You got it.

The team that Elop acquired over a year ago are still working in a silo away from the Nokia bureaucracy on SmarterphoneOS (of course, it will be re-branded when Nokia come to release it). The OS is intended to completely replace S40 which isn't fit for purpose anymore (Nokia know Asha sales will take a pasting as Android/WP get cheaper and cheaper). Like Blackberry 10, the aim of this device is to get very tight social networking integration (i.e. the unified notification center) with a much more fluid UI (S40 like Symbian was just never designed to work with touch devices). Like the Asha series, the device will occupy the price point between Series 30 phones (~$20) and Windows Phones ($150+) and will continue to be marketed at developing markets. I believe that the plan is to unveil a device running this OS at Nokia World 2013 this September.

Elop isn't a complete fool. He knows that the creaky Series 40 OS is on its last legs and that developing market consumers will just move to cheap Android phones if nothing is done. Windows Phone is not an option for Nokia. A licence for the OS is $25 alone and WP just won't scale to a lower-end device anyway. The only option for Nokia is SmarterphoneOS (or whatever Nokia will end up calling it).

All will come clear during Nokia World 2013.