Microsoft Lumia 650: What’s with the 15k pricing?

lumia-650Microsoft is not doing terribly well in the Indian smartphone market, or for that matter, in most smartphone markets around world. But the company continues to surprise with its pricing strategy.

The latest from its stable is the Lumia 650, the successor to the rather well-recieved 630 and 640.

However, going by the pricing, Microsoft seems to have been living under a rock for the last one year.

The Lumia 650 has been priced at Rs 15,299 — which puts it in the upper half of India’s smartphone market by price.

In comparison, you can buy phones like LeTV Le 1s and Redmi Note 3 (well sorta buy in case of Redmi) for Rs 11,000-12,000 and get three times as much RAM and a processor that four times as powerful as the Snapdragon 212.

Yes, you read that right.

The Snapdragon 212 scores 300 in single core mode and about 1000 in quad-core mode on benchmarking application Geekbench 3.

In comparison, the LeTV Le 1s scores 1,000 in single core and 5,700 in multi-core mode, while the Redmi Note 3 scores 1,500 in single-core and 3,500 in multi-core mode.

Instead of the 4 Ah battery on Redmi Note 3, the Lumia 640 offers a 2 Ah battery, and instead of a 5.5-inch full-HD display, the Lumia 640 comes with a 5-inch 720p screen. The only saving grace is that it’s an AMOLED panel.

The primary camera resolution is 8 MP and on the front, there’s a 5 MP unit. Storage is 16 GB, or half of the other two, and yes, the Lumia 640 does support an external MicroSD card.

PRICING GONE AWRY?

And yet, the pricing is far, far ahead of the specifications.

This could still have been forgiven a year ago when the market was a different beast and not as competitive. Hardware prices were higher a year ago too.

Not surprisingly, there are some extremely strong reactions coming from consumers on social media. Some of them are so strong that we cannot print them here.

So what is going on?

First, all the models that are available cheap — like those from Xiaomi, Lenovo and LeTV, are all web exclusives.

And the problem with web exclusives is that they are bought primarily by very tech-savvy buyers.

If Lumia has to compete in this market, then it has to offer a more decent (well, a lot more decent) set of hardware for this kind of price.

On the other hand, about 55% of mobile phone sales still happen in the offline, or brick-and-mortar stores in India, and this has been an area of strength for Microsoft as it inherited a strong distribution network from Nokia.

However, to sell using the offline channels, Microsoft has to provide for decent margins for distributors and retailers. While online distribution cost, including margins, could be as low as Rs 400 for a Rs 15,000 phone, offline, it will be closer to Rs 3,000.

What Microsoft could do is that it brings out an online-only model to compete in the online space, while leaving the Lumia 650 to fight it out in the malls and corner shops.

But still, Rs 15,299? That’s still a little too steep.
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