Motorola Goes On the Cheap

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Editor's note: Though Nokia had a loss of market share, it did not lose its No. 1 spot. This article originally stated otherwise. We apologize for the error.

The battle for handset market share continues. Nokia (NYSE: NOK) may have announced its own plans for emerging markets recently, but today Motorola (NYSE: MOT) upped the ante by saying that it has received a contract to provide supercheap cell phones to potential users in developing countries, which is a highly coveted market.

According to today's announcement, the company will provide handsets to countries like India, Nigeria, Bangladesh, Yemen, and Kenya at the dirt-cheap price of about $30 each. That far undercuts Nokia's recently announced phones, which are intended to sell for about $120, a price tag that may be too large for most residents of developing nations.

The contract was awarded to Motorola by the Emerging Market Handset program, which is provided by the GSM Association; Motorola won a similar contract back in February to provide $40 phones to emerging markets. Motorola vied with other handset makers to get in on the ground floor in these countries, where there will likely be explosive growth in the number of mobile phone users.

Meanwhile, Nokia has delayed its music-playing handset, while Motorola already has the ROKR model, which incorporates the hot Apple (Nasdaq: AAPL) iTunes service.

Many of you may remember Nokia's fall from grace back in 2004, when it lost market share, sinking to 28.9% of the market, as competitors like Motorola saw their own share edge up. At that time, much of the blame was put on Nokia's failure to provide some of the hottest handset styles that consumers were looking for. Given Motorola's aggressive recent moves, it might be fair to wonder whether it's got its sights on stealing market share once again.

Alyce Lomax does not own shares of any of the companies mentioned.