By Ingrid Lunden
A big step today for both Nokia (NOK) and Microsoft (MSFT) in their bid to be at the center of the huge smartphone growth currently underway in China and other emerging markets: Nokia today paired up with China Telecom (CHA) to formally launch the Nokia 800C, the first CDMA Windows Phone to hit China, and the first of Nokia's Lumia line of high-end devices tailored specifically for that market.
The two also said that it would be following this up with a lower-cost CDMA handset, the 610C, in Q2. This handset is especially crucial in testing whether Nokia will be able to retain its smartphone leadership in emerging markets as it continues its transition from Symbian to Windows Phone, and Android continues its low-cost march up the sales charts.
China Telecom, which is built on a CDMA network, is the third-largest carrier in the country, but still has more subscribers than many of the number-one carriers in other countries: as of February, it said it had 132.33 million subscribers, with 41.15 million of them on 3G. As of January, there were 136.6 million 3G subscribers in the country, according to the Ministry of Industry and Information Technology. Rival carrier China Unicom believes that number could double this year. Others have predicted that this year China will overtake the U.S. as the world's largest smartphone market.
It has also, more recently, been in the news for smartphone launches for another reason: After years of not offering the iPhone on its network, China Telecom finally started to sell the device earlier this month. But while people were long anticipating China Telecom carrying the device - as a route to Apple picking up significantly more market share in the country - some have suggested that the kind of subsidies that China Telecom might have to attach to the device would ultimately hurt its profitability: while Apple (AAPL) is selling the iPhone 4S for 4,988 yuan ($790) for a 16GB model, the same device costs only 289 yuan per month with China Telecom if a user signs a three-year contract.
That gives Nokia (and Microsoft) an opening in the market. So far, Nokia's pricing for the Lumia 800C is coming in below Apple's iPhone 4S: without a contract, it's going for 3599 yuan ($570). It's unclear what kind of pricing the 610C will have with China Telecom, but there is a clear opportunity, especially with the lower-end device, for China Telecom to claw back some of those lost margins, while still offering a shiny, new device to the masses.
Nokia and Microsoft are looking to attract Chinese consumers with content that is very much aimed specifically at them. That will include support for popular portals Sina (SINA), SOHU, Tencent and Renren (RENN); Nokia Maps local content integration from web portals Fantong, Jiepang, Ctrip, Qunar and Soufun; local Nokia Drive navigation; and a selection of Chinese hits in Nokia Music - as well as 20,000 local apps in the Marketplace app store (with a new developer push to encourage more).
Additionally, it looks like Trends, a fashion magazine reading app, will be populated with local content. And there are some freebies, too: those buying Lumia devices in China get 100,000 free plays of Fruit Ninja and PVZ - these will be in the Nokia Collection, which is Nokia's curated selection of apps.
The devices will also be part of a new retail push from China Telecom targeting the youth market, a chain of shops called Tianyi FlyYoung.