Local exec: our profit margin on 15 Euro Nokia 105 are similar to those we get on our smartphones
Nokia has started selling its new ultra-cheap $20 model 105 in China yesterday. The phone is actually a bit more expensive there, retailing at 162 yuan ($26), but that does include local taxes. The new handset goes under the name Nokia 1050 there.
During the launch, local Nokia execs gave a few interviews about the new phone, and had some interesting things to say.
According to Nokia China Platform and Technology R&D director Jun Wang, the ultra cheap price of 1050 handset is not a problem for Nokia. Despite the low price, the profit margins generated by the sale of each device are comparable to those Nokia gets from its smartphones. And while profits per device in absolute numbers are pretty low, Nokia will make it up in volume. Because of the extremely low price they expect to move huge quantities of Nokia 105 phones around the world.
Furthermore, the shift of many of Shenzen cheap phone makers to Android smartphones actually helps Nokia with their own low cost phones. Since nobody yet can profitably make Android smartphone below $50, competition in ultra cheap market tier has actually decreased. And, according to Nokia exec, there still are 2.7 billion people in the world who do not have a mobile phone, for many whom Nokia 1050 would be a perfect entry device.
Well, we’ll have to wait and see what the actual sales of Nokia 105 will show in a quarter or two. But it seems that those terrible Q1 numbers from Nokia’s mobile phone division may not be as bad as they look at first glance.