Widespread adoption of Microsoft phones has not taken place. Windows Phone’s market share is hovering around 3 percent. But there is a sector of the mobile market that has not been overrun with Android and Apple devices, or any smartphones for that matter — developing nations where consumers can’t afford a smartphone. These are the segments Microsoft is targeting with its Nokia 215, a $29 feature phone with Internet access that will be released in areas of Europe, Africa, and Asia.
Microsoft now has an Internet phone that could become widespread in countries with high growth potential. But the real question may not be how well the 215 sells, but whether its users will become future Microsoft smartphone customers.
The phone, announced Monday, will cater to consumers who live in countries with burgeoning economies and early-stage wireless telecommunication systems. Its price point is a perk, and the 215’s battery life is outstanding, lasting 29 days on standby, which is critical in developing nations without reliable electricity. And, though stripped-down for affordability and enhanced battery life, the phone’s features aren’t meager. It has Microsoft’s Opera Mini browser, Bing search, and users can access Facebook and Twitter.
“With our ultra-affordable mobile phones and digital services, we see an inspiring opportunity to connect the next billion people to the Internet for the first time,” Jo Harlow, vice president of Microsoft’s devices division, said in a statement.
Global smartphone sales have surpassed those of feature phones, but there is still a huge market for basic, low-cost phones. Most consumers in regions such as sub-Saharan Africa and the Middle East can’t afford data plans, International Data Corporation mobile-phone analyst Ramon Llamas says, so smartphones aren’t yet a viable option for communication. Thus, the 215 will help Microsoft make inroads in these areas, which have the best potential for growth as the U.S. market matures.
Success in the feature-phone market can have smartphone implications. Consumers in developing nations first develop a taste for feature phones, but as national incomes rise, that desire for feature phones morphs to smartphone demand. India’s mobile phone market, for example, grew 9 percent in 2014, but smartphone sales rose at a blistering 82 percent clip.
So just as important as building a great feature phone is building one that will foster demand in an entry-level smartphone. In November, Microsoft released the Lumia 535, a smartphone that retails for about $130, in India. It, like the 215, is a relatively affordable phone that targets developing-nation users, meaning the 215 and 535 could function as adjacent rungs on Microsoft’s mobile-phone ladder.
“The Nokia 215 is perfect for people looking for their first mobile device, or those wanting to upgrade to enjoy affordable digital and social media services,” Harlow said, and those upgrades are what Microsoft is banking on. If the 215 takes hold in developing markets, consumers are more likely to purchase the 535 when they decide to upgrade to a smartphone.
But Llamas thinks the gap between 215 and 535 features is too wide. He says Web browsing and social media aren’t enough to overcome the two models’ different user interfaces. The 215 is a voice-centered device with physical buttons and a small screen, while the 535 is a traditional multimedia, touch-screen smartphone. “At the very least, (Microsoft) will establish a bulkhead in terms of brand recognition,” Llamas says. “But as far as mapping (consumers) toward smartphones, there’s more of a challenge there.”
Brand recognition is no cinch, either. The 535 was the first Lumia smartphone that didn’t bear the Nokia name, but Microsoft went back to Nokia branding with the 215. (Microsoft retained the right to use the Nokia brand for 10 years after it purchased the Finnish company’s phone division.)
Nevertheless, the 215 could be quite profitable — feature phones are far less expensive than smartphones to produce, and Microsoft won’t have to compete with Apple or Android in the feature-phone market. But if the 215 isn’t a stepping stone to the 535, its commercial viability could be short-lived.