The Finnish cellphone maker, which is weeks away from completing the sale of its handset division to Microsoft for $7.2 billion, on Monday announced its first phone based on Google’s Android operating system.
The move to use the hugely popular operating system of one of its main rivals, and a main competitor of Microsoft’s, aims to jump-start Nokia’s flagging handset sales, especially in emerging markets. The new phone will offer users far more applications than they can access with phones running on Microsoft’s Windows Phone operating system.
Nokia’s chief executive Stephen Elop, who will join Microsoft when the acquisition closes, said the new Android-based phones would drive users to Microsoft services like email and cloud storage.
The first, low-cost version will be available immediately in certain developing economies, while two other versions with more capabilities will ship from the second quarter of the year.The devices, which will cost between 89 euros to €109, or $122-$150, will be targeted at customers in emerging markets, and use Nokia’s own services like maps instead of those offered by Google in the standard Android software.
“It introduces new customers around the world to Microsoft’s services,” Mr. Elop said at a news conference. “There’s a real opportunity in growth markets to take advantage of existing app ecosystems.”
The decision, however, could prove short-lived.
The day before Nokia unveiled the new phone at a packed press conference at the Mobile World Congress conference in Barcelona, Joe Belfiore, who runs the Microsoft Windows Phone division, said of Nokia: “There are some things they do that we are excited about, and other things that we are not so excited about.”
While Nokia remains an independent company until the deal with Microsoft closes by the end of the quarter, it is unclear what the American company will do with Nokia’s new Android-based phones when it completes the acquisition.
In a blog post on Monday, Microsoft said that it welcomed the inclusion of many of its services like Skype and Outlook on Nokia’s new phone, but added: ”Our primary smartphone strategy remains Windows Phone, and our core device platform for developers is the Windows platform.”
Like Nokia and other cellphone makers, Microsoft has focused much of its attention on fast-growing developing economies that are expected to be the main driver for growth in the industry. Nokia has suffered years of declining sales for its smartphones, as the likes of Apple and Samsung have ousted the Finnish company as the world’s largest maker of high-end phones.
By targeting the phones primarily at emerging markets, Nokia said the devices – under the Nokia X brand – would help educate new customers about the company’s existing offerings and connections to Microsoft. The price of the phone is between the company’s high-end Lumia smartphones and its low-cost Asha devices. The aim is to attract consumers in countries like India and Brazil who are looking to buy their first smartphone to access applications such as Facebook and Skype, he added.
The Nokia chief executive also defended the decision he took in 2011 to scrap the company’s own operating systems to focus on building a relationship with Microsoft and its Windows Phone.
Analysts say the decision tied Nokia to Microsoft just when the rival Android operating system was starting to gain traction with users. Now, Android powers roughly 78 percent of worldwide smartphones, while Windows Phone hold less than 4 percent of the market, according to the technology research firm Gartner.
“Our Windows Phone decision was to create a third ecosystem with Microsoft,” Mr. Elop said at the press conference on Monday.
While the Android operating system will power Nokia’s new phone, the Finnish cellphone maker has adjusted the software to include its own services and design. That includes using Nokia’s Here mapping software, not Google Maps, and creating a tiled effect on the device’s home screen that mimics the company’s other phones.
Nokia said consumers would have access to Android app stores, including its own and those from rivals like the Russian search engine Yandex. Mr. Elop added, however, that some Android apps that run on Google’s services might not work smoothly with Nokia’s new phones.
Analysts said Nokia’s Android-based phone could offer consumers, particularly in emerging markets, greater choice compared to the growing number of phones that rely on Google’s version of Android. Many cellphone makers have been struggling to profit from growing demand for smartphones, as competition among manufacturers has kept profit margins razor thin.
“It definitely shakes up an industry that has become fixated on incremental advances,” said Tony Cripps, principal analyst at the technology research firm Ovum. “Nokia’s strength in developing markets will be a major catalyst for sales.”
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