Nokia dropping phone prices, going in for the kill

Nokia's doing far better than rivals like Sony Ericsson and Motorola, but it's not going to let up while it's ahead -- the cellphone maker is reportedly cutting prices across the board in order to increase pressure on the competition. The biggest cuts are on the 5310/ 5610 music phones and the 8GB N81, but most other handsets have seen price decreases of up to 10 percent as well. The move is something of a surprise, with one analyst calling it a "Crazy Ivan," which is probably the first time The Hunt For Red October has ever been employed to describe the actions of a multinational corporation. So, Espoo -- does this mean the Tube is going to be crazy cheap, or what?

[Via Phone Scoop]

[CAHLITO @ Jul 31st 2008 12:44PM]

Hm, N81 sounds neat. I'm in need of a new phone

[Roo @ Jul 31st 2008 12:57PM]

I'm in too, I hope the cuts are also on the special edition N81 8GB.

[Muhammed @ Jul 31st 2008 9:31PM]

I guess when they called the 5800 Tube a "mid-range" phone they were up to something.

[Andrew T. @ Jul 31st 2008 12:47PM]

I like the move. Beat the competition while they're ahead. Also, by cutting prices, I'm pretty sure sales will jump (ex. Centro). As RIM is heading towards global handset status, this will surely slow that down, while it will prevent Nokia from losing market share to Apple as analysts are predicting.

[kjb434 @ Jul 31st 2008 12:49PM]

And Nokia fans won't whine and bitch about trying to get a refund because they adopted early!

[Mischa Lockton @ Jul 31st 2008 12:53PM]

I guess by mostly ignoring the USA market, they are going gangbusters.

[KEROLiUKAS @ Jul 31st 2008 12:57PM]

Sweet...Now if others would follow

[Pdexter @ Jul 31st 2008 12:59PM]

It's a good move to take all out from the dominant position they are currently by smoking Moto and SE even more when they really don't have many hit phones out there.
About Apple people still need to remember that Apple is taking customers mainly from Moto and other companies that are strong in North America not to say that Apple wouldn't have some affect to Nokia's sales now too after 3G iphone came out even if Nokia have raised their market share all the time.

5800(Tube) should indeed be rather cheap and maybe they are setting prices for new line of phones coming.

[CanisMinor @ Jul 31st 2008 3:36PM]

The Tube is not really the iPhone competitor. It is simply a quick low-end "test" for Nokia. The true iPhone competitor is rumored to be the Nokia E77, which will be released late next year, most likely around the time that an iPhone 3.0 can be expected

[Pdexter @ Jul 31st 2008 4:03PM]

Been reading Eldars articles? :D
Yeah i know, but you can be sure that people here in Engadget will compare those 2 if people compare something like N95 and iphone.... everything can be possible.
5800 main point will be the price because it's a fact that it wont be as much of eye candy as iphone those who are expecting it to be something different than S60 just made for TS use and a bit more eye candy than fp2 will probally be disapointed.
Looking forward that E77 it might actually have totally new OS in it....

[NutMac @ Jul 31st 2008 12:59PM]

Get out of town... up to whopping 10%! Those crazy Nokia execs. Now I can buy $100 phone for only $90 or so. Woohoo! Free $10!

[CraigJ @ Jul 31st 2008 1:02PM]

An extra 10% in a low margin business is quite significant. This will likely affect the stock in a negative fashion in the short term because their EPS will be lower.

[avester @ Jul 31st 2008 1:04PM]

Since selling a phone that costs 80$ to make for 60$ is a goddamn genious idea.

[0megapart!cle @ Jul 31st 2008 2:16PM]

Uhm, honey, when the hell was cellphones, in general, a low margin business. Sure, some cellphones, like the Centro, are sold at very attractive price points (although Palm is likely getting a subsidy from the carrier to supplement their bottom line). But most phones, when the subsidy is included, are sold at far more than the value of the hardware and the software.

[CraigJ @ Jul 31st 2008 5:09PM]

Hi honey, Is a net profit margin if 8.24% high in your book?

Apple which is touted as a high margin electronics company has a net margin of 14.36%

Microsoft, on the other hand 27.13%. That's a high margin business IMO

[tekdroid @ Jul 31st 2008 5:16PM]

0megapart!cle @ Jul 31st 2008 2:16PM
Uhm, honey, when the hell was cellphones, in general, a low margin business.
---------
Exactly, but I'll offer some context to all this:
Posters generally from the USA associate Nokia with low-priced phones, and therefore, everything they do as low-priced and low-quality. Apparently they are not big in the USA. In Australia (from first-hand experience) and most of Europe (as I understand it) it's quite different. At least the perception is.

[uwaga dude @ Jul 31st 2008 5:19PM]

Not everyone is as ballin' as you, sir NutMac.

[Jez @ Jul 31st 2008 6:20PM]

Do North Americans really take Nokia products as cheap?
Because that would be kinda funny as Nokia owns those expensive segments first with smart phones and secondly with the premium phones 8xxx series and the super luxury phones Vertu.
Plus Nokia as a brand is actually most valued from Europe. Thought i guess it's not too much of suprise as Nokia phones aren't really sold in USA, right?

[CraigJ @ Jul 31st 2008 7:37PM]

I'm basing the margin thing on their published financial reports. Has nothing to do with the phone costing $1 or $1,000. Nokia's net margin is 8.4%, which is low compared to, say Rim (21.52%)

[voze @ Jul 31st 2008 8:40PM]

Not sure where you have gotten those numbers, but anyways example Nokia's profit rose 8% in last Q(Q2) while most of the new models are coming out this Q or have come out now.

[TheSprunk @ Aug 6th 2008 6:44PM]

Yeah, In the U.S. Nokia's are mostly considered crap phones. That's because they mostly (maybe even only?) "sell" old and low end models, generally bundled as sub $50 or even free phones with a service agreement with a Provider.

Seeing all the reports about people modding/hacking or simply generally loving their "awesome" Nokia's was rather confusing at first. They don't really advertise much here, and the internet aside, you really don't see them much at all until you mention the keywords: broke, cheap, free to the guys trying to sell you a 2-yr contract.

[Johnny @ Jul 31st 2008 1:02PM]

S-E's best hope was/is the X1. Unfortunately I think it's too little too late. And Motorola? Hey, I liked you guys. I loved the Moto Q, but with it's crippled WiMo, it just didn't cut it.

[Sarig @ Jul 31st 2008 3:13PM]

I'm not sure if X1 is really important for SE. Given the impressive amount of almost equal consumer class cell phones they've got, you'd assume that's where they put their money (and losing it, apparently).

[tekdroid @ Jul 31st 2008 11:06PM]

Apparently the Q9h has killer call quality/ speakerphone/ reception, which makes me wonder if it's worth dropping some money on.

[Speney G @ Jul 31st 2008 1:03PM]

10% off Vertu too? HOLY CRAP! Maybe I can afford one now...nope.
And on a side note, am I the only one still hoping for a US 3G E90?

[sam @ Jul 31st 2008 1:09PM]

hate to break it for you guys, but this is not at all surprising, nokia (just like every other electronics manufacturer) lowers the prices of the models as they get older. nokia does larger drops couple of times a year, last time was in february. btw, this price drop was reported on july 21st already and in unrelated "news", sonye dropped their prices on 16th.

you guys are new in following technology or something?

[Raheem @ Jul 31st 2008 1:26PM]

There are ways of speaking to people which do not require you to sound like a jackass. You have some good things to say but unfortunately, your unrequited bullishness puts me off heeding your words.

[phanbouy @ Jul 31st 2008 1:31PM]

@Raheem

you must be new to engadget

[Raheem @ Jul 31st 2008 1:48PM]

Nah, I just hate when people can't keep a civil tongue.

[Pdexter @ Jul 31st 2008 1:53PM]

Yes much of the market share comes from low end(like 1100 with over 200 million sold have shown), but huge amount of the profits come from mid and high end phones so it wouldn't make much sense. 6300 was Nokia's key product last year that sold by truck loads after that started to slow down, 6500 slide and classic did take it place.

[phanbouy @ Jul 31st 2008 1:55PM]

i was being rhetorical =)

[Raheem @ Jul 31st 2008 3:51PM]

I was being Raheem.

[sam @ Jul 31st 2008 4:09PM]

oh cmon, a "web magazine with obsessive daily coverage of everything new in gadgets and consumer electronics" since march of 2004 reports that price reductions in electronics gadgets are surprising, and you're not allowed to write a jackass comment?

surprising price reduction is when the price of the most hyped mobile phone ever is slashed 1/3 after couple of months of its introduction, not nokias routine cuts of 10% of the price of mobiles introduced almost a year ago.

[tekdroid @ Jul 31st 2008 5:22PM]

sam @ Jul 31st 2008 4:09PM
surprising price reduction is when the price of the most hyped mobile phone ever is slashed 1/3 after couple of months of its introduction, not nokias routine cuts of 10% of the price of mobiles introduced almost a year ago.
-----------
Haha. Was waiting for someone to say it. Agreed :)

[Josh L @ Jul 31st 2008 1:08PM]

I... Would like to have seen... Montana....

*dies*

[Ryan Trevisol @ Jul 31st 2008 1:37PM]

^lol

Though, Nokia is Finnish. Shouldn't this be a "Crazy Olli" or something?

[Rich @ Jul 31st 2008 1:15PM]

The 6220 was only £250 unlocked *before* this move. I can't see any other manufacture competing at that price.

[BFish @ Jul 31st 2008 1:15PM]

Forced move since their product line-up is old compared to competitors.

[Shinigami @ Jul 31st 2008 1:29PM]

+1
They'll be late with their 8mp camera phone (but I hope they'll spam us with variations).

[BrianB @ Jul 31st 2008 1:22PM]

Geez why not 25% cut on the music phones and the Nseries and no cuts on the rest? Much of Nokia's market come from very low-end phones, so doesn't make sense cutting some per cent there. Cutting the 5610 price by a quarter, however, would really send a strong message to Moto, SE and even Apple... Nokia is still king!

[avester @ Jul 31st 2008 1:28PM]

Those who get high-end phones get them for the Symbian, those who get low-end phones get them since they are cheap and the colour is good.

[Pdexter @ Jul 31st 2008 1:55PM]

Yes much of the market share comes from low end(like 1100 with over 200 million sold have shown), but huge amount of the profits come from mid and high end phones so it wouldn't make much sense. 6300 was Nokia's key product last year that sold by truck loads after that started to slow down, 6500 slide and classic did take it place.

[bengreen21 @ Jul 31st 2008 1:27PM]

This news is hilarious. My GF just picked up the 5310 last night. We are getting a new couples plan and she wanted the 5310 ( if you didn't know it is super thin and quite a nice phone). She called me all excited that the price had dropped to 20 bucks on with our new plan. Not too shabby and she loves the phone. Great camera and dedicated music controls.

[phanbouy @ Jul 31st 2008 1:33PM]

oh yeah? well i was hangin' out with George Clooney a bit yesterday and he went on and on on the same thing, so i said "hey look Georgio, I gotta get rollin' now but good look on that phone thing"

[Raheem @ Jul 31st 2008 1:51PM]

Screw that, I was with Her Majesty the Queen yesterday, and I'm all like, "Hey Her Maj, you seen those Nokia price cuts?" And she was all like, "True dat Raheem, they be slashin' sterling like I be feedin' corgis."

[tekdroid @ Jul 31st 2008 5:27PM]

lol

[Steffen Jobbs @ Jul 31st 2008 1:27PM]

Price cuts are always good to hear. I think Nokia should use the strategy of giving all their handsets away for free in order to increase market share. It won't do much good in the smartphone sector, however. Apple already has that sector sewn up. The only way Nokia could make headway is to pay people to use their smartphone handsets. Excellent strategy to hold market share in that sector.

My avatar would be happy to use Nokia smartphones. Especially the N95. He agreed that if they gave him plenty of bananas a month in place of money, he would be happy to carry one. He thinks the N95 isn't all that great of a browsing handset, but it takes great pictures of all his chimp friends in heavy forest cover due to its high megapixel count and fine flash.

[avester @ Jul 31st 2008 1:29PM]

iPhone is not a real smartphone, and the market share isn't that big.

[kips @ Jul 31st 2008 1:43PM]

Is it a joke?

[bjay @ Jul 31st 2008 2:04PM]

@avester
Iphone is a smartphone, i do understand what you want to say concerning the Ctrl C, Ctrl V issue as well as the true multitasking capabilities but you should know that the Iphone is smart enough for many people(though i am not in that league, and i suspect you re not)

@Steffen Jobbs
"It won't do much good in the smartphone sector, however. Apple already has that sector sewn up" pls pass me some of the weed you are smoking