Nokia Recruits Vespa Rider in Race Against Androids in China

An 800 million-euro ($1.07 billion) factory, located in Kecskemet about 90 kilometers (56 miles) southeast of Budapest, began production of the Mercedes B-Class compact today, marking the carmaker’s first new assembly plant in 15 years — and likely the last major auto facility to be built in Europe.

“We have, I’m quite sure, the largest force of people who work with developers here in China over any of the other ecosystems,” Nokia Chief Executive Officer Stephen Elop said yesterday in Beijing, where he unveiled versions of Lumia based on Microsoft Corp. (MSFT)’s software. “We have been focused on making sure the locally relevant applications get a lot of attention.”igjNQCHuSOc4

As many as 140 million smartphones will be sold in China this year, an increase of more than 80 percent, pushing the country past the U.S. as the world’s largest market for the devices, according to researcher Gartner Inc. Local directory services integrated with maps are among applications that may give Lumia phones an edge and justify a higher price, particularly in sprawling cities such as Beijing.

Nokia declined 1 percent to 4.09 euros as of 3:42 p.m. in Helsinki, paring the gain this year to 8.5 percent.

‘Up For Grabs’

“In China, the game is far from over,” said Derek Ling, who runs Tianji, China’s biggest professional networking site with 9 million users. “The iPhone is not nearly as dominant in China as it is in the U.S.” Apple has been “having difficulty negotiating the right terms with the biggest provider in China, which is China Mobile (941), so everything is up for grabs.”

Nokia yesterday showed versions of Lumia 800 and Lumia 610 to run on China Telecom Corp.’s network. It’s also working on phones for networks operated by China Unicom Hong Kong Ltd. and China Mobile Ltd.

Nokia and Microsoft said this week they will offer grants for Windows Phone app startups through Finland’s Aalto University. “We’re doing the same type of thing here in China,” Elop said.

Nokia and Microsoft yesterday announced a developer program called Be Top to help developers create applications for Windows Phone users in China. The program has a budget of 5 million yuan ($794,000), Anna Shipley, a Nokia spokeswoman, said by e-mail.

Dianping, Jiepang

Under the agreement with Let’s Powwow, data about restaurants and clubs will be pushed to Nokia’s map database for use in other apps, Guli said after an evening ride in Beijing, where his company is based.

Nokia gained access to geographic databases for China when it acquired mapmaker Navteq in 2008.

Location-based apps already in the Windows Phone Marketplace include Dianping, a city directory that has coupons and supports check-ins; and check-in service Jiepang.

Jiepang has a new version using Nokia maps that will be exclusive on Lumia phones, said Leo Lee, a spokesman.

Android phonemaker Samsung Electronics Co. (005930), working with the three major carriers in China, was the country’s leading smartphone supplier in the fourth quarter with a 24.3 percent share, according to Gartner. Nokia was second with 19.6 percent, while Apple had 7.5 percent.

Renren, Sina

“Nokia faces very stiff high-quality competition including local phone makers who offer a mobile experience plugged into all sorts of services,” said Benjamin Joffe, who runs strategy consulting firm Plus Eight Star in Beijing. “So it depends how good an integration they can do with services like social networks and e-commerce.”

China’s biggest social media platforms already support Windows Phone. Renren Inc., a social networking service, is listed on the Windows Phone Marketplace, as is Sina Corp.’s Sina Weibo, a microblogging service, and the QQ instant messaging system from Tencent Holdings Ltd.

Renren and Sina have worked with phone maker HTC Corp. (2498) to offer handsets with preloaded apps and in some cases special buttons to access the services, while companies such as Xiaomi Corp., which sells high-end handsets running a customized version of Google Inc. (GOOG)’s Android for less than half the price of an iPhone 4S, aim to make money later on software and services.

‘Last Shot’

Windows Phone integrates social networking with the user’s contact list and photos, providing live updates to the screen. With Facebook Inc. and Twitter Inc.’s websites blocked in China, Nokia will need deeper integration with Chinese social networking applications to make the most of the platform’s evolving abilities.

Windows Phones from all manufacturers had a 1.9 percent smartphone market share in the fourth quarter, according to Gartner, compared with more than 50 percent for Android and nearly a quarter for the iPhone.

“Windows Phone is Nokia’s last shot if they want to maintain their smartphone share in China,” said C.K. Lu, a Taipei-based analyst with Gartner.

China was still Nokia’s biggest market last year, even as revenue for the greater China region, which includes Hong Kong and Taiwan, fell 18 percent as users were attracted to cheap Android smartphones competing against mid-priced Nokia devices.

Nokia will need smartphones priced as low as $150 to compete, Lu said. The company announced the 189-euro ($252) Lumia 610 in February and it is Nokia’s cheapest Windows Phone. The price for the China version of the 610 hasn’t been revealed.

“Right now both the iPhone and Android have such great momentum and Windows Phone is really swimming upstream and they have a lot to prove,” said Ling, who hasn’t yet committed to a Windows Phone app. “Ultimately we follow where the users are.”



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