Nokia: Losing market share in India

How can Nokia get back on track in India’s teeming mobile market? The Finnish company’s N-series has been its crown jewel for years, but it is losing its battle for supremacy to new entrants such as Apple and Google.

Aug 24, 2010 06:00:00 PM | Article | Campaign India Team

Nokia remains the market leader with 52.2 per cent share, but analysts are concerned by its 15 per cent drop in revenue in the 2009/2010 fiscal year. This is despite the fact that Nokia launched 22 devices in 200,000 retail outlets across India and offered services across 400 towns and cities.

The reason for Nokia’s troubles are the fact that local players such as Max, Karbonn, Lava and Spice, are offering Indian consumers value-for-money. In addition, the low-cost, Taiwanese or Chinese-made models, offering similar applications and functionality, and perceived high-end features, are much in demand. Even so, the battle is less pressing in this low-end segment and, Nokia managed to hold its 64 percent market-share from 2008 to 2009.  

In terms of user interface, experience, and quality, Nokia still reigns in the Indian market. However, Indian buyers seem to be willing to forsake these attributes given the short life-span of the handsets.

Also, the majority of mobile phone subscribers have more than one SIM card, and are using dual-SIM phones. While demand for dual-SIM card handsets has risen over the last year, Nokia has not stepped in to fill this niche and many of its low-cost models are sparse on features.

Nokia is also facing fierce competition from Samsung, the world’s second largest handset vendor, and LG, who have made substantial gains in the Southeast Asian market. With nearly 192 million mobile subscribers added in the 2009/2010 fiscal year, success in India is vital. As the Indian players adapt and respond to their users, Nokia must reposition itself, or its chances of retaining pole position are doubtful.

Brand health diagnosis

Bindu Sethi, chief strategy planning officer, Grey Asia-Pacific:

“Nokia penetrated the Indian market by catering to a wide consumer segment. And, similar to other industries, Nokia’s competitors emerged to bite into the pie that it created.

In technology-based categories like cars, watches and mobile handsets, the extremities are always vulnerable. The premium and lower price segments can be wrested from the market leader by brands that focus on those segments. That is why a brand like Nokia that straddles a wide spectrum needs to protect its flanks.

For example, Apple and BlackBerry, which focus on smartphones, create differentiation and satisfy unmet consumer needs. Brands that address the bottom of the pyramid play differently as their quest is for numbers. Fast moving consumer goods like detergents and shampoos have seen similar occurrences in India, where regional low margin players have offered bigger volume at lower prices.

Nokia needs to come up with innovative ideas that cater to the changes in the Indian market. Most importantly, Nokia should continue to reiterate what made it consumers’ first choice in the first place - its quality.”

Madan Mohan Rao, research projects director, MobileMonday:

“Nokia has been slow in reacting to a number of nimble moves, from local entrepreneurs and handset giants like Samsung. But the company isn’t down and out.

It launched its latest C Series device in India - the C5, for the mid-range market. It is also credited with helping to double the size of the music industry in India with more people listening to music on the mobile phone than on radio or television.

At the high end of the market, it is becoming more fashionable to have a BlackBerry or an iPhone in urban India, rather than a regular handset.

Some analysts fear it is this race to keep up with the mobile application game that may be
distracting Nokia from the harsh realities of the market on the ground in new frontiers such as rural India.

Nokia’s ‘Made for India’ phone bundled with a flashlight, and Nokia Life tools with agricultural information services for Indian farmers do not seem to be coming as fast now.

Nokia has to learn from its shortcomings and fumbles in the India market and there is a lot of room for it to manoeuvre and re-invent itself.”

This article was originally published in the 29 July 2010 issue of Media.