Ina Fried

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Microsoft, Nokia Target Low End in Effort to Crack Tough U.S. Market

For the most part, Windows Phone has found itself targeting the premium segment of the U.S. smartphone market.

Lumia 521

That’s especially tough in a country like the U.S., where big phone subsidies mean that one has to compete against free iPhone 4 and Android devices. Even the top-end devices generally sell for under $200 with a contract.

However, with T-Mobile’s recent move away from phone subsidies, Nokia and Microsoft are pouncing on an opportunity to offer a new smartphone at a noticeably lower price.

The Lumia 521, which runs on T-Mobile’s network, sells for around $150 unsubsidized. That’s hundreds less than many other smartphones. It goes on sale at Walmart and Microsoft stores next week, after selling out during a run on HSN.

Speaking at our D: Dive Into Mobile conference earlier this month, Windows Phone boss Terry Myerson noted the difficulty that Microsoft and its partners have had in subsidized markets such as the U.S.

“If every phone is $200, we are the challenger at the same price,” Myerson said. “That’s a playing field that is a little harder.”

T-Mobile’s move away from subsidies could create more room for Microsoft — and for others targeting the low end of the market.

The Lumia 521 is a T-Mobile customized version of a low-end model that Nokia introduced back in February.

Nokia CEO Stephen Elop said that Windows Phone needs to continue to come in less-expensive phones in order to effectively compete against Android.

“There’s definitely an opportunity to push to even lower price points,” he said.

Microsoft is also taking a harder line in its advertising, debuting an ad that goes directly after Android and the iPhone.

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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus