Microsoft yesterday announced a solid Q2 2014 quarter and as a phone hardware manufacturer sold more than 5.8 million Lumia smartphones in period of 67 days in Q2 2014 after Nokia D&S acquisition.

Rising on its yesterday’s quarterly performance announcement, Microsoft Devices unit today announced its most affordable Windows Phone 8.1 based Lumia till date to be sold at a price of EUR 85 (w/o taxes, subsidies) or $125 (with taxes) retail. Lumia 530 is a quad-core device powered by Qualcomm Snapdragon 200 bundling core Microsoft and Nokia experiences at a very competitive price-points. Very attractive device.

  • Lumia 530 should help Microsoft Devices to maintain the momentum set by its predecessor Lumia 520, the best selling Lumia smartphone till date
  • Lumia 530 should be the perfect smartphone to drive sales volumes not only in markets such as India, Brazil or Italy
  • But also in highly subsidized markets such as USA it could be used to attract more than 70 million+ feature phone users in this market alongside Lumia 635. Big opportunity for Microsoft here to attack prepaid channels in other developed markets as well.
  • Lumia 530 with Dual SIM capability should also help it become immensely popular in high volume markets such as India and China to compete with long tail of android phones with stuttering experiences and banal industrial design
  • However, Lumia 530 pricing and value will be tested once local kings such as Micromax and others launch $90-$100 retail priced smartphones under Google’s Android program with latest software Android L promising a higher user-experience
  • We believe, Microsoft should persist with the Lumia 520 and price it ($90) a notch below Lumia 530 Dual SIM to drive more volumes and compete with barrage of Android smartphones at sub-$100 retail price points as we think the shelf life of Lumia 520 is far from over
  • Similarly, with a slight refresh Lumia 620 can be positioned between Lumia 520 and Lumia 530, considering its smaller screen size
  • Furthermore, Lumia 525 (with 1GB RAM) should be priced slightly above Lumia 530 ($130) since its not a Dual-SIM device and should not cannibalize much of Lumia 530 sales
  • Lumia 630 is priced around ($145) and should round off well the sub-$150 retail portfolio
  • This will allow Microsoft to have almost four SKUs from US$90 to $150 filling important gaps in the portfolio and help drive at least 5-7 millions per quarter with just these four models in near- to mid-term

  • While this is great for an entry-tier strategy but Microsoft needs to also scale these experiences at high-end as well. While Lumia 930 is the best Windows Phone on the market it needs a companion flagship to complement
  • A refresh for its super-premium Lumia 1020 would be great with availability by start of Q4 2014. Addition of 4K video capabilities, 2K Display, extra cloud storage, newer user-friendly innovations and standout premium design to compete with likes of LG G3, upcoming Galaxy Note 4, etc

Microsoft should look to capture share in the high-volume $100-$200 retail price segment with the help of above portfolio spread out in the price band as well as growing list of Windows Phone partners such as Micromax, Presitgio, Xolo, Blu and others. Though it will be interesting to see how Microsoft drives $50 -$100 price bands with Asha and Nokia X series being retired as well as in profitable mind-share driving $400+ premium segment where it has failed to gain formidable share.

 

About Author

Neil is a sought-after frequently-quoted Industry Analyst with a wide spectrum of rich multifunctional experience. He is a knowledgeable, adept, and accomplished strategist. In the last 11 years he has offered expert strategic advice that has been highly regarded across different industries especially in telecom. Prior to Counterpoint, Neil worked at Strategy Analytics as a Senior Analyst (Telecom). Neil also had an opportunity to work with Philips Electronics in multiple roles. He is also an IEEE Certified Wireless Professional with a Master of Science (Telecommunications & Business) from the University of Maryland, College Park, USA.