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Nokia Extends Lumia Family

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In an attempt to compete more efficiently in the smartphone segment, Nokia Corporation (NOK - Free Report) has unveiled two new low-priced versions of its Lumia handsets. Containing high-end features, these latest Lumia devices will give the company a full range of Windows-based smartphones catering to a wide variety of customers.

In addition to Nokia’s traditional services like Nokia Music and Maps, the large screen Lumia 720 comes with a 1GHz processor and NFC (Near Field Communication) technology. The smartphone imitates the styling of Nokia’s flagship Lumia 920 and houses a 6.7 megapixel camera.

The smartphone also possesses a 1.3 megapixel front-facing camera that delivers HD quality pictures. Meanwhile, Lumia 520 comes with a smaller 4 inch touch screen and 5 megapixel camera that uses the same Carl Zeiss lenses applied in Lumia 920.

Lumia 720, which is priced at $329 without carrier subsidies, is expected to be launched in Hong Kong, Singapore and Vietnam in the first quarter, while Europe, Africa and India will witness the launch in the second quarter of 2013. The Lumia 520 is expected to be retailed at $183 and will be available in the U.S. markets via T-Mobile in the second quarter of 2013.

Nokia faced a lackluster 2012, as the company lost its title as the world’s largest cell phone manufacturer to Samsung Electronics. Amid stiff competition from Google Inc.’s Android and Apple Inc.’s (AAPL - Free Report) iOS-based phones, the company also lost its smartphone leadership.

Nevertheless, the company’s decision to join forces with Microsoft Corporation (MSFT - Free Report) is finally paying off as the latest Lumia 920 and Lumia 820 have performed better than its predecessors.

According to research firm IDC, demand for smartphone costing less than $250 grew by 99% in 2012, while smartphones above $250 grew by only 23% during the same time frame. IDC also expects 45% growth in smartphone shipment in 2013 backed by carrier subsidies in developed countries and high demand for sub-$250 phones in the emerging countries.

Though Nokia still need to go a long way we believe that it is targeting the right market. The next phase of smartphone growth is expected to come from the less expensive handset segment as sluggish rate of economic growth is forcing customers to curtail their budget.

The company expects to attract more customers and maintain the sales momentum with these two low-budget phones, thereby extending the reach of Windows-based phones.

However, on the flip side, both the handsets lack LTE (Long Term Evolution) features, which puts the phone in an unfavorable position as most of the latest smartphones come with LTE features. It remains to be seen how the company fares in the low priced smartphone market, which is being dominated by Samsung and the Chinese handset manufacturers.

Nokia currently carries a Zacks Rank #2 (Buy).

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