Although Nokia is proving slow in launching a smartphone to rival the iPhone, Blackberry or Gphone, it is being quick in its efforts to bring new services to low-end non-smartphone users.

The world's biggest cellphone maker hopes by providing low-end users with services that previously were only available on expensive smartphones, these users will take longer to mirage to the high-end market where Nokia no longer has an advantage, thus giving the company extra time to defend its position in the high-end market.

Last week, Nokia announced the launch of its new Life Tools Service in China, which provides users in rural areas with customized services in the fields of agriculture, education and entertainment. The service will be delivered through short messaging services, Nokia said.

"In China, only 10 percent of mobile phone users have access to the Internet," said Chris Leong, Nokia's senior vice-president for China, South Korea and Japan. She said the company has "a huge ambition" to connect the remaining 90 percent of users in the country with the Internet.

According to the company, the Nokia 1616 and the Nokia 1800 will support the new service across China. "At least 10 handsets" will be launched in China to support the service, Leong said.

Nokia sold 107.8 million mobile devices in the first quarter, an increase of 16 percent over last year and a 15 percent fall from the previous quarter, according to the company's quarterly report.

In China, the company sold 21.1 million units, about 19.57 percent of Nokia's global sales volume. This was an increase of 20 percent compared to the fourth quarter last year, the only area with positive growth quarter-on-quarter.

"In countries like China, the price of the smartphone needs to be reduced to below 1,500 yuan to be accepted by most users," said Pang Jun, an analyst at research firm GFK China. He said only about 15 percent of cellphones sold in China are smartphones. The number is about 30 to 40 percent in the United States.

In China, where cellphone users have surpassed 700 million, smartphones are still used mainly by city dwellers. In the country's vast rural areas, most users still have handsets that cost less than 1,000 yuan, meaning that they are unable to surf the Internet as conveniently as smartphone users.

Earlier this year, Nokia launched a marketing campaign to promote its low-end C and X series products in China.

According to GFK, Nokia's market share in China is nearly 40 percent. That percentage is even higher in rural areas.

"I think Nokia's strategy is to bring its nascent Ovi services down to low-end handsets to expand its user base," said Fang Li, an analyst at research firm Analysys International. But she said that Nokia also needs to quickly launch innovative products in the high-end market because users' migration to smartphones is just "a matter of time".

(China Daily May 15, 2010)