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Samsung and Nokia in the spotlight at Mobile World Congress

Vendors hope to prove new products are worth upgrading to, as smartphone growth slows

By Mikael Ricknaus, IDG News Service
February 18, 2014 10:21 AM ET

IDG News Service - The two most talked about smartphones ahead of this year's Mobile World Congress sit at opposites sides of the spectrum; the low-end Android-based Nokia X and Samsung Electronics' new flagship model, the Galaxy S5.

The smartphone market has seen phenomenal growth in the last couple of years. But even if worldwide shipments increase, growth rates won't be as impressive, resulting in even tougher competition.

The fourth quarter highlighted this burgeoning trend, as mobile phone sales in mature regions fell due to weaker demand. Lack of compelling hardware innovation in the high-end segment meant consumers didn't find enough reasons to buy the latest model, according to Anshul Gupta , principal research analyst at Gartner.

Also, after nine consecutive quarters of explosive growth, China experienced its first slowdown, according to IDC. Vendors there will also have to increase efforts to convince consumers to upgrade, instead of relying on first-time buyers.

It is against this backdrop that Mobile World Congress opens its doors Monday. For Nokia as a handset maker, this year's trip to Barcelona will be its swan song as its acquisition by Microsoft is scheduled to be approved before the end of March.

Reports have in the last couple of months said Nokia is planning on using the Android open source code and a user interface of its own to reignite the low end of its product portfolio, and it seems likely the company will launch its first product early Monday morning local time.

It's not difficult to understand why Nokia is moving away from the proprietary operating system used on its Asha phones. Forked Android or AOSP (Android Open Source Project) devices had a 25 percent market share with 71 million shipped smartphones during the fourth quarter -- mainly thanks to China, India and adjacent countries, according to ABI Research. That's more than Apple's iOS, Windows Phone and BlackBerry put together.

The Nokia X, also known as Normandy, is rumored to be powered by a dual-core 1GHz Snapdragon, have a 4-inch screen with a 854 by 480 pixel resolution, and a 5-megapixel camera. The device is also expected to have 512MB of RAM and 4GB of integrated storage that can be expanded using a microSD card slot. Nokia's most advanced Asha phone, the 503, also has a 5-megapixel camera, but with a low resolution 3-inch screen.

The X will enter a competitive section of the smartphone market. But it isn't just consumers who will decide its fate -- Microsoft will soon own Nokia's smartphones and will have to decide on strategies for the sub-$200 and $100 segments. Since analysts expect much of the growth is coming from that segment staying away is not an option.

When Nokia decided on Windows Phone, getting the cost down was a key part of its strategy. The Lumia 610 arrived in April 2012 with a $260 price tag without taxes and subsidies, followed by the 510 for about $200 in October the same year, and then the best-selling 520 for $185 in February last year. But after that, Nokia's quest to push down the cost of its Lumia devices stalled.

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