Microsoft has a hit with low end phone

While software giant Microsoft has been touting its software at the top end of smartphone land, it is actually Steve Ballmers’ considerable bottom end where the money is likely to be made.

The new Nokia Lumia 521 is a much lower-priced smartphone launching with Windows on board, and is being seen as Microsoft’s boldest move to win mass market share.

The model will go on sale at Walmart at an unsubsidised price under $150. This is good value for a phone running up-to-date software without a long-term contract.

Terry Myerson, head of the Windows Phone unit at Microsoft’s campus near Seattle, told Reuters that it was an opportunity for it to offer a very high quality device in the mainstream.

It is starting to look like Microsoft is right. The Nokia Lumia 521 went on sale on the Home Shopping Network (HSN) last week, where it has already sold out.

The 4G phone  is a mid-range device with some high-end features, such as a four-inch touch screen, five megapixel camera and high-definition video display.

What is surprising is that Android, which is open source, is supposed to be a lot cheaper for the likes of Samsung to put in the shops. Microsoft phones with their Vole Tax should be much more expensive.

So far Microsoft has done better overseas with its phones. It has 20 percent of the market in Mexico and Poland, and almost seven percent in Britain.

Myerson said that outside the US, Microsoft was doing better because there was not the influence of the carriers such as AT&T and Verizon Wireless.

US phone retailers pay heavy up-front subsidies from AT&T and Verizon, in return for long-term service contracts, which mean that mean US customers can afford the most expensive hardware from Apple and Samsung. This has made it hard for Microsoft to get its foot in the door.

Myerson says Microsoft has to differentiate on more than just price and introduce some “killer hardware” to use Microsoft’s Office and Xbox products to turn the phone into a work tool or advanced toy.