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Nokia under siege?

india Updated: Jun 11, 2011 10:20 IST
Vivek Sinha
Vivek Sinha
Hindustan Times
Vivek Sinha

Connecting to shareholders is not the same as connecting people. Finnish giant Nokia's shares plunged in a single session by 18% last week when it candidly admitted that its key targets will be missed on bad market conditions in China and Europe.

Its chief technology officer has gone on long leave in a symptom of its woes.

It's Indian journey has not been that easy either. The handset maker that is a household word has steadily lost turf in the country, though it still remains at the top of the mobile handset brand heap.

Its market share plunged 46% in 2009 to 30% in 2010. In a sign of waking up to market realities, it announced this week it will make dual-SIM handsets to address downmarket mass consumers - something it had earlier said it will not do.

"Nokia seems to trying to do the catch up game with other players," says Naveen Mishra, lead analyst, CyberMedia Research.

The company faces challenges both at the high-end smartphone (a phone that combines features of phone and a computer) market where Apple's iPhone, Research In Motion's Blackberry, Samsung and HTC are giving it a stiff fight. At the lower-end are the lowly priced Chinese brands such as the G-Five and desi Micromax that keep the company on its toes.

In the ultra-high smartphone market, where the price tag can top Rs 25,000, the cult following of "cool" iPhones and corporate icon BlackBerry is a headache for Nokia. BlackBerry's ubiquitous push-mail and the iPhone's touchscreen-led user-friendly slickness are hard to match for a sturdy engineering-oriented label like Nokia.

At the lower end, it is sheer price play, though Nokia had made an Indian splash once with a Rs 1,500 model, the Nokia 1100.

"Nokia's low cost portfolio is not as lucrative as it should have been," says Anshul Gupta, principal research analyst at research firm Gartner.

But Nokia is not exactly sleeping on the job. Its main gambit is not about the machine, but what you can do with it. It is adding service options to handsets - matching all price points. One of them, example is "Mobile Money" that enables transfer of cash.

"Its better to play to our strengths rather than play to somebody else's strengths," Viral Oza, marketing director, Nokia India, told Hindustan Times. "We wish to offer our services across our portfolio at all price points."

Music download service Ovi Music and Nokia Tej, a business application for small businesses like shopkeepers are among such offerings.

It is also picking up iPhone-like tricks to help community users. For example, its N8 - launched last year - pushed data consumption amongst consumers to a new high.

"An example is the ESPN widget (sports application) we launched which crossed the million download mark in 45 days of launch," said Oza.

Nokia is not worried about the lower end.

Nokia believes there is not enough space for over 100 handset vendors and expects a lot the players to disappear over time. "The mobile industry is one of the quickest in terms of innovation cycles. Price alone cannot be an innovation," says a confident Oza.

Nokia's slow phasing out of its Symbian platform in favour of a partnership with Microsoft to launch Windows phones is its next big bet. But will it work?

It is clear that there is no cakewalk ahead for Nokia as it defends a turf that once was a virtual monopoly.

What Nokia is doing to fight | Top five handset players in India | The changing game