Nokia's Low-Priced Phone Targets Emerging Markets

BERLIN — Nokia, struggling to regain traction with its make-or-break line of Windows smartphones, introduced a moderately priced, Internet-ready model on Tuesday targeted at emerging markets around the world.

Nokia said the new smartphone, the Lumia 510, would cost about $199 and be sold initially in India, China, Latin America and some other emerging markets where the penetration of smartphones, unlike those in more mature Western markets, is still very low.

The new smartphone is the eighth in the Lumia line running the Windows operating system. Nokia is hoping the line will reinvigorate sales and is resting much of its future on its success, according to analysts.

Last week, Nokia reported a loss of €969 million, or $1.26 billion, for the third quarter, as sales of Lumia smartphones fell to 2.9 million units from 4 million in the previous quarter.

Nokia, the global smartphone market leader until the arrival of the iPhone from Apple in 2007, is fighting to reassert its relevance in an industry that has become increasingly dominated by models running Apple’s iOS and Google’s Android mobile operating systems.

The newest smartphone is the first step in a major expansion of the Lumia line announced last week to create a full range of alternatives to iOS and Android phones.

“With the Nokia Lumia 510, we continue to meet our commitment to bring Windows Phone to new, lower price points,” said Jo Harlow, executive vice president of Nokia’s smart devices business.

While the company, based in Espoo, Finland, has slipped in the global rankings during its two-year transition to Windows phones, it remains the No.2 maker of cellphones after Samsung. In the second quarter, Nokia sold 84 million cellphones worldwide while Samsung sold 93 million, according to Strategy Analytics, a research firm in Boston.

The Lumia 510 will be sold starting in November in five different colors, red, yellow, cyan, white and black, and will run on version 7.5 of the Microsoft Windows Phone operating system. The touch-screen phone comes with a five-megapixel camera and Microsoft’s scrolling tiles interface.

Nokia is seeking to exploit its sizable presence in emerging markets, where consumers are just beginning to buy Internet-ready smartphones.

Sixteen years after Nokia introduced the world’s first smartphone, the Nokia Communicator, the number of smartphone users worldwide finally topped one billion at the end of September, according to Strategy Analytics. But it will take less than three years, by the end of 2015, to add the second billion, according to the research firm.

Neil Mawston, a Strategy Analytics analyst in Milton Keynes, England, said most of those new buyers were expected to come from markets that Nokia was targeting with the Lumia 510: China, India and other emerging markets in Asia and Latin America.

Nokia’s long history in emerging markets will benefit the Finnish company, Mr. Mawston said, but it must still overcome the reputational damage suffered among consumers over the past two years as it phased out phones based on Nokia’s in-house operating system, Symbian.

He compared Nokia’s challenge to that faced by Samsung, which was struggling before it released the Galaxy S smartphone in March 2010. Sales of the Galaxy smartphone line helped Samsung overtake Nokia this year as the top cellphone maker.

“It will be a double-edged sword for Nokia,” Mr. Mawston said. “But there is definitely potential for Nokia to turn things around. They only need one killer device.”

Convertible bonds planned

Nokia plans to raise €750 million by issuing bonds that can be converted into shares, seeking an inexpensive way to bolster its fragile finances as it battles to win back market share, Reuters reported from Helsinki.

With its cash reserves falling and its credit ratings cut to junk over the past year, analysts have said Nokia needs to show a turnaround in the next several months if it is to survive.

But analysts said Nokia was smart to choose convertible bonds, which normally pay lower interest rates than conventional bonds because they offer investors the chance of making money when they are converted into shares.

“It is a rather cheap way to get extra financing,” said Mikko Ervasti, an analyst with Evli.

Bits Blog: Nokia’s New Lumia Is an AT&T Exclusive

Ángel Franco/The New York Times The Nokia Lumia 920 will be available only at AT&T stores.

Nokia’s new flagship smartphone, the Lumia 920, will go on the market next month, and in the United States it will be available only on AT&T.

This story is familiar: Last time, AT&T was the only American carrier to sell Nokia’s flagship Lumia 900, which didn’t sell well. So why does AT&T keep getting the goods?

To be fair, the iPhone was initially an exclusive for AT&T. That worked out well for Apple because the carrier, in exchange, aggressively promoted the then-revolutionary smartphone in its stores and ad campaigns to give it a big boost. Later, the iPhone became available on Verizon Wireless, Sprint and many other carriers around the globe to become the best-selling smartphone in the world.

For Nokia, however, the odds are stacked against it. The smartphone market is crowded with iPhones and many popular Android phones. And Nokia’s Lumia phones include a less-popular feature: Microsoft’s Windows Phone operating system. Pairing with one carrier won’t give it the same push that Apple got.

Nokia and AT&T have not disclosed a price for the Lumia 920.

Susan Sheehan, a Nokia spokeswoman, said in an interview that the company was glad that AT&T had committed to marketing the Lumia 920 and training retail employees on selling the phone. She hinted that there would be partnerships soon with other carriers but declined to go into detail about what phones the deals would be for.

“We are really excited about the commitment that AT&T is expressing for the 920, and we think that it’s going to be a great launch with them,” she said. “At the same time, there’s a lot of passion and energy from customers across the United States, so we’re looking forward to making other announcements with different operators in the weeks and months to come.”

Nokia very likely gave AT&T the exclusive to get its marketing support, which could make or break the device because people may not have heard of it otherwise, said Jan Dawson, a mobile analyst at Ovum. In addition, the Finnish phone maker has a poor track record for making good phones for CDMA, the technology used by Verizon’s and Sprint’s cell networks, so it’s unlikely those carriers wanted to sell the Lumia 920 at all, Mr. Dawson explained.

With the Lumia 900, Nokia’s previous flagship phone, AT&T backed it with what it called its biggest phone introduction in history, which included giant posters in stores, TV commercials and even a Nicki Minaj concert. After all that, Nokia sold only 600,000 Lumia 900 phones and later cut the price of the smartphone in half.

Apple, on the other hand, recently sold five million  iPhone 5s on the first weekend the model arrived in stores.