Nokia the world's second largest mobile phone supplier unveiled a new family of smartphones at Mobile World Congress (MWC) 2014, the Nokia X series based on Android Open Source Project (AOSP) for the first time. In other words Nokia has circumvented the Google using its Android platform by replacing the (GMS) Google mobile services & APIs with essentially Nokia APIs and Nokia-Microsoft services.  Nokia X series is an important step for the Finnish vendor to rebuild its position in the very important high-volume "affordable" sub-$100 wholesale price-band smartphone segment.

Nokia X Series : X, X+. XL

Image Credit: Nokia

 According to Counterpoint Research's Market Outlook service while overall smartphone growth will slow down in 2014 compared to previous years but the sub-$100 wholesale smartphone segment will grow above-average to more than 350+ million units in 2014. Also, majority of the growth in this segment will be driven by Android based smartphones considering the low-cost advantages.

Hence, for scale  players like Nokia competing in this segment with Asha devices is not enough and thus need the Windows Phone based Lumia series to trickle down in this price-range quickly. However, pushing Windows Phone down the price-tier might be difficult in near-to mid-term as  building a broader Lumia portfolio with low BOM costs is difficult to achieve mostly due to Microsoft's tightly controlled restrictions to maintain the optimal User Experience. Hence, Nokia X family fills this big and important  gap left between Lumia and Asha range brilliantly by addressing multiple challenges ( & that too immediately) which have been restricting Nokia from growing in this high-volume segment:

• Achieving lower BOM costs
• Multi-SIM support (key feature for emerging markets which are mostly driving this segment)
• Access to nearly a million Android apps
• Taking Microsoft services (e.g. Outlook, OneDrive, Skype, Bing etc.) & signature Nokia experiences (e.g. Nokia Camera, Music, Here maps, etc.) to mass-market

With Nokia X series, Nokia not only  achieves the above goals but also instills confidence across distribution channels, consumers offering multiple choices from Asha to X to Lumia. Nokia should be able to easily differentiate from long tail of Android vendors  in these prepaid-centric and unsubsidized high-growth markets primarily due to the following factors:

• Strong Brand awareness
• Extensive distribution and service networks
• Striking, colorful Lumia design language and industry leading build quality
• Curated Nokia store experience (of Android Apps)
• Signature Nokia & Microsoft apps, experiences and cloud services
• Multiple device SKUs :  X,X+ & XL (phablet)
• Clean, simplified UI and Unified "Fastlane" notification center: easier for existing Asha users to upgrade
• Strong commitment to developers and building own suite of high-value apps & services

In light of above positives, if Nokia can execute their go-to-market strategy well with crystal clear messaging to the channels and consumers on how the entire Nokia portfolio makes sense offering consistent design, experience, high value and multiple choices offered and that too in a very "sweet spot" price-band should help the Finnish vendor propel back into the top 5 global smartphone rankings fairly quickly and improve the top-line and bottom-line in long-term.  India, China, South East Asia and Latin America will be the key markets for the Nokia X family.

From Microsoft's perspective Nokia X  series should be one of their vehicles to drive their horizontal services strategy bringing it to the next hundreds of millions of consumers which wouldn't have been possible (immediately) with Windows Phone ecosystem or partner expansion alone.

In terms of some caveats, Nokia in atleast a year’s time will need to push the Asha platform down to sub-$30 wholesale ASP price-points to accommodate more of X series phone from $75-$150 retail price bands..

Secondly, since this is a global version of Android fork, Nokia will have to reproduce a special “Chinese” fork which will cater with special Chinese apps and services to compete well with likes of Xiaomi or Huawei. Additionally, we see with this strategy Nokia will have to maintain or drive multiple platforms (Windows Phone, AOSP, Asha, S40/30)  in their portfolio similar to Samsung (Android, Windows Phone, Tizen, proprietary)  which could become resource intensive.

However, it's always positive for any company to see their own products cannibalize their own products rather than competitor products cannibalize their products. So even if Asha, X or Lumia models overlap in terms of pricing for short-term it offers multiple choices to consumers and more opportunities for Nokia to acquire more consumers and increase its marketshare.

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