* New phones to retail at around $99
* Deliveries to start in fourth quarter 2012
* Nokia losing share in smartphones, mobile business crucial
(Adds analyst's comments, updates share move)
By Tarmo Virki
HELSINKI, Sept 25 Troubled cellphone maker Nokia
unveiled two new affordable touch-screen cellphone
models on Tuesday to defend its mass market position while it
struggles to compete in high-end smartphones.
Basic cellphones have generated most of Nokia's sales,
holding up much better than smartphones, where it has rapidly
lost share to rivals like Samsung and Apple
With a profit margin of over 20 percent, these phones are
still the company's bread and butter even though consumers are
increasingly switching over to smartphones.
"Although they don't get as much attention as its
smartphones, mobile phones play a key part in Nokia's future.
Mobile phones account for the majority of Nokia's revenue today
and they are also vital for building loyalty with potential
smartphone users in the future," said Ovum analyst Nick Dillon.
Nokia said on Tuesday it expects the Nokia Asha 308 and the
Nokia Asha 309 to retail for about $99, excluding taxes and
subsidies, with deliveries to start in the fourth quarter of
Analysts have said offering phones around or under $100 is
crucial for the company if it wants to compete with cheaper
smartphones using Google's Android software.
Nokia still sells almost 1 million basic phones a day but it
has reported operating losses of 3 billion euros ($3.9 billion)
in the last 18 months, all while closing sites and cutting tens
of thousands of jobs.
Analysts say the new phones will buy it time but that its
new Windows smartphones must succeed to secure its turnaround.
"The new Asha devices are essential to defend Nokia from a
raft of low-cost Android alternatives," CCS Insight analyst
Geoff Blaber said.
"The continued strength of the mobile phone business is
testament to Nokia's scale and distribution advantages.
Defending that business is critical if Nokia's smartphone
business is to weather the storm."
The new phones use Nokia's low-end Series 40 software
platform and hence most analysts do not count them as
smartphones, even though Nokia itself sells them as smart
devices in emerging markets.
"The smartphone-feature phone distinction is largely
irrelevant in emerging markets. The Asha devices provide all the
features most users need, including apps, web browsing and
Facebook access," said Blaber.
Nokia has to use its low-end software for the new $100
phones as Windows Phone requirements for hardware are too high
for such cheap phones. Nokia's cheapest Windows Phone retails
for around $200.
Shares in Nokia were up 1.8 percent at 2.14 euros,
outperforming 0.5 percent rise in STOXX 600 European technology
Separately on Tuesday, Nokia said it would cut 725 jobs at
its South Korean factory as part of its global cost savings
programme unveiled in June.
(Editing by Muralikumar Anantharaman, Mike Nesbit and Philippa