Samsung chases Nokia with low-cost phones

Samsung plans to produce more low-priced phones to compete with market leader Nokia, according to Korean press reports.

The world's second largest mobile phone maker will expand its cheapest product line by releasing up to six models retailing at $30.

"This is our 'ultra low-end' strategy to chase up Nokia," an unnamed Samsung official told Korea's Electronic Times.

Samsung spokesman Kim Tae-hoon confirmed the new strategy in a statement to media, saying that the firm will launch colour-screen handsets costing between $40 and $50 in developing markets including southeast Asia, India and Latin America.

Korean media reports claimed that Samsung could cut manufacturing costs to as low as $20 by sourcing some components from its own Flash memory, DRam and logic chip manufacturing businesses.

However, analysts warned that the cut-price strategy would inevitably hurt profit margins, which currently stand at just below 10 per cent for Samsung's telecoms business.

Samsung's average selling price across its entire phone range was $151 in the third quarter of 2007, compared to Nokia's $120. Both figures come from company financial releases.

Samsung hopes to sell 200 million handsets in 2008, compared to an estimated 160 million in 2007, and to raise its global market share from 15 per cent to 25 per cent by 2010.

Market leader Nokia increased its share of the global market from 36 per cent to 39 per cent in the third quarter of 2007.