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Deal to boost Nokia India’s feature phone business

Microsoft’s acquisition of Nokia’s mobile phone business may spell good news for the US firm in India.

business Updated: Sep 04, 2013 02:35 IST
Manu P Toms
Manu P Toms
Hindustan Times

Microsoft’s acquisition of Nokia’s mobile phone business may spell good news for the US firm in India.

Despite its struggles with Samsung at the high-end and Chinese vendors at the low-end, in volume terms, Nokia is the largest feature phone company in India with a 15.4% marketshare, and since feature phones account for 85% of the Indian handset market, Microsoft will gain if it continues with the Finnish major’s feature phone stable, said analysts.

Although revenue fell 18% and Nokia lost the numero uno crown to Samsung, Nokia India clocked a sizable Rs 9,780 crore in revenue in 2012-13.

“India is predominantly a feature phone market and Microsoft would only benefit by continuing with Nokia’s feature phone portfolio,” said Manasi Yadav, senior market analyst at research firm IDC. “It has inherited a feature phone maker with strong brand equity and distribution channel. Nokia has hugely invested in building an ecosystem around its Asha series phones. They may want to stick around with it at least for the next few quarters.”

However, question marks loom over the its research and development (R&D) centres and manufacturing base in India. Also, possibilities of Microsoft’s tie-up with Indian vendors such as Micromax for cheap Windows smartphones look dim.

Reports were doing round about Nokia shifting its Chennai manufacturing plant to Vietnam or cutting production by half to 80 million units though the company denied them.

“Microsoft might continue with the Chennai plant as long as they sell feature phones,” said an analyst with a global consulting firm.

“The biggest concern is about Nokia’s research and development centres in India. They may slash the headcount there,” he said.

The company had cut 300 jobs in its R&D centres in Bangalore, Mumbai and Hyderabad two years ago. It currently has around 1,000 people working in R&D division in India.

According to IDC’s Yadav: “Microsoft may look to leverage on Nokia’s hardware capabilities to build sub-Rs 10,000 smart phones on Windows platform. However, this makes us sceptical about any tie-ups with Indian vendors for inexpensive Window phones. We have to wait and watch.”

First Published: Sep 04, 2013 00:32 IST