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Microsoft's $29 phone proves Nokia's future lies with low-cost devices

By Nathaniel Mott , written on January 5, 2015

From The News Desk

Microsoft has announced an Internet-connected cellphone that will cost just $29 when it debuts in Africa, the Middle East, Europe, and Asia some time in the first quarter of 2015. It's called the Nokia 215, and it supports the idea that Nokia's future still belongs to cheap handsets instead of premium devices -- despite Microsoft's hopes.

Nokia's high-end smartphones -- all of which came with the Windows Phone operating system pre-installed -- struggled to attract attention for years. (That's at least part of the reason why the company sold its devices and services business to Microsoft in 2013.) Meanwhile, in emerging markets around the world, Nokia's low-cost devices soared.

That contrast between the two product lines led me to argue that Nokia's future belonged to the cheap "smartphones" it sold in markets where wireless connectivity is just starting to reach more people. As I wrote in May 2013, before Microsoft announced its interest in acquiring the company's phone-making division for $7.2 billion:

Nokia is no stranger to emerging markets, with the company selling more than twice as many Asha-branded smartphones than Lumia devices during the end of 2012. The devices might not grab headlines or be co-introduced by Nokia and Microsoft in front of a rapt audience, but they have quietly become Nokia’s most popular products.

Improving those products — and partnering with Facebook to offer consumers free cellular data — could be more important to Nokia than building yet another high-end device that fails to compete with the iPhone or Samsung’s Galaxy S line. Nokia is a low-end smartphone maker that happens to have built some of the best-designed high-end smartphones on any platform. Again, the Nokia 215 supports that argument. It's a cheap smartphone with a 29-day battery that comes with Facebook Messenger pre-installed. The chances of it ever coming to the United States are slim -- it only supports 2G wireless networks -- but it's tailor-made to first-time phone buyers who want to access at least some small portion of the Internet.

It also follows the release of Microsoft-Nokia smartphones which bring the Lumia product line down from "premium smartphones" to "Windows Phone devices that are colorful, decent, and cheap." And at least one high-end Lumia phone, the McLaren, has been canceled.

The future of Nokia -- or at least the portion of the company Microsoft acquired -- remains with low-end smartphones that offer a good-enough experience to consumers who either don't need or can't afford better devices.