Nokia Buys Feature Phone Platform Maker, Raises Questions

Microsoft's special Windows Phone partner Nokia revealed the purchase of the maker of a feature phone platform this past week in an effort to bolster its low-end phone offerings. But the transaction has raised some unnecessary questions about Nokia's commitment to Windows Phone, with some believing that the company had previously intended to bring Windows Phone handsets to the low end of the market.

That is not the case.

Nokia's plan always involved separate platforms for smartphones and feature phones, the latter of which are more entry-level devices aimed at the billions of people worldwide who want more phone capabilities but can't afford the expensive monthly data fees that accompany smartphones. At an October 2011 event, Nokia unveiled its offerings for both markets, with the new Lumia line of Windows Phone handsets aimed at smartphone buyers and the new Asha line targeting the feature-phone market.

But now Nokia is purchasing Smarterphone, a Norway-based feature-phone OS and platform, previously called Mimiria. This purchase—which was actually completed almost two months ago and only announced this past week—should be seen as an embodiment of Nokia's previously stated effort to move past the dated Symbian OS. Regardless, it has no effect at all on Nokia's Windows Phone plans.

Although the lines are blurring between smartphones and feature phones and will continue to do so, Windows Phone is today aimed at the high end of the overall cell phone market, and as a smartphone platform it provides a first-rate application store, extensibility capabilities, pervasive Internet connectivity, and other features that are only beginning to creep into feature phones. It's more likely that feature phones will eat into so-called dumb-phone sales, however, than smartphones. Thus, they're not so much competition as they are complementary, especially for a company like Nokia that sells both.

Indeed, at its October 2011 Nokia World event, Nokia executives spoke of the company's plan for "the next billion" customers. And a big part of that plan—short term, probably the biggest part—involves feature phones, not smartphones. These devices will simply sell in bigger volumes because they're less expensive. In fact, it's likely that Nokia will continue to sell Symbian devices, creating a three-tiered pricing system for its products, with the Smarterphone products occupying the very bottom.
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