or 3G support. The market for these cheapies is still as large as 300 million units per year.

But here’s the problem: A $60 Asha feature phone would have offered a plausible pool of consumers who might migrate to $100 Windows phones in the near future. Most Asha models do have 3G support, GPS, downloadable apps, etc. They could have been a feeder system for the Windows Phone market.

But the ultra-cheap models like Nokia 130 are so basic that it’s hard to see how many of their owners will vault into the Windows Phone camp. What is the pathway from owning a $25 GSM phone without even GPS support into buying a four-times more expensive Windows smartphone with Excel support?

By canceling the Asha series of premium feature phone models, Microsoft blew a hole in the middle of its handset portfolio, which now has a super weird, barbell shape. It will be pretty fascinating to see what synergies there between $25 and $250 models.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.