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Nokia's New $99 Phone Could Mean Trouble For Microsoft

Stocks in this article: NOK MSFT FB GOOG BBRY

NEW YORK ( TheStreet) - Nokia (NOK - Get Report) has just announced a tiny new phone that could be a very big deal for them and disrupting to their competitors. It might turn also evolve into a formidable bargaining chip against Microsoft (MSFT - Get Report) and Windows Phones.

The new phone is called the Asha 501 and it's part of their low-cost line of handsets designed to appeal to users in what is commonly known as "emerging markets." That usually means phones with very few features that sell at a very low price point. They chose to announced the handset in India - one of the world's largest emerging markets.

From what we can tell, this phone may be inexpensive for users to purchase but looks to be anything but cheap or ordinary.

Until now, Asha phones ran on Nokia's ancient Series 40 operating system. It's the lightweight software platform they introduced 14 years ago and has been installed in more than 1.5 billion Nokia handsets. The phone is fine for voice calls and SMS messaging but don't expect most modern-day smartphone conveniences.

Nonetheless, the new touchscreen Asha 501 is different, and enticing. It uses what Nokia is calling its Asha Software Platform - basically some Series 40 with a large dose of innovation from a software platform called Smarterphone from a Norwegian company they purchased in 2011.

The bottom line here is this new phone blurs the line between very basic feature phones and very expensive smartphones. It also gives Nokia the basis for some leverage when it comes to its dependency on Microsoft and their Windows Phones.

The Asha 501 isn't the ultimate new Nokia phone. Far from it. It has a tiny, 3-inch touchscreen. It weighs 3.5 ounces. Only a 3.2 megapixel rear camera without a flash. It has Wi-fi but only runs on 2G cellular networks. The large capacity battery can provide 17 hours of talk time and last up to 48 days in the standby mode. Best of all, the 501 is designed to sell for less than $100 without a contract.

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