Nokia drops price of smartphone

Stiff competition may have forced 50 percent price cut

ORLANDO, Fla. - Nokia announced on Monday that it has cut the price of the Lumia 900 smartphone by half.

The phone will now sell for $49.99 with a two-year contract with AT&T, down from its original price of $99.99. The new price comes just three months after the device was introduced.

While this may be a move to boost sales of the flagship Windows smartphone, Nokia spokesman Doug Dawson said the price cut is "a normal strategy that is put in place during the life cycle of most phones."

An industry analyst said the move was a way for Nokia to "drive down inventories" of the Lumia 900 before the company launches a new generation of devices that will run on an updated version of Windows Phone software. That launch is expected in the fourth quarter.

While Nokia won't release sales figures for the Lumia 900 until Thursday, the company is facing stiff competition in the smartphone market from competitors like Apple and Samsung. Once the world's dominant mobile phone maker, Nokia has struggled in the U.S. market. Matters were made worse for the company when the Lumia 900 was met with mixed reviews, followed by a software glitch that prompted Nokia to offer consumers a $100 AT&T credit.

Nokia's stock price has declined in recent years amid shrinking market share and profit warnings.

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