The Nokia Lumia 820 starts at $49.99 with a two-year wireless contract from AT&T while the flagship Lumia 920 phones start at $99.99 with the same contract terms.
That’s much more aggressive than what I would have thought. Seems they are going straight for the low-end market.
Jim,
They need market share, so they have no choice but to price aggressively. I’m not sure that it’s a case of targeting the low-end of the market, rather making sure that price is not a barrier to adoption.
That might mean that they end up with more low-end adoption – but so be it – they might just end up with a bit more of the high and middle end users that they really need.
(Assuming that low-end users don’t use smartphones in a smart way as opposed to middle and high end that spend more easily on digital services such as apps.)
This could backfire on them. Lots of people are learning the difference between “cheap” and “premium”, and without a premium product they may have difficulty getting a foothold.
I would love to see what the margins are. I can’t believe this pricing model is going to help Nokia’s financial situation.
There are basically no margins there. As far as I can understand, currently Nokia wants to achieve huge volumes of WP smartphone sales, to get itself some market position and economies of scale.
They could have pulled off $199 if it wasn’t ridiculously thick and heavy by today’s standards.
I disagree. To me it’s a sign of their realisation of the bad position they are in. I bet they’re trying to get e foothold in the market using a penetration pricing strategy.
I’m not saying that it’s a particular good way to do it and Nokia my shoot itself in the foot with it, but there’s not much they can do.
I agree with your statement. They need market share, price cannot be an additional barrier for them.
If they can show they are gaining market share, I bet they can find the money to finance themselves. I still think Microsoft’s desktop market share is an advantage for them in a post windows 7 world.
AT&T is cutting them a deal, the carriers want to live in a world with 3 dominant operating systems, with 3 compelling choices, customers might upgrade their cell phones more.
What’s all that smoke going up? Oh, it’s Nokia profits!