Nokia recently launched three new devices – the Asha Touch 311, 306, and 305 – as it continues to execute on its “connecting the next billion” strategy. With larger three-inch displays and a new design, the major selling point of the devices is the touch user interface that brings a smartphone-like user experience at an affordable price point. The Asha Touch devices will be available in later this year across several regions.
The Asha Touch range looks compelling, and will fill gaps in Nokia’s device portfolio. It also validates the emerging touchscreen feature phone segment, which is becoming increasingly pervasive in emerging markets. Although it has been late to this segment, Nokia can use its scale, distribution and after-sales support networks to offer a compelling proposition. However, we believe that the Asha Touch range may struggle to gain traction against similar feature phones and the increasing number of affordable smartphone options.
The key features of these new models are the touch UI with swipe functionality and the integrated Nokia Browser. The devices are a significant improvement on earlier Asha models, and will offer a compelling user experience. The Asha Touch 311 boasts a capacitive touchscreen, 3G HSPA and WLAN connectivity, and is powered by a 1 GHz processor. The Asha Touch 305 incorporates Nokia’s Easy Swap dual-SIM feature, while the Asha Touch 306 uses a single SIM, but has affordable Wi-Fi connectivity. Both the 305 and 306 have resistive touchscreens. All three models come with 40 free games from Electronic Arts, and the 311 comes with 15 levels of Angry Birds preinstalled. The devices will also feature social integration with Facebook, Twitter and WhatsApp. The Nokia Browser, with its cloud-accelerated browser technology, is featured prominently on all of the Asha Touch devices. This continues Nokia’s departure from Opera Mini, although the browser is still available in the Nokia Store.
Asha Touch devices are priced attractively, are sure to receive operator support and Nokia will be able to take advantage of its significant distribution, retail and after-sales support assets. Some of Nokia’s innovations, such as Easy Swap and the Nokia Browser, will also be attractive compared to other vendors’ offerings, and the user experience is expected to be superior to that offered by entry-level Android smartphones. These benefits could prove to be a significant advantage for Nokia over other feature phones or entry-level Android smartphones from vendors such as Samsung, Huawei or ZTE.
However, despite its advantages, Nokia may struggle to gain traction with the Asha Touch range. There are currently a multitude of device choices for emerging market consumers, and they are increasingly showing a preference for brands such as Samsung or affordable Android smartphones. In rural areas, affordability is the primary driver of adoption, which is pushing consumers further away from Nokia. Nokia’s channel strength in rural areas is also not as strong, and it has been outflanked by Chinese “shanzhai” (imitation or pirated handsets) devices in a number of markets. Another factor is the declining fortunes of Research In Motion and the impact that this will have on Nokia’s sales. At current prices, emerging market consumers could pay $20 more to get a BlackBerry Curve, which has considerable brand appeal and stickiness, particularly among the youth segment that Asha Touch is likely to target. With reportedly high inventory levels on hand, we expect RIM to aggressively price their older Curve models. This is sure to affect the prospects for the Asha Touch range.
The device landscape in emerging markets is increasingly diverse and complex, and the days of clear delineations between feature phones and smartphones are gone. The prevalence of prepaid connections and lack of device subsidies in emerging markets means that consumers have to purchase a device in full. As a result, emerging market consumers will typically choose devices that are affordable and offer an end-to-end user experience that includes a superior UI and provides access to apps and content.
With affordable smartphones the new focus among device vendors that are eager to expand their influence and market share, the Asha Touch range fills an important gap in the market. For consumers that are still unable to afford an entry-level smartphone, the touch feature phone represents a stepping stone to a full smartphone experience. Vendors such as Nokia are working feverishly to blur the lines between the two device categories. Nokia has looked to “smarten” up its feature phone line-up, while vendors such as Samsung are filling gaps in their portfolios with new feature phones. These new devices form the relatively new segment of touch feature phones, and offer significantly enhanced features and UI compared to traditional feature phones.
Nokia’s Asha Touch 305 and 306 will cost $85 and $93 respectively, which positions them to compete directly with Samsung’s Champ and Star touch feature phone line-up in emerging markets. The Asha Touch 311 will retail for $121, which will put it into competition with Samsung’s Galaxy Y range. The Asha Touch 311 will also compete with entry-level Android smartphones from emerging market vendors, which have already fallen below $100.
