Old strengths, new opportunities

Written by Nandagopal Rajan | Updated: Aug 26 2014, 07:08am hrs
It is hard to find an Indian with a mobile phone who has not used a Nokia at one time or another. But that brand is slowly fading, or should I say folding into another formidable brand. It wont be long before Nokia completely transitions into Microsoft and tries to reclaim the loyalty that many of us have to the Finnish phone maker. The work has already started.

Nokia is still in the fabric of this country. There are still 300 million Indians with Nokia phones we literally built the phone market here. I dont think we are stupid enough to ignore all of that. But we know we have to innovate to stay relevant, says Chakrapani GK, general manager, Consumer Channels Group of Microsoft India. He should know, having spent a considerable part of his career with Nokia.

While Microsoft will continue to woo the Indian smartphone consumer with Lumia devices, it has also started investing in local manufacturers to take the Windows Phone experience to different price points. We are looking at a 100-million-unit smartphone market this year and over half of that is the sub-R8,000 segment. For us to be a competitive challenger, we have to be entrenched at every R1,000 price point. Between R5,000 and R6,000 you are looking at 15-20 million units and there is another 15-20 million in the next R1,000 bracket, explains Chakrapani, adding how the effort has to be to produce different experiences around every $10 or $20 price change.

Till a few months ago, Nokia had hit a sweet spot with Lumia 510 and 520 smartphones, which were arguably the best devices in the under R10,000 segment. That was before the Moto phenomenon happened. The Moto E and Moto G have been so successful in India that despite being available only on Flipkart, Motorola has managed to sell 1 million units in five months and claim the number five smartphone brand spot, according to IDC. Most of Motorolas gain would have been Nokias loss. There has since been a spate of Android devices trying to make a mark in the sub-R10,000 segment and there are more coming. IDC gives Googles Android operating system a 84.7% Q2-2014 market share in India, while Windows Phone is flat at 2.5%, behind Apples iOS.

But Microsoft seems to have some weapons being readied in its armoury. I got a glimpse of one, an ultra-light Lumia phone with an Indian brands logo on it. It is among the lightest phones I have held in my hand, and would hit the Indian market soon with Windows Phone 8.1. As cheaper phones become better, it will be this sub-R10,000 category that will see bulk of the volumes.

Chakrapani says Microsoft is getting more precise and clear on how it wants to sell in this market. Between our first-party Lumia and our partners third-party Windows Phones, we will be there in every R500 bracket, he says. While Indian companies such as Micromax, which are now for the first time adopting Windows, have amazing agility in being able to conceive a product and get their manufacturers in China to deliver it on time, Microsoft wants them to focus on the final product and the experiences it can give the customers. We certainly want to build scale, but we also want to differentiate the devices.

This is critical to Microsofts vision of a mobile India, where the old Nokia brand has an important role to play. Microsoft is clear that its smartphone strategy will revolve only around Windows, now that it has buried the short-lived Nokia X platform which had Android at its core. However, the Asha platform will continue in the foreseeable future as a bridge between feature and smartphones. Chakrapani thinks it will have an advantage over cheap Android phones as people who look at a R4,000 phone as a big investment will not be reckless in their choices. He has the same counter for the challenge posed by Android in other sub-R8,000 price points. These are buyers whose replacement cycles could be years. That is playing to our strengths. We understand the consumer and the value and economics of the long term. We want to ensure that people who have less resources get better experience, he says, adding that they wont do something just for market share. We are catering to the segment where buying a phone is a big family decision, a choice made after spending an hour and a half in a store. These people dont like to be cheated; we want them to cherish that investment. If the brand lets them down, they wont come back.

In this segment, the physical store is still an important cog in the wheel. This is where Nokia brings another huge advantage to Microsoft. While the latter is present in just about 100 cities, Nokia is there in 800. How many technology brands in this country can be in 800 cities Microsoft is now among those handful of companies, says Chakrapani. Couple this with the volume Indian OEMs such as Micromax and Xolo can deliver and we could be looking at Windows Phone emerge as a strong number two in India. Microsoft hopes to achieve this with devices that offer the right balance of price, specifications, unique ID and services, something it managed with the hugely successful Lumia 520. We want to move from one such hero device to four such hero devices. The ideal scenario is one where Lumia has two of those and our partners the rest.

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