The mobile market in India is currently worth Rs 35,946 crore growing at 14 per cent year on year. Samsung is now the No 1 brand in the country having overtaken Nokia after registering a growth of 47 per cent last year. Indian brands such as Micromax, Karbonn and Lava have also made inroads into the market, mostly at the expense of Nokia.
The big change in the market has been the growth of smartphones with people increasingly happy to shell out a little extra for it. India is now the third largest smartphone market in the world with 9 million units sold last year. This accounts for 15 per cent of the total mobile phone handsets sold; the remaining 85 per cent being feature phones. In the smartphones category, phablets (screen size: 5 to 6.99 inch) now account for 30 per cent of the category.
The other big changes are reduction of prices of fast 3G wireless technology and the expected launch of 4G technology on a national scale. Riding on these changes, data consumption is expected to grow and this will, in turn, further fuel the growth of smartphones. This is also supported by trends in the US, where 62 per cent of the mobile subscribers use smartphones as of Q2 2013.
Nokia in India Nokia was one of the first handset companies to enter the India market in the early 1990s and the brand almost became generic to cell-phones. Its hold on the Indian market was far stronger than in the international market. Adding to this is the fact that the Indian mobile phone market grew at a scorching pace in the early 1990s, Nokia even started one of its largest manufacturing facilities in India. However, along with the rest of the world, Nokia lost its leadership position in India, unable to capitalise on the smartphone trend.
Current range of Nokia phones in India
Feature Phones
Number Series: These are basic feature phones within the Nokia portfolio. It has phones like 106, 207 and 515.Asha Series: These are also features phones but the differentiating factor is that the phone comes pre-installed with popular apps, and the memory and processing power is better than the number series phone. This competes with feature phones from Indian manufacturers such as Micromax, Karbonn, and Lava as well as foreign manufacturers such as Samsung and LG.
Smartphone
Lumia Series: This is the smartphone sub-brand from Nokia. The models go from 520 to 1020 each differentiated by processing speed, cost and other high-end features. It is based on Windows OS.
What analysts say
The drop of shares of Nokia is possibly one of the most analysed and written about cases and analysts believe Nokia lost shares due to a combination of reasons:
1. High on feature and competitively priced products from global majors such as Samsung, LG, Sony at the top end.
2. Entry of feature rich but cheap Chinese handsets under local brands such as Micromax and Karbonn at the lower end
3. Its inability to find a universal platform like Android for its smartphones. This, analysts feel, will hound Nokia much longer and much harder as the market continues to shift to smartphones from feature phones.
Current Situation
Facing competition and erosion from all sides, Nokia responded by cutting the prices of its feature phones, introduced the feature-rich Asha range and jettisoned its OS for the smartphones in favour of Windows OS in mid-2011 with the launch of Lumia range. The high-profile launch of the Lumia and subsequent marketing pressure has not really resulted in a reversal of fortunes for Nokia.
In early September 2013, Microsoft finally bought over Nokia’s handset business, which has raised even more questions on Nokia than it has answered.
The Problem
Industry feels that the Microsoft buy was meant to popularise the Windows OS and possibly fight Google phones in the market. However, given that the brand Nokia is leased to it for just 10 years, how will the company use the handset manufacturing facilities and the brand to further its objective.
The marketing team realises that currently Windows OS is definitely not the most popular and will, hence, hamper the growth of Nokia handsets, especially in the smartphone segment. At the same time, unless the Nokia smartphone share grows rapidly, the objective of popularising the Windows OS will not be achieved. It is obvious that the Microsoft board is only keen to popularise the Windows OS and not just increase Nokia handset sales.
You are the head of the Mobile Solutions business at Microsoft and have been asked to share your views on what should Microsoft do from here with respect to Nokia handsets division and why. The objective for you is to make Windows the strong second as the operating system for phones, if the not the first, during this 10-year period. As both companies in question are live companies, you can gather additional information on their current strategies from secondary research.
Write to > blcasestudies@thehindu.co.in in not more than 700 words, your advice to the board of Microsoft. ( >see contest rules )
Note: This is a case prepared by the author and not an industry review article. The figures used are from secondary research sources and used only as inputs for the respondents to device strategy. The author does not claim to have any first hand information from any of the companies mentioned here.
(Vishwadeep Kuila, an alumnus of IIM-A, runs a marketing consultancy in Chennai, Brand Vectors)