While we in the United States tend to think of Android in terms of the Galaxy S III and HTC One X superphones, the battle being fought in several other countries is over the low-end devices. In China, arguably the biggest mobile battleground in the world, low-end Android devices rule the roost, propelling Android to a 70% market share in the country. Nokia and Microsoft have made it very clear that they want to compete in that market.
During a call discussing Nokia’s overall strategy shift, which includes selling off its luxury Vertu line and axing 10,000 employees and a handful of senior executives, Nokia indicated that Microsoft is providing “specific support” to Nokia to develop ultra-low-cost devices aimed at China and emerging markets. The goal is to come up with device even cheaper than the Lumia 610, which combined with Windows Phone 8 could take off in these locales.
We don’t exactly know what “specific support” means, but it’s pretty safe to guess that Microsoft is throwing significant amounts of money at Nokia to buffer the bottom line. When developing devices at such a low-cost, it’s customary to either cut corners in the development process or take a hit to the bottom line. As Microsoft is really the only one to benefit from Nokia developing ultra-cheap devices, it makes sense that Microsoft would offer to subsidize Nokia’s losses.
We should learn more about Windows Phone 8 in just under a week, and perhaps we’ll also learn more details of Microsoft and Nokia’s push into China and other emerging markets at that time.