Microsoft’s Strategy to sell Phones to Every Price Point Just Became Quite Clear

OK, it’s been a while since we thought much about the full spectrum of phone purchasers. Here in North America it’s the top enders, the Flagships, the Lumia 1020, iPhone x, Galaxy 5, Lumia 1520’s etc that get the attention.  Microsoft has a solid lineup of top end phones with the Lumia 1020, 930 and 1520, however, except for Apple, it’s actually the lower level hardware that pays for things.  The largest selling Windows Phone is the Lumia 520 and its variants, and with the release of its successor, the Lumia 530, which adds significant value over the 520 while maintaining its low price, Windows Phone is really serving the price sensitive market well.  Add in a solid field of step up and mid-range phones, and there’s a Lumia for almost any budget.

"Take THAT high end Fruitphone, and THAT el cheapo android!"

“Take THAT high end Fruitphone, and THAT el cheapo android!”

We touched on this in a recent article, and the release this week of the Lumia 530 in India and other markets has highlighted the push that Microsoft is making for the low priced part of the market. This segment has never been served by Apple, and with a low priced OS, Android has dominated the space, but the recent change in policy at Microsoft, to release its OS free to OEMs, has seen many low price OEMS that previously only offered Android phones commit to Windows phone.  Simply put, the low price market is now in play, and Microsoft is going at it all guns blazing.

When Microsoft ditched the “high end” feature phone ASHA line of Nokia handsets, there were many superficial analyses that suggested Microsoft was ‘abandoning’ the low end of the market (We’re looking at you Tero), but as we explained, this was anything but the case.  Rather, Microsoft was dropping an unprofitable business, and making a push to convert those hundreds of millions of Nokia ASHA users to their low priced Lumias.

But this would still require a step up in their spending as ASHA’s can be found for as little as ~$50-60.  Could Microsoft make the case for cash-limited customers to step up?  It seems they can.

101910359-Tm9raWEtMTMwX1dISVRFX0ZJTkFM-1000x1000_530x298Yesterday the phone world was abuzz with the news that Microsoft was releasing a $25 phone for the masses.  It’s no Lumia, or even an ASHA of course, but you can do a lot with it, including watching videos and streaming music.  Simply put, for $25, it’s an insanely good deal and it will keep the large ‘pre-smartphone’ worldwide market loyal to Nokia for some time, while making a boatload of cash for Microsoft at the same time.  And make no mistake, it’s part of a considered and cohesive strategy to sell to the entire economic spectrum of phone buyers.

Yesterday saw Amazon selling the hugely popular Lumia 520 for only $39.99, off-contract, for AT&T in the US.  That’s an insane price for any smartphone off contract, and is less than half the normal off contract price for this phone.  Now clearly they are selling off inventory in advance of the US release of the new 530, but it makes the point that it is possible to sell a Lumia for an ASHA price.  Imagine what MS could do with a phone designed to sell at this price point from the get go.  I imagine they are thinking about it right now.

"Me Likey Me Selfie"

“Me Likey Me Selfie”

Meanwhile, Microsoft is not letting up on the midrange of the market either.  The much talked bout “Selfie” phone and the “top of the Midrange” new member of the Lumia 800 family, the first of the line to sport a Preview camera, clearly represents a push to sell to price-conscious Consumers.  This segment of the market is fertile ground to recruit “Switchers”, customers who already were using a smartphone on another platform but are not deeply wedded to it.

We already know how successfully Windows Phone has been at picking up former BlackBerry owners. When their contracts are up, midrange customers are likely to look around a bit for another experience, and as shown in a recent post by Nokia when they look at Windows Phone they often like what they see.

"Why Fight When You Can Switch"

“Why Fight When You Can Switch”

When you add it all up, there are lots of reasons for new, and returning Nokia customers to stick with, or switch to, a Lumia.  Even if the price jump is too large for them at the moment, they can still get a great Nokia experience while they save for the step up they are hankering for.  That’s not an opportunity to engage and retain price-sensitive customers that’s available to Android or Apple.  Only Microsoft can offer the experience, from one end of the market to the other.

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