From DailyTech: As anticipated, Microsoft Corp.'s (MSFT) inheritance got a little bit more complex early this morning, with Nokia Oyj. (HEX:NOK1V) unveiling a series of budget devices based on a forked version of Google Inc.'s (GOOG) Android operating system. The devices -- the Nokia X, XR, and X+ -- imitate the look of the Windows Phone, while using a mix of Nokia, Microsoft, and third-party software.
The budget devices are priced at €89, €99, and €109 respectively (roughly $120, $135, and $150 USD before taxes and subsidies). The X is the base model, while the XR adds more memory and the X+ adds a bigger screen.
Developed under the codename "Normandy", these modified Android smartphones answer a key dilemma of how to insert Windows Phone into low-end devices. Much of Nokia's sales in developing markets such as China, Indonesia, India, and Brazil are still feature phones.
Previously, devices at this price point were branded under the Asha lineup and exclusively used S40 (Series40), a derivative of the Symbian operating system. Asha isn't going anywhere; Nokia is looking to supplement it with and Android "cross-over point", Nokia X. Nokia X will serve as a set of training wheels accustoming buyers on the cusp of mid-tier Windows Phone offerings to get accustomed to the look of and some of the services of the platform via an Android clone.
Former Nokia Chief Executive Stephen Elop -- who is currently Nokia's Executive Vice President, Devices & Services while it awaits completing a $7.2B USD acquisition by Microsoft -- comments:
Lumia continues to be our primary smartphone strategy. Lumia is where we will continue to introduce the greatest innovation.
[However] we see the X family being complementary to (Windows Phone) Lumia at lower price points. Even as you see Lumia push lower and lower, you will see us push lower with Nokia X below that.
There's quite a lot of vendors ... who made the Android decision but couldn't differentiate. We wanted to build with Microsoft a third ecosystem, and that's what we are doing while others fall by the wayside.
The new smartphones come in six of Nokia's iconic colorful body designs.
Nokia Product Marketing Vice President Jussi Nevanlinna said the new approach will allow Nokia to bring popular apps to its budget lineup with greater ease, commenting to Reuters:
Our fans oftentimes tell us 'We love your hardware, we love your products, but we also love our Android apps'. Can you make something happen so the Android apps magically run here?
Roughly 75 percent of Android apps will run without trouble and can simply be resubmitted as is to the new Nokia-branded Android app store. As for the 25 percent that don't, most are currently tied to Google's proprietary APIs -- such as location-services, multi-player gaming services, or internet browsing. Nokia is also working to provide API support to allow easy porting of these apps.
Microsoft's lineup will also continue to consist of Nokia Symbian devices on the low end. Alongside the new Android-based Nokia smartphones, the company also announced a pair of Symbian handsets. The lower end Nokia 220 runs S30 and priced at €29 (~$40 USD) before taxes and subsidies.
Both the Nokia 220 and 230 use compressed browser technology similar to the technology pioneered by Norway's Opera Software ASA (STO:OPERAO). There's a bit of Microsoft touch via the integrated Bing search. Twitter Inc. (TWTR) and Facebook Inc. (FB) apps are preloaded onto each budget device.
As for Nokia, it gains a source of revenue via the HERE location service (which Microsoft pays Nokia for) and app store (which is free, but which revenue shares between app developers and Nokia). Nokia has promised not to build a new phone unit to compete with Microsoft. However, revenue from services on the Nokia X and similar devices -- along from the $5-10 USD in patent licensing fees it pockets for nearly every Android device sold -- could give Nokia a cash pile to reenter the market as a competitor to Microsoft in 2016.
If Nokia launches a pure Android lineup in 2016, it could be a dangerous foe to current Android device makers. As Samsung Electronics Comp., Ltd. (KRX:005935) (KRX:005930) and other smartphone makers are encumbered by an estimated $15-30 USD in patent licensing fees per device, Nokia's devices could quickly match such experienced rivals in profit margins. Nokia owns long-term licensing pacts with Samsung and Apple, Inc. (AAPL) (who make regular payments to Nokia for the patents) -- plus a long-term licensing deal with Microsoft which is thought to be royalty free.
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