Nokia’s outgoing CEO Stephen Elop was in Vietnam this week to inaugurate a new manufacturing plant, but it won’t be making fancy new smartphones running software from Microsoft, which recently agreed to buy Nokia’s handset business. Instead the factory will churn out hundreds of millions of bare-bones feature phones for the developing world.
The manufacturing plant in Vietnam’s Bac Ninh province, a little way east of Hanoi, has been under construction since 2011. It’s expected to employ up to 10,000 people and produce 45 million phones per quarter, 95% of which will be exported.
Even though Nokia’s market share is negligible in the market for the higher-end smartphones that affluent consumers prefer, it is still the world’s second-largest mobile-phone maker, thanks largely to low-end phones, which make up 90% of its handset sales. As Quartz has reported, it even manages to eke out a small profit on the Nokia 105, which sells for about $20.
The consumers that buy the 105 may be willing to upgrade to Nokia-Microsoft smartphones in the future—Elop, who will continue to run the Nokia phone business for Microsoft when the deal closes next year, has described low-end phones as an “on-ramp to Windows Phone.” Under the terms of Microsoft’s acquisition of Nokia’s handset division, it will have the right to use the Nokia brand on its phones for 10 years.