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National Column
Are we ready to connect again?
After quarters together of being battered left, right and centre by the competition in India and globally, Nokia is finally looking forward to sunnier days post its deal with Microsoft and a slew of product launches in India. But will the Microsoft intervention be enough?
Issue Date - 30/04/2012
When we debate over how glocalisation took the Indian market by storm post-liberalisation, Nokia will really be impossible to ignore. The Finnish giant managed to take an early lead in the handset arena after its debut in 1995, and has sustained its position since. Over the years, India became Nokia’s favourite hunting ground for applying its innovative marketing strategies. Specifically, it churned out a range of handsets across the price pyramid starting from low cost ones like Nokia 1100 in 2003, and ensured that product features were in tune with Indian conditions. While this may surprise many for obvious reasons, Nokia launched its first touchscreen phone back in 2004 to capitalise on the smartphone segment – the Symbian OS series 90-based 7710. It also kept on unleashing smartphones like N95, based on Symbian and eventually bought the company in 2008.

And that is approximately the time when time and tide started turning, as Nokia lost its steam to the relative smartphone upstarts like Apple and Samsung. On the low end, players like Micromax, Spice and G Five ensured that Nokia had to battle harder for every inch of space. The fact that Symbian had by then become woefully outdated did not help matters. In Q2 2011, Nokia India was still ruling the charts with 45.8% market share in smartphones and 25% in the overall mobile handset market (IDC). But its share drastically slipped to 35.3% in smartphone shipments for Q3, 2011, closely followed by Samsung at 26%. Positively, where Samsung gained by 5% in smartphone shipments, Nokia has managed an increase in overall handset market share by 6.8%, for which its dual-SIM phones played a critical role at the lower end.

The key now, however, has to be its alliance with Microsoft. Nokia initially came up with high end smartphones viz. Lumia series (Lumia 800 & Lumia 710) at a pricey tag of around Rs.28,000, but it has managed to move into the affordable space as well. With Lumia 610, some telecom analysts are upbeat. Deepak Kumar, Research Director, IDC India says, “The slowdown in Nokia’s smartphone shipments is in line with expectations that it would be preparing to transition some of its market share from Symbian to Windows.” Nokia’s shares plunged from $8.74 on NYSE on May 10 last year to $4.51 by December 19. Since then, they have recovered somewhat to close at $5 on March 10.

But competition is still maintaining a leg up. Samsung, which earlier brought in the Mandel handset for Rs.18,500, has recently launched its dual-SIM Android-based smartphone – Samsung Galaxy Y Duos. It provides an updated Gingerbread OS and that too at a competitive price against the available option from Nokia (Asha series). Interestingly, Samsung is already making waves globally with the ‘Focus Flash’. Priced at Rs.14,000, it is currently among the best selling Windows platform-based phones in US followed by the Lumia series.

Since its debut, Nokia has largely been positioned as a mass market brand and not a premium brand like Apple. It has plans to infuse nearly $50 million by 2014 to revamp its Indian operations for both high end and low end segments. Six Lumia series models have been launched in the first quarter of 2012. Add to that the new model launches from the Asha series respectively, which are much hyped as ‘smartphone-like phones’, but still use Symbian. Overall, Nokia is looking at crossing the ‘50% market share’ rubicon again by 2012. Furthermore, there is a possibility of Nokia entering the tablet market by next year on a Windows 8 platform. Gopi Rajeev, Lead India analyst for Smartphones & Tablets, IDC says, “If they can cater to prices, they (Nokia) still stand a ground. It is not just Android all the way.”

Of course, the negatives are still daunting enough. Nokia faces a dramatically different situation today compared to 1995, when it had to battle with the disconnected marketing strategies of players like Siemens and Motorola. There has to be more of localisation in the app space. Nokia’s OVI store, which pales as compared to Android and Apple, should rope in more application developers with a focus on creating regional applications. Also, the company should first get its mass market strategy in order and push down its smartphone price points more aggressively to make them top performers in the lower end. Volume growth is clearly in favour of the smartphone segment. IDC projects mobile phone shipments to India to grow at a CAGR of 13.03% from 2011 to 2015 and reach 30 million by that calendar year. In contrast,smartphones are expected to clock a CAGR of 63.4% in the same period and reach 77.5 million by 2015. Initial gains in this market will help Nokia build the momentum for sustainable market share. If you compare the lowest priced Nokia smartphone with its competitors currently, the company is still far from gaining that kind of edge. The Lumia 610 retails at Rs.12,600. In comparison, LG Optimus ME 350, Motorola Charm, Samsung Galaxy Y and Sony Xperia Mini 10 are priced at Rs.7100, Rs.6999, Rs.7300 and Rs.10,000 respectively. Nokia needs to get back to connecting with this part of India first, also since its premium offerings may take time to create their space in the market amidst the Android and iOS wave.
Anirudh Raheja           

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