As part of its ‘next billion strategy to connect one billion people with a mobile phone and the internet by 2013’, Nokia recently launched two internet-enabled mobile phones (Nokia 110 and 112) targeted at low end consumers.

Although Nokia often launches new phones, this launch is of special significance as it is the first time that the Finnish handset giant has launched its phones in Pakistan and then on to its global markets (usually new phones are launched in other markets and then brought to Pakistan).

There were two major, interconnected reasons for this decision, both linked to the tremendous growth potential in Pakistan’s low end mobile handset market.

First, according to Haseeb Ihtisham, Area Head of Marketing, Nokia Near East, “80% of Pakistanis buy phones costing less than $100 (approx Rs 8,000-9,000)”; therefore the majority of the population qualifies as the target audience for low end handsets. In addition to this, Pakistan is also what Ihtisham calls a ‘replacement market’ and most users replace and upgrade their handsets with new, feature enriched models every 18 months on average.

The two factors combined led Nokia to the obvious conclusion: that launching feature enriched handsets for the low end market in Pakistan would be a viable venture. Therefore the new Nokia handsets (110 and 112) are priced at Rs 3,800 and 4,200 respectively. In line with Nokia’s strategy of connecting people to the internet via their mobile phones, the handsets offer (along with features such as dual SIM, VGA camera, media player etc.), the ability to browse much more cost effectively compared to other mobile handsets.

Ihtisham explains that the phones come with an in-built cloud computing technology that compresses internet pages and cuts data costs by almost 90%. To provide a further incentive, the 110 and 112 models offer Rs 8,000 worth of free game apps for those who activate their internet (GPRS).

These features and incentives are of crucial importance in a market where overall internet penetration is estimated at 10% of the entire population (Source: CIA World Factbook) and where penetration is expected to grow as a result of internet usage via mobile phones. There is some evidence to suggest that mobile internet usage is on the increase – according to the Pakistan Telecommunication Authority, there were approximately 15.7 million active mobile internet subscribers as of June 2011. Nonetheless, mobile internet still has a long way to go in Pakistan.

Apart from making internet enabled handsets cheaper and reducing data costs (a measure that is already being implemented by telecom operators via specialised internet packages such as Jazba and Talkshawk), Ihtisham says that another important aspect in improving penetration is to simplify internet usage by creating applications that lead users directly to the relevant websites instead of looking for them via search engines.

“We need to understand the issues that a first-time internet user will face and then tailor our approach accordingly.”

To this end, Nokia has been working with local app developers to create apps that are simple, relevant and user-friendly.

It is pertinent to point out that Nokia’s interest and investment in first-time internet users and low end markets as well as its overall ‘next billion strategy’ is an aggressive attempt to rebuild its faltering market share in developing countries where it is said to be losing out to players such as Samsung and Chinese handset brands, which are able to offer value-laden handsets at extremely affordable price points.

Considering that that 110 and 112 are Nokia’s first forays into offering an internet-enabled handset to the low end market, the user experience, especially in relation to Samsung and the Chinese devices will be of utmost importance in determining whether or not these new Nokia handsets are successful.

Additional reporting by Vanessa D’Souza.