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What Does Nokia do When Cheap Android Phones Arrive?

Nokia (s nok) today introduced the new C3 Touch and Type handset, a relatively inexpensive S40 handset offering a touchscreen display and connectivity features often relegated to smartphones. Alcatel last week announced an even cheaper touchscreen handset with similar features, but the device runs the Google Android (s goog) 2.1 operating system. With Symbian^3 and MeeGo, Nokia is clearly shunning the idea of going with Android for its future phones, but what happens when competing Android devices challenge Nokia’s dominance of the feature phone market?

It’s easy to say that comparing a top-notch hardware maker like Nokia to a budget brand like Alcatel (s ALU) isn’t comparing apples to apples. From the standpoint of overall quality and expertise of design, Nokia wins hands down, and the new C3 has a premium quality to it. However, I wonder if it will matter when inexpensive, “good enough” hardware running the Android operating system comes to market, just as Alcatel’s OT-980 will next month for €99 ($129 U.S.) on a pay as you go contract. By comparison, the impressive C3 will cost €145 in the fourth quarter of 2010. Both feature 3G and Wi-Fi connectivity, memory card slots and touch displays.

The point here isn’t to say that the OT-980 will outsell the new C3; it certainly won’t, as Nokia’s global presence is sure to get the C3 in the hands of people all around the world. But the OT-980 is just one infantry soldier in the Android army onslaught that’s mustering for battle.

The number of Android devices sold by 2014 is expected to rival that of Nokia’s Symbian platform according to Gartner (s IT), and while the pundits and analysts can often be wrong, the consumer won’t care. The general public will see a cheaper outlay for comparable hardware, smartphone-like connectivity, and an app store. I’m still here at Nokia World feeling more positive about the overall strategy that Nokia has put forth, but the consumer side of me is concerned. Am I just being paranoid, or should Nokia worry about their longtime dominance in the lower end of the market?

Related research on GigaOM Pro (sub req’d):

Mobile OSes Are No Longer Just About Mobile

24 Responses to “What Does Nokia do When Cheap Android Phones Arrive?”

  1. Kevin,

    You should get both phones in a do a comparison.

    I know people with cheap Android phones and they’ve only got bad things to say about them. If anything I think they do the Android brand more harm than good.

  2. I own a Samsung Spica, one of the cheapest Androids you can buy in the EU. It has an 800 Mhz processor, but its slow and laggy as hell, and the battery goes quick. I can’t even imagine what kind of experience a $100 android would be.

  3. What about BOM?

    I don’t understand this…
    – ROM: C3-01 has 128 MB, OT-980 has 256 MB (double)
    – RAM: C3-01 has 64 MB, OT-980 has 192 MB (triple)
    – Retail price: C3-01 €145, OT-980 €99

    I guess one is more profitable than the other.

    • Shaun Murray

      There’s this fantastic off the cuff quote from Nokia’s Anssi Vanjoki in the Financial Times where he likened rival Android manufacturers to Finnish boys who “pee in their pants for warmth during the cold winter”.

      “handset makers using Android could have low operating margins”, and that “they were likely to enjoy only temporary relief with Google’s operating system”. (behind the New International paywall btw)

  4. I think for a few years it will be ok. The market as a whole is growing, there is enough pie to go around for now for both Android and Symbian (and even S40). After that, I think it is difficult to predict anything anyway :)

  5. Let’s remember other factors important to people buying cheap phones – battery life …
    Android power inefficiency disqualfies it from low price segment until extra power efficient chipsets arrive or huge battery is slapped in.

  6. Shaun Murray

    The C3-01 is actually higher spec than the very low rent Alcatel. C3-01 has more metal and it’s about half the size of the plastic, chunky Alcatel which weighs 50g more.

    I think these are aimed at different segments really. C3-01 at people that still just want a reliable phone. Alcatel at cheapskate Android users though you’d have to question anyones sanity in going for a slow 320×240 resistive screen Android phone that is too slow to run Froyo.

    Experience wise, the Alcatel is going to really put people off Android, which can only be good for Nokia. Maybe Nokia paid Alcatel to produce such rubbish? :)

    You also have to wonder why Nokia isn’t pushing Symbian lower into handsets like the C3-01 and the X3 equivalent. They’re surely capable of running S^1 and maybe S^3.

  7. Kevin,

    I agree with you, consumers wont care. For instance, I have owned more than 7 high end nokias smarts in past, but now I have diverted my mind towards other manufacturers. I use 2 phones and both are not nokia, though I have 3 working nokias stitting idle in the shelves. I have gone with one cheaper Samsung and another entertaining and reliable Sony Ericsson. I’m waiting for Microsoft to come up, but wont let Android down for sure.

  8. dissertations5

    I guess Nokia just needs to cooperate with android. Both sides would win. Still Nokia is a brand known for reliability, at least for me. But I would be more interested in buying a new nokia phone if it is stuffed with android:)

  9. The same problem exists for Samsung, HTC and LG.

    What happens when cheap generic Chinese Android handsets flood the market? The Chinese models may be quite good.

    The hardware becomes a commodity, and all the manufacturers are headed on a downward price spiral.

    Nokia, and even the venerable iPhone are wilting under the force of Android. The iconic iPhone’s market share is going to start heading backwards.

    Given that, imagine how Microsoft’s unfinished, hapless and half-backed Windows Phone 7 is going to go. It doesn’t even stand a chance.

    • By you theory, Dell, HP, Acer must all be dead, but that is not true, with scale, you can reduce costs and keep profits as well as market share. There is also something called a brand, how many Chinese made PCs have you bought till now?

  10. I think and hope that Nokia can cope with the competition from Android. This would be good for the consumer because it would not be not healthy that Android would become the Microsoft of mobile world controlling what and how add revenues are split and pushing heavily Google’s own interests and applications.

  11. sukhoi.sukhoi

    “But the OT-980 is just one infantry soldier in the Android army onslaught that’s mustering for battle.”

    Do you really thing C3 will be last one. C3 is all metal legacy of one best selling feature phone in recent history i.e. 6300.

    I guessing Nokia will have many sub-100euro phone (without subsidies) in the pipeline to counter that army and i guess with their scale for feature phone no one match them in terms of portfolio or prices.

    This article reminds me of some american movies…….I think it was 13 days about Cuba and stuff – when Kennedy ask and a US general say Russians will do nothing even if we bombard them… come do you really thing so…?? in the movie Kennedy also didn’t think so…

    Just my 2 cents on the topic.

  12. Android’s going to own the low-end of the market, especially with the price of present-gen ARM chipsets dropping so rapidly. Here’s a knockoff BlackBerry I saw recently in Indonesia for $100. In 12 months time, devices like this are going to run Android, and that’s going to have a tremendous impact on Nokia and their marketshare. Also, it’s a little pathetic to see Nokia shipping an S40 device at a significant premium to a device running the much-more-capable Android.

  13. Corrections then comment:

    The C3 runs S40 – not Symbian. Is essentially a smartphone “acting” featurephone. It’s Java-based, designed not for the “application boom” market that smartphones have going on, but for the services-enabled markets which are more into the hands of many of the non-NAM carriers.

    Android’s run into the lower end competes with not just S40 and Brew (the two dominant platforms in the sub-$100USD before subsidy market, but with Symbian’s push into that market as well. The question, and a good one, is not so much if Nokia can handle a run against S40 and Symbian by Android, but whether the Symbian Foundation and its licensees will be able to respond accordingly. And judging by the work that we’ve seen with Symbian positioning (the 5230 is priced at $150USD w/o subsidy), it will be a nice fight.

    The correction wouldn’t therefore be how does Nokia (manufacturer and platform supporter) respond to Andorid (platform), but how does Symbian respond, and what’s the worth of S40 and Brew in light of these since both of these incumbents aren’t just in this segment, but huge as all get out (S40 alone is the largest mobile platform by far when all mobile platforms are considered).

    So yes, smaller more adept manufacturers can adapt Android to their chipsets very quickly; but that’s only part of the equsaion – remember, even in the non-US-viewpooint of mobile, carriers still have tremendous sway towards what folks purchase. Especially on low margin devices that Nokia, Samsung, and LG excel in ;)

    • Yeah. Right. An article with no numbers on sales volumes means they’re doomed.

      Meanwhile, here’s some reality for you:

      Android holds 7% of the Chinese market and will grow. Nokia hold 75%. This will shrink to about 40-50% in line with the rest of the world so no, not doomed.

      I’d also point out that the Android budget handsets released in the UK – the Tattoo, Pulse and Liquid – failed to make any significant impact on the competing Nokia handsets (the 5xxx) series.

    • I believe we forget that a feature phone buyer does not necessarily care whats inside i.e. which OS. at $100 price point a consumer wants a phone thats durable, withstands harsh environment and makes call/plays music/browse internet. So no, android at lower price points dont matter unless a big brand like Samsung adopts Android 100%.