Ina Fried

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Nokia’s Mary McDowell Sees a Future for the Feature Phone

Despite ever-cheaper smartphones, Nokia’s Mary McDowell insists there remains a future for the feature phone, provided they can continue to offer more bang for even fewer bucks.

Nokia’s strategy at the low end, McDowell said, is to recognize that the smartphone is coming down in price and to continue to offer its feature phone lineup at prices below that.

“People see the smartphone phenomenon,” McDowell said. “They want apps. They want browser access. There’s just a smaller wallet.”

But smartphones are coming down in price, forcing Nokia to offer cheaper and cheaper products in its feature phone lineup. Last quarter, Nokia’s low-end phone revenue dropped by nearly a third from year-ago levels, with the number of phones shipped also down 24 percent.

McDowell acknowledges that smartphones have eaten away at what was the top end of her business, especially in markets like China.

In the beginning of last year, the company had nine feature phones priced above 100 euros (around $125). By the first quarter of this year, it had just three in that price segment.

Earlier this week, Nokia introduced a pair of new feature phone designs — the first all-touch devices in its Asha lineup. The phones, which range in price from $79 to $115, are designed to offer similar kinds of experiences as the typical smartphone, but at a lower price.

Historically, the overwhelming majority of Nokia’s feature phones have used either numeric keypads or Qwerty keyboards, but McDowell said she expects 40 percent of the feature phone business will be made up of all-touch devices by 2015.

The strategy in the feature phone business is to continue to offer the best phones possible at prices below where the cheapest Android phones can reach.

What McDowell isn’t talking about is what Nokia’s strategy is to compete directly against those low-end smartphones. Historically, Nokia has been a strong player there with Symbian, but that market is drying up quickly.

The company is said to be working on a line of Linux-based phones under the code name Meltemi that could better address the low-end smartphone market. Its cheapest current Windows Phone is the Lumia 610, which sells for around $236.

McDowell steadfastly refused to comment on any efforts beyond Series 40 and the Windows Phone smartphone business that Jo Harlow oversees. However, there is clearly a gap between where Series 40 is headed (lower and lower prices) and where even Windows Phone is capable of reaching over time.

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— Gitesh Pandya of comments on the dreadful opening weekend box office numbers for “The Fifth Estate.”