Nokia grabbed headlines last week when it announced plans to sell phones in the mainland market for as low as ?45 ($452). But the Finnish manufacturer believes it must do far more than lower the price of handsets for cost-sensitive Chinese consumers. It must also lower costs for operators China Mobile and China Unicom. 'Affordability is about handsets and the mobile services,' Nokia's networks director for new growth markets, Rauno Granath, said. 'Air travel used to be expensive and now it is much cheaper. Affordability is found in different passenger classes, but they all reach the same destination. In the same way, we are making voice and text messaging services more affordable.' Mobile phone manufacturers aim to increase penetration by another billion customers worldwide, much of this in developing markets such as India and China. Nokia expects China could expand from 400 million users to 650 million in the next four years, with growth primarily coming from rural markets where the average monthly income is between US$50 and US$100. One way to accomplish this goal is by helping operators extract more value from their network investments. The Nokia 2310, a low-cost handset to be launched in the mainland this quarter, will be pre-installed with a proprietary 'pre-paid tracker', a technology which Nokia aims to eventually license to network operators later this year. The tracker allows pre-paid mobile phone users - who are typically the most cost-sensitive - to check their remaining account balance on their handsets before and after making a call. This saves customers from having to dial in to check their balances, thus saving network resources for the operator. With an estimated 70 per cent of China Mobile's 254.9 million subscribers using pre-paid accounts, Nokia believed the technology would be a good sale. Antonio Torres, director of business development and industry marketing for Nokia's 'entry business unit', a division which targets emerging markets, said handset manufacturers must work with network operators to optimise their business models. 'We need to put features into the phone to reduce the cost of the network and utilisation rate of the network,' Mr Torres said. One technology called 'adaptive multi-rate codec' would allow operators to have flexible network redundancy, so that more users could be accommodated in the same network capacity. Together with another technology called 'single antenna interference cancellation', which also maximises network traffic by reducing the interference between the network antennae, operators could save US$30 per phone over the handset's life, Mr Torres said. The mainland is Nokia's biggest market, contributing 11 per cent of ?34.19 billion in net sales last year. Last week, the company unveiled three new phones at an estimated price of ?45 to ?75. It believed the phones could satisfy the mobility needs of a new class of handset users who cannot afford to spend more than US$5 per month on phones and services. Nokia expects that from now to 2008, there will be another billion mobile users worldwide, growing from 2 billion as of last September.
