Are you sure?

Nokia cuts phone prices as market growth returns

Nokia cut phone prices across its portfolio in late January, putting its cheapest smartphones on a collision course with mid-range phones from rivals and Sony Ericsson.

Nokia said price changes were part of its normal, ongoing business. The world's top cellphone maker usually cuts prices across its portfolio a few times each year.

Several industry sources told Reuters Nokia had cut prices by up to 10%.

After the price cut Nokia's cheapest smartphone model, the 5230, retails for around €170 in Finland. The model's wholesale price is now below €120.

Demand for cheaper smartphones has helped the segment grow despite the recession, defying the broader, weaker industry trend. Sales jumped 30% in the October-December quarter according to research firm Strategy Analytics.

Nokia said last week that revenue from smartphones jumped 26% in the quarter from the previous quarter to €3.9 billion, helping power its overall result. The average wholesale price of its smartphones dipped to €186 from €190 in the third quarter.

The falling prices have hurt handset vendors like Sony Ericsson, who have focused on mid-range or feature phones, which often boast good cameras or music players but lack computer-like open operating systems.

These have been cheaper than smartphones, but the price difference is declining fast.

“This latest round of price adjustments sees Nokia taking its low-cost Symbian devices into new territory,” said Ben Wood, research director at CCS Insight, a British firm that tracks the wholesale prices of mobile phones in Europe.

Nokia's price cuts come as the industry returns to growth following a grim 2009 marked by recession-hit consumer demand. Nokia says it expects the cellphone market to grow 10% this year. (Reuters)