The Wall Street Journal is reporting that Nokia will release a new entry-level smartphone at Mobile World Congress that runs on a modified version of Google’s Android operating system. The rumour that Nokia has been building an Android smartphone is certainly not a new one, with reports of the project codenamed ‘Normandy’ having leaked in December.

According to the report the Normandy smartphones will run a customised version of Android similar to Amazon’s implementation on its Kindle Fire devices. It would mean the removal of all of Google’s services replacing them instead with a combination of Microsoft’s and Nokia’s services. Instead of Google Maps, location tasks would be handled by Nokia’s HERE mapping service similarly gaming would fall under Microsoft’s Xbox moniker.

Nokia’s current range of low-end pseudo-smartphones, the Asha series, have failed to hold off the barrage of cheap Android smartphones coming mostly from China. Android smartphones are available from as little as R500 with the cheapest Asha device starting at around R750 making it 50% more expensive in a highly price sensitive market. Where Nokia still holds an advantage that could overcome the Android competition, especially in Africa, is in its brand name. Nokia is still the most popular phone of choice in South Africa garnering 44% of the market according to the World Wide Worx Mobility report.

With Microsoft’s impending purchase of Nokia’s Devices and Services division on the cards for some time around March or April, depending on regulatory approval, Nokia’s Android smartphone release could wind up being rolled out under the auspices of one of Google’s biggest competitors, Microsoft. One of the biggest costs associated with making Windows Phone devices is the licencing fee for the operating system, estimated to be as much as $30 (approx. R300), which is paid to Microsoft. Once Microsoft takes over Nokia that license fee would fall away immediately opening up Windows Phone to become an even more price effective competitor to Android.

The Android Phone ploy could therefore be just a stop-gap measure for Microsoft and Nokia while they ready their own barrage of ultra low cost Windows Phones. While not quite at the very low-end of the scale, the low cost Nokia Lumia 520 has already seen massive success in developing markets like South Africa with its attractive R2 000 price.

We will be at Mobile World Congress in Barcelona to report back live from the event.

[Image – Evleaks]