Finnish mobile phone maker Nokia has unveiled a cheaper smartphone using Microsoft's Windows Phone software with the intention of winning back market share by targeting a wider audience.
It would be recalled that Nokia last year dumped its own smartphone software in favour of Windows Phone to step up its fight against rivals such as Apple's iPhone, but the high prices of its phones have been a major weak point.
The company in a statement said that its new Lumia 610 model would be excluding subsidies and taxes, when it goes on sale next quarter.
"The 610 takes Nokia's Lumia portfolio to an encouraging new price point in its pursuit of cheaper Android rivals," said head of research at CCS Insight, Ben Wood.
Investors, however, were unconvinced the new model and pricing would do the trick, and Nokia shares were down.
Analysts noted that Asian handset makers such as Huawei and ZTE were coming out with even cheaper smartphones.
"I had hoped for a slightly lower price range. Maybe the markets were a bit disappointed with the price, which was quite high," Inderes analyst Mikael Rautanen said, adding the shares had spiked in anticipation of the event.
Nokia also announced a global version of its high-end Lumia 900 phone and unveiled a new top-of-the range cameraphone 808, which comes with a 41 megapixel camera sensor, as well as three more basic models.
The move comes over a year after Chief Executive, Stephen Elop compared Nokia to a "man standing on a burning oil platform" and teamed up with Microsoft to take on Apple and Google's Android phones.
Wall Street and industry analysts said that although the latest Windows phones could be worthy competitors to Apple's iPhone and top-of-the-range Android handsets, the devices lack unique qualities to make their sales take off.
Microsoft's share of the smartphone market fell to just 2 percent last quarter, from 3 percent a year ago and 13 percent four years earlier, according to Strategy Analytics.
In addition to its struggle in high-end smartphones, Nokia also faces an increasing threat from Asian manufacturers.
Analysts said both Huawei and ZTE are set to grab more market share globally in 2012, as they shift their focus from basic phones to smartphones.
Huawei and ZTE are now selling smartphones running on Google's Android operating system, attracted to the higher margins the market provides.
Both companies made new handset announcements at the same trade show, the Mobile World Congress in Barcelona.
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