The Western smartphone market is maturing — smartphones are now near-ubiquitous tools, and the rate of new users is slowing. Gaining presence in a mature market is challenging, and American consumers have made clear they prefer iPhones and Android devices over Windows phones.
Where the market isn’t settled is in developing nations, and that’s where Microsoft continues to add mobile emphasis. On Tuesday, it rolled out two new Lumia smartphones — the 435 and 532 — that, together with previous phone releases, lay down a path for developing-nation consumers to more easily accept and upgrade within the Microsoft phone family.
“They’re going where the growth is,” International Data Corp. mobile analyst Ramon Llamas says of Microsoft. “Markets like North America and Western Europe — we’re already at subscriber saturation. Most of the mobile phone users in these regions already have smartphones. What they’re trying to do is reach out to those first-time smartphone users.”
Microsoft’s vice president of phones, Jo Harlow, said in a statement that the goal of the Lumia line was to bring “devices to as many people and price points as possible.” The newest Lumias are the cheapest yet — the 435 will retail for about $80; the 532 for $95 — and will be released in February in select European, Asian, and African markets.
The rollout follows a precedent set by the Nokia 215 and the Lumia 535, value-oriented phones Microsoft released in January and November, respectively. With the two latest phones, Microsoft has established a better pathway for customers to upgrade from the $30 215 feature phone to the $130 535. By comparison, Google’s low-cost Android One phones cost around $105.
The 215 feature phone certainly met the low-price criteria in developing markets, but Llamas says it was’t a phone that could successfully transition customers to Lumia smartphones because the only key Microsoft feature it held was the Bing search engine. The new Lumias, on the other hand, are well-stocked smartphones with Windows Phone’s defining features: One Drive, Skype, Office, and Cortana.
“Users in emerging markets may be financially challenged, but they’re definitely not ignorant to some of the experiences they can have (in a smartphone),” Llamas says. “The second-hand smartphone market is absolutely thriving, but if you have the choice to get a new device … at the price point that Microsoft is willing to bring it down at, it’s worthy of consideration.”
The competition for smartphone users in developing nations is a heated one. Android, the operating system in 84 percent of worldwide smartphones according to the most recent data, has been an early leader in affordable phones; its U.S. market share is 52 percent. Windows Phone’s global market share is 3 percent, and there’s far more room for growth in developing markets than in Western nations. German research firm GfK predicts nations such as India, Indonesia, South Africa, and Pakistan will see the largest smartphone market growth by value in 2015. Not in GfK’s top 10 list: Japan, Germany, the United Kingdom, or the U.S.
“Sales of low-end smartphones are going to continue to grow in the next few years,” says Gartner mobile analyst Bill Menezes. “The opportunity for higher-priced phones continues to diminish, and most of the growth is going to come from … low-end, primarily Android, phones in emerging markets.
“In that context, we see Windows Phone growing in terms of the overall base, but clearly a lot of that’s going to come from undeveloped markets instead of some of the more mature markets.”
Just because Microsoft’s trotting out low-cost phones in emerging markets doesn’t mean they won’t eventually trickle over to the U.S. Menezes says as wireless carriers ditch two-year contracts and customers have to pay the full price of phones, low- and mid-level smartphones will likely gain traction. Thus, the international fate of the Lumia line could be a harbinger of Microsoft’s future gains or losses in the domestic smartphone market.