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Microsoft Does About-Face, Debuts $25 Phone

Sarah Thomas
8/11/2014
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Microsoft is doing away with Nokia's low-end feature phones, but it still sees life left in the ultra low end, as evidenced by its new product launch Monday.

The software-giant-turned-phone-maker introduced the Nokia 130, a €19 ($25 US) phone aimed at first-time phone buyers in emerging markets. The device lacks an Internet connection and will run Nokia's own operating system, not the Asha OS that Microsoft Corp. (Nasdaq: MSFT) said it was scrapping in favor of the Android variant Nokia X. (See Microsoft to Axe 12,500 Ex-Nokia Employees.)

The device also includes a video and music player and, impressively, battery life of up to 36 days standby for the single SIM version, or 26 days for the dual-SIM version. See the video below for a quick look at the device in its red, black and white glory.

The Nokia 130 will begin shipping in the third quarter in China, Egypt, India, Indonesia, Kenya, Nigeria, Pakistan, the Philippines and Vietnam.

Unlike Nokia, which focused on hardware sales, Microsoft is all about selling its services. With these low-end devices, it's hoping to bring on board first-time device users and eventually get them using Microsoft services such as Bing and OneDrive. The strategy makes some sense, although it is a bit hard to follow, given that the 130 is very much a Nokia-branded device and (in this version, at least) doesn't even connect to the Internet.


Want to know more about the mobile device market? Check out our dedicated smartphone content channel here on Light Reading.


The move also represents an about-face for the company, as it recently told employees (those it didn't axe) that it would focus entirely on Windows Phone and stop updating its basic feature phones. The newly married Microsoft-Nokia is still clearly working out what its focus will be and just how low it will go. (See Microsoft Poaches Top Qualcomm Exec.)

— Sarah Reedy, Senior Editor, Light Reading

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MikeP688
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MikeP688,
User Rank: Light Sabre
8/17/2014 | 11:53:52 PM
Re: branding
Actually it is a reasonably smart move considering what Mozilla is trying to do and what other players especially in India are trying to do because of how saturated the US Market is :-)
nasimson
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nasimson,
User Rank: Light Sabre
8/13/2014 | 11:40:45 PM
Re: Branding
In two words, this is: acquisition blues. Can't believe it's Microsoft doing this. Having a good experience of these countries in developing world, I have one prediction: Failure.
SachinEE
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SachinEE,
User Rank: Light Sabre
8/13/2014 | 8:14:35 AM
Disposal of low end feature phones
The fact that Microsoft is doing away with some of Nokia's low end feature phones is quite encouraging. I agree with the fact that the white space broad band initiatives aims at targeting the low income developing areas. I also agree with the fact that it is not really a bad strategy to target some of the first time phone buyers in the upcoming markets. The only strange fact is that the newly developed services focused phone comes without an internet connection. 
DHagar
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DHagar,
User Rank: Light Sabre
8/12/2014 | 2:38:46 PM
Re: Branding
@SachinEE, I totally agree.  It appears to ignore the logic of why the customer would want it when there are other options.  It appears to be a bridge to nowhere.
SachinEE
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SachinEE,
User Rank: Light Sabre
8/12/2014 | 2:32:53 PM
Re: Branding
Why would Microsoft design a phone without any internet connection? Even if their target is first time buyers, i don't see how this particular device will help market Microsoft programs because I don't think anyone will even want to buy a phone with no internet. the best guess is that they are just trying too find something lucrative to  do wit h Nokia's left overs and make some money on the side but lets give it a try and see how it goes.
DHagar
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DHagar,
User Rank: Light Sabre
8/12/2014 | 12:29:06 PM
Re: Branding
@SReedy, great question.  Two parts to my answer:  number 1, they don't have the expertise that Nokia had initially to understand how to make money on low-cost phones, number 2, as everyone is pointing out, if it tied in with either a Microsoft designed platform, operating system, etc., in staged transition to a long-term strategy, that would make sense.  The $25 phone could be a "module" that fits into whatever new business strategy and platform/systems Microsoft is building. 

I don't see them as a strong service company and just trying to get people "hooked" on Microsoft does not seem like a solid business proposition to me.  I think they are treading water to find out which way to go.
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
8/12/2014 | 12:06:05 PM
Re: branding
DHagar, What kind of new business model are you envisoning here?
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
8/12/2014 | 12:05:15 PM
Re: branding
I think you answered the question of where Microsoft is going yourself! -- "pick up market share, incremental revenue, or it hopes people will graduate to higher-end phones"

This phone itself won't encourage more, but it does follow that if they like it, they might stick with Microsoft when it comes time for a new device. If they are mobile only users, that might be a possibility. 

But, I do agree, it seems strange. Will have to see what other products are in its pipeline for this segment, as well as how they are branded.
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
8/12/2014 | 12:03:24 PM
Re: branding
Yeah, and as Harlow said, it doesn't have an other option to target this segment. I guess the $25 phone at least gets people signing up for a Microsoft account and perhaps someday in the future upgrading. it could pan out well, but right now it just looks like diluting its strategy.
KBode
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KBode,
User Rank: Light Sabre
8/12/2014 | 8:11:55 AM
Re: branding
I suppose -- as with their white space broadband initiatives -- they hope to target lower-income developing areas with cheap tech, get them hooked, and then hit them with ads -- but yes, like you and the others note it never feels like Microsoft's business strategy is entirely coherent. Still seems like a company that has a lot more streamlining to do before it begins to understand how to do one or two things well, instead of seventy things fairly badly.
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