Can Windows Phone Compete in the Low-End?

Ben Bajarin / October 24th, 2013

At Nokia World earlier this week Nokia launched what I feel is an interesting product. I am an optimist so I have not given up on Microsoft or Nokia when it comes to mobile computing. The most interesting product to me is the Lumia 1320.

Lumia-1320_632

I got to spend some time with the new Lumia large screen phones and the latest update to Windows Phone 8 shows well on larger screen smartphones. But what makes the 1320 interesting is not the size but the price. The Lumia 1320 is estimated at $339 USD and will launch first in China and Vietnam in early 2014, followed by other Asian markets, India and European markets. For context on that price point, in China the $339 priced smartphones or 2000 Yuan price range occupied 8% of Q2’13 sales.

Here is a chart using IDC’s numbers on where the global platform share sits currently.

Screen Shot 2013-10-24 at 9.40.31 AM

I ask the question whether Windows Phone can compete in the low-end because that is where I feel its best chance at market share gains will come from. Our research suggests that Apple is an immoveable force in the high end or top 10% of the global market and with the addition of the 5c it is possible they will dominate the top 20% by the end of the year. Where Android succeeds is the area where Windows Phone has a chance – at the low-end. If I am Microsoft and Nokia I focus on the blue line in the graph not the green one…at least for now.

I truly believe that Android needs low-end competition. I say this because Android in the low-end is not advancing personal computing. From what I have seen and used with the Windows Phone, I feel it is a much better platform than Android at those price points to empower consumers with computing. The problem is that Android has an army of OEMs shipping phones at low-price points. Windows Phone will never make a dent in Android unless they get the same.

To date Nokia’s best selling Lumia is the 520 which is among the most affordable of the group. It will be interesting to see how the 1320 does but I will remain optimistic until proven otherwise.

Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio
  • James King

    One word: scale

    Its competitors have it, Microsoft does not.

    It’s perfectly plausible that Microsoft can and likely will gain share coming up from the low end. However, it will happen at a snail’s pace and MSFT is likely to get broadsided by a challenger that is barely on anyone’s radar now but could be dominating the space within 5 years.

    A mobile phone is the one device where an OS based entirely on browser technology makes sense. That’s why I think Firefox OS could be huge at the low-end.

    • its a test

      If there is one company that not only survives out-of-left-field competitors, strong opposition, and bad press, its Microsoft, and in nearly every case, they end up dominating. MS will slowly but steadily eat at the market share, until it becomes the monopoly, and then another entire computing field will open up for it to start again at. Look at OS’s, office products, servers, business uptake, consumer uptake, consoles, developers interest, gaming, etc. Each on of those fields MS had “no hope” in before, but now is the undisputed monopoly and nearly all for more then a decade. The current fields to look out for are search, tablets, and phones, which ms is slowly and constantly making ground in.

  • DarwinPhish

    Does Nokia still have the production and distribution capacity they had when they were still the #1 smatphone maker?

    • Bhaskar

      They have the capability, but the problem is too many models in the line-up! One day, 22nd Oct they launched six devices. More devices you try to push, obsolescence is faster, so profit declines per device. Inventory and retailer returns will shoot up as Nokia wants to launch too many models too frequently. Only Samsung can succeed in this, not only because their supply chain is nearly own and Android/Google has a better app ecosystem. Microsoft needs to enable developers and get strategic partnership right for Nokia to succeed.

  • Quicksingle

    It would have been interesting if Nokia had gone with Android.

    • Keyur Shah

      You are wrong.From a business point-of-view.

      VERY wrong.
      See,here is where the problem lies.People think that “oh Stephen Elop is a Trojan, he just got in Nokia to hand it over to Microsoft”
      Well, it may or may not be true but you cannot deny that he may a very important and strategic move by adopting Windows Phone OS is its nascent stage.
      I’ll give you couple of reasons to justify my stand.
      1) Android is over-saturated market, every tom,dick and harry of the electronics world is manufacturing tablets and phone and installing Google Android OS on it. No one is making profits,with exceptions obviously being Samsung Electronics which currently holds almost 70% of Google’s Android market share.
      2)Google owns Motorola. In this fast changing technological world, hardware doesn’t make you the Emperor.SOFTWARE does.

      For ex: Nokia indisputably makes the very best hardware in the market yet they suffer loss.

      Getting back to the topic, Google makes software and Motorola the hardware.Google is under no circumstance going to let Samsung dictate the mobile world for long,Even Samsung boys realize that,that’s why they have started to build their own software(rather unsuccessfully).In a few years, if not months,Google is going to put more emphasis on creating its own hardware,something similar to what Microsoft is doing.And in that scenario,no hardware company would stand a chance.Not Samsung,Not HTC,NOT NOKIA.

      NOKIA MAY GAIN CUSTOMERS FOR SHORT TERM,BUT WOULD DEFINITELY LOSE TO GOOGLE AND MOTOROLA IN LONG RUN.

      Now,for the reasons as to why Nokia’s adoption to Windows Phone OS was a brilliant business move:
      1)EARLY MOVER ADVANTAGE: Nokia jumped early on the Microsoft ship and quickly gained almost 80% of the Windows Phone OS which it still retains.No matter in which country you reside,if they are selling Windows-Phone OS,there are 80%chances that the hardware is NOKIA.Not SAMSUNG,Not HTC.
      2)No matter what people say about WINDOWS PHONE OS,it has a future.It would take some time,some ironing out of issues, but surely Microsoft will gain from this OS.And when it happens NOKIA would benefit.
      Now,many would argue that NOKIA is being sold to Microsoft, but I guess it would be foolish on Microsoft’s part to kill Nokia.Because they(Microsoft) haven’t just purchased patents,talents and the handset business but most importantly they have purchased GOODWILL,the name and fame of one of the greatest phone-maker in history.It would be just foolish to kill such a legacy.

      Hope,your perspective changes after this article.

      Regards,
      KEYUR SHAH

  • David Trent

    I think that public perception of Metro has become too toxic due to the inappropriateness of it on the desktop platform. The new look might well be ok on a mobile device, but the whole issue has become contaminated with this issue and if things don’t change Microsoft will only ever be an also-ran across the board of mobile devices. The only chance the company has as a real player in the future is for the incoming CEO to issue a public apology for alienating so many customers and admit they were wrong, remove Metro from the desktop, and stop all this unified interface nonsense which so effectively dumbs down the desktop. How to then relaunch the mobile device line without that disasterous baggage is where the CEO will really earn his/her salary, and if successful will be the subject of many future business case studies (just like Windows 8 will, though for opposite reasons I.e. how to shoot your cash cow between the eyes).

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