Nokia's cheapest Windows Phone now world's best-selling Windows product

We’re big fans of Nokia’s ultra-affordable Lumia 520 here at Neowin. For the price – as low as $79 off-contract in the U.S. and £99 in the U.K. – very few other devices come close to what it offers. 

Evidently, we’re not the only ones to have been won over by the cheap and cheerful Windows Phone. We reported recently that the 520 now represents over 20 percent of all Windows Phones in use around the world, and Microsoft has since shared another little detail that underlines just how popular the device has become.

Softpedia reports that, at Microsoft’s company meeting earlier this week, they were told that the Lumia 520 isn’t just the most popular Windows Phone in the world; it’s actually the best selling of all Windows products currently available, with sales exceeding those of all Windows PCs and tablets, including Microsoft’s own Surface range.

Microsoft will surely be encouraged by the 520's success, as it moves towards absorbing Nokia's device business, which it purchased earlier this month in a deal worth $7.2 billion. 

Source: Softpedia

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any chinese MTK quad core device will now run android at a acceptable level

just look at xiaomi hongmi 130 dollars and its the best lowend device hopefully they bring it to the west....

nokia and microsoft needs to move on fast if they want to mantain the lowend race at least

eilegz said,
any chinese MTK quad core device will now run android at a acceptable level

just look at xiaomi hongmi 130 dollars and its the best lowend device hopefully they bring it to the west....

nokia and microsoft needs to move on fast if they want to mantain the lowend race at least

$30-$50 more expensive, only 4GB of rom, really bad touch input lag, lots of UI lag(without doing much), cheap display with horrible viewing angles, cheap build quality.

no thanks

I have one of these too. I wasn't expecting to own a smartphone, never mind a Windows one. But when my w705 crapped out for the second time I needed something. And this cost half the price of the old w705.

I got one just as a smart remote control for my AV components for $79. Works great with the Yamaha app and unofficial Samsung app. Beats that expensive Harmony Remote I had before.

Phones are entering the stage where the low end phones do everything most people would want. There's just no reason to spend $600 for a phone anymore. It's the same as what happened to laptops.

Cost focus is how Microsoft became big. They should (re)learn from this, they are not Apple.

So first focus on being the cheapest while still offereing acceptable quality. That is how you capture a large marketshare. And then eventually more of your uses will gain some wealth and desire a high-end product with the same OS.

This is how desktop Windows become big and this is how they can change their fortune with tablets and phones.

Ronnet said,
Cost focus is how Microsoft became big. They should (re)learn from this, they are not Apple.

So first focus on being the cheapest while still offereing acceptable quality. That is how you capture a large marketshare. And then eventually more of your uses will gain some wealth and desire a high-end product with the same OS.

This is how desktop Windows become big and this is how they can change their fortune with tablets and phones.


Well it were companies like Dell and HP who were "cost focus" and sold PCs to customers for cheap. Microsoft was never cheap nor cost focused. Profits for them are realized when OEMs install Windows at the manufacturing level, not when they're sold to consumers. They do and have always have higher margins than Apple. Nonetheless, I know what you're trying to say here.

The problem is that the business models are different now that Microsoft has become the handset maker, whereas before, they simply supplied the OS for desktops/laptops. If they were to go cheap now, they would substantially sacrifice margins, something they've rarely ever done (original Xbox comes to mind).

So what you thought worked prior may not work in this new market. Sure they may gain market share, but the Lumia 520 is unprofitable. It clear from the Surface tablets that Microsoft are trying to preserve margins as a device maker.

And how is that working out for them?

When it comes to tablets and phones they are the underdog. If they continue down this road then they will lose marketshare and their large margins will do nothing for the bottom line. I also doubt Microsoft has better margins on the average Windows PC then Apple has on their Macs. I'd like to hear more about this.

I think for now they need to accept that the Lumia 520 isn't going to make them rich. It's not as if they would have sold L720's to these consumers if there wasn't a L520. Instead they are increasing their marketshare and more importantly their mindshare. I think Microsoft's concern should be to stay relevant.

If they are above the 10% marketshare then they can think about how to convince their customers to buy a high-end Phone. But at that point developers will want to develop for WP and then tech enthousiasts will want to buy WP. So gaining marketshare will help them gain some margins as well.

Ronnet said,
And how is that working out for them?

When it comes to tablets and phones they are the underdog. If they continue down this road then they will lose marketshare and their large margins will do nothing for the bottom line. I also doubt Microsoft has better margins on the average Windows PC then Apple has on their Macs. I'd like to hear more about this.

I think for now they need to accept that the Lumia 520 isn't going to make them rich. It's not as if they would have sold L720's to these consumers if there wasn't a L520. Instead they are increasing their marketshare and more importantly their mindshare. I think Microsoft's concern should be to stay relevant.

If they are above the 10% marketshare then they can think about how to convince their customers to buy a high-end Phone. But at that point developers will want to develop for WP and then tech enthousiasts will want to buy WP. So gaining marketshare will help them gain some margins as well.


How's what working for who? You mean the Surface? The surface is one generation in. Even if they don't sell much, they could still be profitable as opposed to the 520, which hasn't done anything for Nokia.

Also, I never said anything about a Windows PC having better margins than a Mac. I said Microsoft have better margins than Apple. Windows is simply duplicated onto various machines. There are no hardware costs involved in that for Microsoft.

As for "if continue down this road then they will lose marketshare"... What road are you talking about? They lost market share maintaining the same business model for mobile devices they have with desktop devices: selling handset makers the OS. They've tried it since 2000. As a result, they've become nearly irrelevant. So what exactly are you talking about?

Why would any profit seeking company accept something if it isn't going to be profitable? There's no point of market share if there's no profit in it.

Edited by AWilliams87, Sep 29 2013, 1:26pm :

Why would a company accept something that isn't going to be profitable? They wouldn't or at least shouldn't.

But I never said such a thing. I said FOR NOW they should accept that there hardly is any margin on the L520 in order to capture a larger marketshare. Marketshare means interests from developers. This leads to more apps and that in turn leads to more interests from consumers.

Like I said it's not as if the L520 is taking away sales from the L720. Instead it's taking away sales from cheap Android phones and feature phones. The next time these consumers are looking for a new Phone they might take the L730 just like my nephew went from a Galaxy Ace to a Galaxy SIII and his sister just got a Galaxy Y as her first Phone.

With 'down this road' I mean Microsoft offering too expensive products. They don't have the reputation to sell devices at all prices, not yet anyway. They need to get that ecosystem in order and they need consumers and developers to make that happen. Without an ecosystem developers and consumers are looking the other way. The way to break this vicious circle is by price and targetting new smartphone buyers with lower demands.

Ronnet said,
Why would a company accept something that isn't going to be profitable? They wouldn't or at least shouldn't.

But I never said such a thing. I said FOR NOW they should accept that there hardly is any margin on the L520 in order to capture a larger marketshare. Marketshare means interests from developers. This leads to more apps and that in turn leads to more interests from consumers.

Like I said it's not as if the L520 is taking away sales from the L720. Instead it's taking away sales from cheap Android phones and feature phones. The next time these consumers are looking for a new Phone they might take the L730 just like my nephew went from a Galaxy Ace to a Galaxy SIII and his sister just got a Galaxy Y as her first Phone.

With 'down this road' I mean Microsoft offering too expensive products. They don't have the reputation to sell devices at all prices, not yet anyway. They need to get that ecosystem in order and they need consumers and developers to make that happen. Without an ecosystem developers and consumers are looking the other way. The way to break this vicious circle is by price and targetting new smartphone buyers with lower demands.


Your theory sounds so wonderful. Unfortunately, it doesn't stand up to any empirical evidence. As a matter of fact, historically, the opposite is true of what you're saying. Once you associate your brand with cheap, you attract customers looking for a bargain. Once those customers upgrade and become less price sensitive, they buy brands associated with high end.

A large portion of the iPhone new customers in the U.S. upgraded from cheap Samsung phones. Most don't buy more expensive phones Samsung phones. Also, most of Samsung sales came from high end, more profitable, phones, not cheap ones like the Galaxy Ace; particularly from the SIII and SII.

If Windows phone captured 15% of the market with largely cheap phones, those are customers are largely unwilling to spend extra money on apps and games. Android has an 80% market share globally, yet 75% of the revenue from smartphone apps come from iOS. 65% of e-commerce comes from iOS devices.

Can I get your sources? Because it sounds like yesterday's news. Last I heard Samsung almost had just as much profit as Apple in Q1 2013. They've slowly released higher-end models after they got people on the Galaxy bandwagon. Clearly it's working.

Tell me how you image Microsoft is going to attract customers and developers if they have high prices and a low reputation? They need to break this cycle and while you might not agree with my solution I'd like to hear your thoughts on it.

This has been the phone I have been recommending to anyone who is a first time smartphone buyer. Everyone who has bought it has been very happy with it - they can't understand how Nokia are making any money on them.

It wipes the floor with the low end android devices in my opinion.

iwillneverstop said,
This means that Windows 8, even with Windows 8.1 comming, is a failure?

no silly. It is the SINGLE best seller. If you count win 8 pcs combined they easily outsell this phone. Which makes sense given the thousands of models of pcs spread the demand around. There are 110 million win 8 users today. If that is a failure, then most google products are for they fail to even reach that.

neonspark said,

If that is a failure, then most google products are for they fail to even reach that.

You mean like Android that is now on more than a billion smartphones, Chrome that is used by almost a third of the browsing market, a search engine that accounts for 2/3 of all search traffic in the world, and YouTube that receives hundreds upon millions of video views per day. Yeah, Google's core products clearly suck!

Javik said,

You mean like Android that is now on more than a billion smartphones, Chrome that is used by almost a third of the browsing market, a search engine that accounts for 2/3 of all search traffic in the world, and YouTube that receives hundreds upon millions of video views per day. Yeah, Google's core products clearly suck!

sorry,android is not on more than a billion smartphones today. android has been activated on one billion "devices" in 5 years. this is different than what is currently in use today,which is a fraction of that. this is called installed base.

That's what happens when you release a quality low end device. It had like 90% of the flagship ability at its own package.

And it helps that the OS was designed to run smoothly on low-end hardware. Seriously, WP8 runs just as well on the Lumia 920 as it does on the 520.

The higher end dual core phone will be the new volume play. I see something like a beefed up 520 but still at the same low price keeping things going while quad cores with GDR3 are the new mid-high end for WP.

The 520 is still 480p dual core and 512MB RAM but if they do a 530 with 720p, 1GB ram for example for the same $100 or so price early next year then that'll sell very well IMO.

Microsoft has found their way back to the smartphone game. Now, they need to continue and deliver a solid and cheap smartphone to win the market. I do believe that they've confirmed that the lower end is the market that they need to target.

RommelS said,
Microsoft has found their way back to the smartphone game. Now, they need to continue and deliver a solid and cheap smartphone to win the market. I do believe that they've confirmed that the lower end is the market that they need to target.

Why should they chase after that particular market segment? There's no profit in it.

Of course there is a profit to be made. MS makes 30% on every app sold. If they break even on every L520 they sell than every cent earned after that is basically profit.

Gungel said,
Of course there is a profit to be made. MS makes 30% on every app sold. If they break even on every L520 they sell than every cent earned after that is basically profit.

First, manufacturing and selling the Lumia 520 is unprofitable. Second, 30% on apps doesn't help Microsoft recoup enough value after operating cost are factored in.

As a company, they have a 28% net profit margin; higher than Apple. Why would they sacrifice that to chase after market share? They've done so once with the Xbox. As a result, the total ROI on the Xbox is still negative.

AWilliams87 said,

Why should they chase after that particular market segment? There's no profit in it.

Where do you think all of these fast growth for Windows Phone are coming from? It is not from high end market, but from lower or mid range market; in fact, from emerging markets around the world.

One thing that you forget, MS have deep pockets. They can afford to lose a few here and there for market share. If they have the market share, then developers will eventually move to the ecosystem, thus helping the sale and market share for their high end devices.

RommelS said,

Where do you think all of these fast growth for Windows Phone are coming from? It is not from high end market, but from lower or mid range market; in fact, from emerging markets around the world.

One thing that you forget, MS have deep pockets. They can afford to lose a few here and there for market share. If they have the market share, then developers will eventually move to the ecosystem, thus helping the sale and market share for their high end devices.


I don't understand your first paragraph. I never implied the "growth" is coming from anywhere other than such.

This idea of losing money for market share in the hopes of making it up by having those customers people buy expensive devices later on is wishful thinking and counter to any historical precedents.

AWilliams87 said,

I don't understand your first paragraph. I never implied the "growth" is coming from anywhere other than such.

This idea of losing money for market share in the hopes of making it up by having those customers people buy expensive devices later on is wishful thinking and counter to any historical precedents.

You asked why MS should go after the lower end market, and my answer was that is their target because Windows Phone is growing from emerging markets with lower end devices. As I stated, MS has confirmed that they will continue to go for the lower end markets, and if you cannot connect the dots, then you are not looking at the big picture. (http://pocketnow.com/2013/09/27/low-end-windows-phone)

How do you think Android smartphone suddenly got so popular even when it got so fragmented? People were buying lower to midrange Android devices in the market rather than the expensive iPhone. Due to the sudden popularity of Android phones, the developers took advantages of it was all.

Historical precedents you said ...Then you don't know Microsoft. MS has been doing this for some time now. MS' philosophy is to enter a market with something, and eventually make changes until it becomes widely used and popular.

RommelS said,

You asked why MS should go after the lower end market, and my answer was that is their target because Windows Phone is growing from emerging markets with lower end devices. As I stated, MS has confirmed that they will continue to go for the lower end markets, and if you cannot connect the dots, then you are not looking at the big picture. (http://pocketnow.com/2013/09/27/low-end-windows-phone)

How do you think Android smartphone suddenly got so popular even when it got so fragmented? People were buying lower to midrange Android devices in the market rather than the expensive iPhone. Due to the sudden popularity of Android phones, the developers took advantages of it was all.

Historical precedents you said ...Then you don't know Microsoft. MS has been doing this for some time now. MS' philosophy is to enter a market with something, and eventually make changes until it becomes widely used and popular.


While I did ask why would they focus on low end, you asserted that is where growth is coming from. I never said otherwise. 520 is low end. Obviously that is where it's coming from. My point is that low end is unprofitable; the 520 is an unprofitable device. There are no dots to connect.

Your last point was so vague is truly means nothing. Every product alway goes through changes. Be more clear on what exactly you're talking about. Microsoft don't have low margin businesses, with the exception of the Xbox, which have a total negative ROI since it's inception.

AWilliams87 said,

First, manufacturing and selling the Lumia 520 is unprofitable.

1. Unprofitable as in breaking even or losing money?

2. Do you any sources to cite for this claim? I'd really like to read them.

AWilliams87 said,

While I did ask why would they focus on low end, you asserted that is where growth is coming from. I never said otherwise. 520 is low end. Obviously that is where it's coming from. My point is that low end is unprofitable; the 520 is an unprofitable device. There are no dots to connect.

Your last point was so vague is truly means nothing. Every product alway goes through changes. Be more clear on what exactly you're talking about. Microsoft don't have low margin businesses, with the exception of the Xbox, which have a total negative ROI since it's inception.

What device do you think are being sold in emerging markets? There's been articles that shows that lower end devices are the biggest sellers for Windows Phone, thus the growth of Windows Phone. For someone who like to use big words, you really cannot connect the dots.

If you think my last point is so vague, then you truly don't know how MS works.

RommelS said,

What device do you think are being sold in emerging markets? There's been articles that shows that lower end devices are the biggest sellers for Windows Phone, thus the growth of Windows Phone. For someone who like to use big words, you really cannot connect the dots.

If you think my last point is so vague, then you truly don't know how MS works.


I understand that is where growth is coming from. I am talking about profitability. Profitability and growth are distinct concepts. The 520, once operating cost are factored it, are unprofitable. Selling more of them doesn't change that.

AWilliams87 said,

I understand that is where growth is coming from. I am talking about profitability. Profitability and growth are distinct concepts. The 520, once operating cost are factored it, are unprofitable. Selling more of them doesn't change that.

WOW ...you really don't know how the smartphone business works - especially how it pertains to where Microsoft is standing. Do you even use a smartphone?

Yes, profitability and growth are distinct concepts, however, have you heard of the term, to make money you must spend money as well?

Have you heard that MS is paying developers to make apps for their ecosystem? Is that profitable for MS? Doesn't make sense does it?

Thus, and once again, MS need the market share for their smartphone to thrive and become profitable.

RommelS said,

WOW ...you really don't know how the smartphone business works - especially how it pertains to where Microsoft is standing. Do you even use a smartphone?

Yes, profitability and growth are distinct concepts, however, have you heard of the term, to make money you must spend money as well?

Have you heard that MS is paying developers to make apps for their ecosystem? Is that profitable for MS? Doesn't make sense does it?

Thus, and once again, MS need the market share for their smartphone to thrive and become profitable.


It is only now in your last paragraph have you ever mentioned profit. Before, it's clear you were conflicting profit and growth.

First, I spoke about the 520, not Windows phone as a whole. But as I kept saying the 520, which is a low end device, was unprofitable, you kept reiterating that low end is where "growth for Windows Phone [is] coming from." Even with your example of Android, you spoke about popularity, not profit. It's only now that you're claiming that for them to become profitable, they need market share. What would become profitable? The 520? Another Lumia phone? You don't specify either.

You don't provide reason why that is the case for anything really. iOS devices make up 13% of the global market, yet account for 75% of all profits in the smartphone arena. Samsung sales comes largely from higher end devices, and they too are profitable. The smaller players are all unprofitable.

Edited by AWilliams87, Sep 29 2013, 9:19pm :

Wow, you really don't know how to connect the dots, let alone use common sense.

AWilliams87 said,

It is only now in your last paragraph have you ever mentioned profit. Before, it's clear you were conflicting profit and growth.

Oh I am well aware of it, however all you know is “Growth = Profit”, but you fail to realized what is MS is doing to get there. Once again, they need the market share (if this has to come from low end devices without profit as you said, so be it) to attract developers to create apps, and to attract consumers to purchase their devices. Without market share, there's no apps, and no consumers. Oh guess what? No profit in the future at all. You do know that profit doesn't happen overnight right?

AWilliams87 said,

First, I spoke about the 520, not Windows phone as a whole. But as I kept saying the 520, which is a low end device, was unprofitable, you kept reiterating that low end is where "growth for Windows Phone [is] coming from." Even with your example of Android, you spoke about popularity, not profit. It's only now that you're claiming that for them to become profitable, they need market share. What would become profitable? The 520? Another Lumia phone? You don't specify either.

I don't have to specify since Microsoft stated that they need to target low end market. It doesn't have to be a Lumia low end device since MS is dealing with other OEMs as well.

As for your flawed Android response. MS is trying to replicate what made Android popular in hope to gain …P r o f i t. My gosh, did I say that word again?!

AWilliams87 said,

You don't provide reason why that is the case for anything really. iOS devices make up 13% of the global market, yet account for 75% of all profits in the smartphone arena. Samsung sales comes largely from higher end devices, and they too are profitable. The smaller players are all unprofitable.

That smaller players that you are taking about are Android OEMs that are paying MS royalties for tech that Android iOS is using without license. The fact that they are paying MS, means that they are probably making a profit (your favorite word) from lower market as well. Just look around out there; how many low end Android phones that the consumers are using? Do you really think OEMs will just jump into this market if there's no money to be had? In fact they took advantage of it, thus the popularity of Android, which in turn, growth = profit.

By the way, please make your argument more valid, and make yourself verse with what's going on with the smartphone world. This is conversation is getting boring.

Hahaha. You introducing a lot of previously unspecified ideas, then implying i'm stupid for not following along with them.

You believe Android is profitable, even at the lower end. You would be wrong. The only handset maker that makes money on Android is Samsung, and they've done so primarily with their high end devices: http://techpinions.com/wp-cont.../2013/05/slide-11-638-1.jpg

The chart shows operating profits. Once you factor in overall net profits, Samsung's profits drops by 26%. Still profitable nonetheless. For everyone else, it's a different story. They don't make money on Android unfortunately.

Microsoft have always stated they need to low end because they were never handset manufacturers. They made money on every device sold no matter what. For them, it was all "growth." Now they're actually in the business of making devices. It's a different story. You believe they could make money later on when customer choose buy more expensive devices if they target the low end market. You would be wrong. There's no example of that ever being true even in the Android world. As the matter of fact, empirical evidence points to the opposite.

Samsung has always made money on the high end, as well as Apple. Lower end companies like Nokia, who lost $4.2 billion in FY12, HTC, LG and the rest don't profit. They opt for market share and has seen little to no gain as a result.

Market share doesn't necessarily beget profit. The chart I posted above, exemplifies that perfectly. iOS devices has a 13% global market share, yet pulls in 75% of the net profits.

Edited by AWilliams87, Sep 30 2013, 3:22am :

AWilliams87 said,
Hahaha. You introducing a lot of previously unspecified ideas, then implying i'm stupid for not following along with them.

You believe Android is profitable, even at the lower end. You would be wrong. The only handset maker that makes money on Android is Samsung, and they've done so primarily with their high end devices: http://techpinions.com/wp-cont.../2013/05/slide-11-638-1.jpg

The chart shows operating profits. Once you factor in overall net profits, Samsung's profits drops by 26%. Still profitable nonetheless. For everyone else, it's a different story. They don't make money on Android unfortunately.

Microsoft have always stated they need to low end because they were never handset manufacturers. They made money on every device sold no matter what. For them, it was all "growth." Now they're actually in the business of making devices. It's a different story. You believe they could make money later on when customer choose buy more expensive devices if they target the low end market. You would be wrong. There's no example of that ever being true even in the Android world. As the matter of fact, empirical evidence points to the opposite.

Samsung has always made money on the high end, as well as Apple. Lower end companies like Nokia, who lost $4.2 billion in FY12, HTC, LG and the rest don't profit. They opt for market share and has seen little to no gain as a result.

Market share doesn't necessarily beget profit. The chart I posted above, exemplifies that perfectly. iOS devices has a 13% global market share, yet pulls in 75% of the net profits.

Oh, so all of these things that you said about growth = profit is contradicting what you said earlier. So which is it? I knew it that if I keep making you talk, you will eventually contradict yourself. It was in the pattern of your dialogs! HA HA HA

And you would lead me to believe that showing a chart without any details on the matter is fact? Show me the article, and then maybe I can show you something that you might have ignored.

RommelS said,

Oh, so all of these things that you said about growth = profit is contradicting what you said earlier. So which is it? I knew it that if I keep making you talk, you will eventually contradict yourself. It was in the pattern of your dialogs! HA HA HA

And you would lead me to believe that showing a chart without any details on the matter is fact? Show me the article, and then maybe I can show you something that you might have ignored.


When did I ever say anything about growth equalling profit? That's what you were implying, not me. I speak in the interest of profit, not market share. When we say growth, we mean market share increase.

Edited by AWilliams87, Sep 30 2013, 4:44am :

AWilliams87 said,

When did I ever say anything about growth equalling profit? That's what you were implying, not me. I speak in the interest of profit, not market share. When we say growth, we mean market share increase.

AWilliams87 said,

Profitability and growth are distinct concepts

You don't remember saying that. Hmmmm. Ok, keep backtracking yourself.

Ok, I was ready for you, and I will quote this from something that I've read in the past:

The importance of the low-end Android devices in emerging markets

On the low-end, Samsung not only has popular feature phones but continues to push low-cost Android offerings in both emerging markets and in more established markets in Europe and North America. With many consumers moving to smartphones for the first time, Samsung has a lot to gain by expanding its low-end market presence and converting as many users as possible to Android phones like the Samsung Galaxy Young.

Why is that? As the wise and all-knowing Puff Daddy once told us so long ago, “it's all about the Benjamins, baby.” Operating margins for feature phones are only around 2% to 3%, according to Mark Newman, an analyst with Sanford Bernstein. In contrast, Samsung's low-end smartphones bring in around 12%.

When it comes to profit, high-end devices like the Galaxy S4 and Note 2 bring in even more at close to 28%, but Samsung realizes that as the market grows, they will continue to see folks with modest smartphone needs that won't want to spend top-dollar for a handset. The company might make less profit from cheap phones, but if they can sell more of them, it is still a win-win for Samsung.

And you are going to tell me and everyone here that there are no money to make on a lower end market. Pffft. Every company will enter a market in hope of making money. There are other companies out there that are making money on low end market. Just because you don't see it being reported, it doesn't mean they are not making a small profit. News tend to focus on big companies not little ones.

As for my stance about MS needing the low end market in hopes that they will gain market share, attract developers, thus attracting consumers, I stand behind it - profit or no profit.

Oh man. Distinct means "clearly different", or "separate." It does not mean equal. I never said profit and growth were equal.

And yes, there is no profit on the low end. It's why Nokia lost money every year for quite some time; over $4 billion last year alone. This isn't a secret or hard information to come by. Google it. Samsung and Apple make money on the high end, which was mentioned in your article. Notice, the article says that the 2-3% margins are operating margins on low end devices, not net profit margins, which is what I mentioned many times previously.

AWilliams87 said,
Oh man. Distinct means "clearly different", or "separate." It does not mean equal. I never said profit and growth were equal. And yes, there is no profit on the low end. It's why Nokia lost money every year for quite some time; over $4 billion last year alone. This isn't a secret or hard information to come by. Google it. Samsung and Apple make money on the high end, which was mentioned in your article. .

@ AWilliams87,
I think Microsoft may be onto something. Nokia managed average ASPs of $160 or $150 per Lumia in the recent quarter. Their average gross margins on all Lumias including 520s stand at ~10-15%. The low-end may be even 8% from what I hear. Gross margins on Lumia 925 or Lumia 1020 are in excess of 35% like with iPhones.

Nokia's problem was managing new R&D expenses especially on the hardware component design side when volumes are uncertain, managing feature phone supplychain when those devices were uncertain to succeed though legacy branding in rest of world apart from NA needs them for channel distribution and lastly giving back license costs for software to Microsoft per their 5 year agreement. Apparently the $1 billion agreement only helped them with license cushioning but not enough to help with marketing and app ecosystem expansion which can only from Microsoft's pockets.

And that is exactly what happened. Microsoft swallowed the Lumia and feature phone division. They need to quickly produce 120, 220, 320 and 420 Lumia phones with appropriate gross margins like 2%, 4%, 6% and 8% and devour the low-end market before their own feature phones die. And before Android takes that market over completely.

If one deducts the license fee of average cost $5.00 per WP license (expected in the future), then Microsoft can successfully make a profit from a Lumia 120 with a 10 app ecosystem sold in Brazil, India, China etc for $25 or $20. That profit can be $1.00 but it is still a profit especially if they can sell 100 million Lumia 120s, 100 million Lumia 220s and so on.

Microsoft will corner the low-end smartphone market and the probability that they will be successful is very high. Expect their phone division to produce average profits starting 2014 fiscal year. Also expect Nokia feature phones to die away a year or two later. Mid end on the profit number can be 400 million phones * average gross margin of 5% * average ASP of $50 = $1 billion. High end can be 400 million * average gross margins of 10% * average ASP of $100 = $4 billion. Low end can be 100 million * average gross margins of 2% * average ASP of $25 = $50 million.

Anyway one looks at it, I think Microsoft will hit the mid end gross margin number of $1 billion in profit by end of fiscal year 2014.

So much for Nokia's plan to become a "Windows" phone maker because there was too much competition in the android market and they thought they could make more money selling Windows phones!

this was from theverge few weeks ago


Sources familiar with Nokia's plans say the company was growing increasingly frustrated last year with Microsoft's work to push Windows Phone to lower price points. An effort codenamed "Tango" resulted in cheaper handsets with low specifications, but Nokia needed more.

Nokia was kind of holding Windows Phone back by resisting to invest more in the low end(understandably, in their situation,low margins). The 520 was probably just a one time concession. I expect Microsoft to go hard in the low end,because apple apparently is not interested in that junk area of the market, and android needs heavy specs to run at an acceptable level,,unless an old version is used. As we've seen with the 520, windows phone runs fluidly on low end specs,and they can even go even lower. the 520 can now be had for $80 out right(fry's,sold out quickly).