Recently, Nokia roped in Shah Rukh Khan as its brand ambassador. The Finnish handset major, which holds the lead in the mobile handset market, both in India and globally, for so long had decided to go without an ambassador in India. This is the only area, perhaps, where the market leader was behind its competitors. While American handset maker Motorola has got Abhishek Bachchan as its brand ambassador, London-based Sony Ericsson is riding on the popularity of Hrithik Roshan. Korean handset major Samsung, too, had launched campaigns in the past with John Abraham.
Nokia?s recent move is just one aspect that signifies the changing dynamics in this industry. Though Nokia continues to maintain its stronghold in the country with more than 75% of the market share, in the past couple of years, other players like Motorola, Samsung, Sony Ericsson and LG have managed to inch forward slightly. Motorola is at the second position in the country with a slender lead over Samsung. According to reseach firm IDC, the second quarter of 2007 saw Nokia retaining its big market share while players like Samsung and Sony Ericsson showed slight improvement in their positions. However, none of them has been able to emerge as a clear-cut challenger to Nokia?s dominance in the country. But this is not stopping them from continuously evolving their strategies and taking a more aggressive stance. In fact, it?s spurring them more.
Explains Romy Juneja, founder and COO of MobileNXT, a mobile retail chain, ?With Nokia having the dominant share in the country, finding niches seems to be the only way out for players, at the moment.? For instance, Motorola and Sony Ericsson, both are betting big on the power of music to gain more ground. A few months back, Motorola launched MOTOROKR, its music phone and coupled it with a high-pitched campaign featuring brand ambassador Abhishek Bachchan. Moreover, after Motorola acquires Soundbuzz (which owns many music libraries in the Asia-Pacific region), which it announced recently, its mobile music capability is expected to get a big boost. Though the American handset maker is going through rough times globally, it is trying every trick in the trade to retain its number two position in India. In the third quarter of 2007, its global market share dropped by 7.6% (to rest at 13.1%) and Samsung overtook it to take the second lead globally and its shares are at an all time low.
Says Lloyd Mathias, director – marketing, Motorola. ?For 2008, we will focus on music phones along with the entry level segment. Also, the enterprise segment is going to be big.? The latest offering from Motorola is its Q series of smart phones, which cater to the enterprise segment along with its MOTOMING. Like all others, the company is gung-ho about the entry-level segment, too. Recently, it launched MotoYuva, which has a MP3 player, 2GB expandable memory and a stereo FM with recording and comes with an attractive price tag of Rs 3,000.
Enticing offerings in the entry-level segment not only guarantee huge volumes for the players but also act as the stickiness factor. According to Juneja of MobileNXT, ?When consumers upgrade to a better phone, they prefer picking up a phone that has the same user interface as their old handset (most of the times, the first). It is very difficult to break that relation.?
But Samsung is choosing a different route for itself. The company is aiming at doubling its market share to 15% by this year and wants to focus on growing the mid to high-end segment apart from focusing on the upgrade market. ?The entry level and the upgrade market are a parallel story in India. While the entry level is big in itself, upgrade will also grow,? says Arpita Pal Agrawal, associate director of PwC?s telecom group.
Though its cheapest phone costs around Rs 1,700, the Korean major prides itself on its offerings in the mass segment, which are colour handsets with features like FM. According to Asim Warsi, general manager – GSM marketing, Samsung Telecommunications, the company is aggressively looking at ?pushing business connectivity through its high-end portfolio.?
Though Samsung has managed to come out with innovative offerings from time to time, its market share has remained in single digits, with a noteworthy increase last year. From 3-4% in the beginning of 2007, it is now hovering around 7-8%, according to company officials.
Late last year, Samsung got on board Sunil Dutt, who was sales director of Nokia India. It is the first time that the company has appointed a country head for India. He comes armed with a four-pronged agenda: Expanding distribution, building the brand, getting new people onboard and upgrading competencies.
While at Nokia, Dutt must have been keenly watching Samsung?s (then a competitor) every move. So what did Nokia do right that Samsung did not? ?Nokia got all four elements?the brand, products, people and the distribution?right at the same time. That?s why it is successful.? Dutt is now trying to get these elements right for Samsung too, preferably all at the same time. Warsi says that the juggernaut for the company begun in early 2008 and blocks have started moving now.
In the past one year, Sony Ericsson also did a couple of things that are noteworthy. Apart from making youth icons Hrithik Roshan its face, it launched the Walkman and Cybershot series, which clicked well. These moves not only increased its share but also did a lot to improve its visibility and image.
Sudhin Mathur, general manager, Sony Ericsson Mobile Communications, India, says that the company wants to position itself as a complete entertainment brand. ?We are looking more at category leadership in music and camera phones than at market leadership. We want to grow our market share, but profitably,? says Mathur.
The fact of the matter is that entry-level phones guarantee high volumes for the players despite coming at razor thin margins. The company has set a target of selling 10 million handsets from the India by 2009. Of course, the handset major will have to do well in the low-cost handset segment. It recently launched two entry-level handsets, especially made for India. These phones have a built in radio AM player, which is adequately suited for rural India where FM is still to make inroads. At the same time its focus on camera and music phones remains sharp.
Despite its competitors upping the ante, Nokia looks unperturbed. The handset major boasts of a portfolio that spans almost all categories. ?A Nokia for everyone,? is how Devinder Kishore, director -marketing, sums up Nokia?s strategy for India. While it continues to have its ears close to the ground, it is betting equally big on adding mobility to consumer multimedia and leveraging its enterprise solutions capabilities. ?Here Nokia?s approach is going to be to take the best of mobility and marrying it with the best of IT,? says Kishore.
The latest flashing on Nokia?s India screen is transforming into an Internet services company, which is the way ahead for it. ?India is among the top 10 nations in the world to use smartphones that offer mobile internet services for corporate and business professionals,? says Chakrapani GK, director – emerging markets & India, corporate business development, Nokia India.
The company?s E-series of high-end phones has recently become quite popular in the country and Nokia is now working towards making its business devices more affordable. As per the Q4?07 results over two million Nokia Eseries devices were shipped in the last quarter.
Says Prashant Singhal, a telecom expert with Ernst & Young, ?The services side of the market is huge, but the revenues get split between the vendor and the service provider. However, handset makers are now thinking about what they can offer on the services side that a service provider cannot. So, in this arena, the competition really is with the service provider.?
One more area where Nokia is far ahead of its competitors is in realising India?s manufacturing prowess. The handset major has one manufacturing unit in Chennai, in which it has announced a fresh investment of $75 million, taking Nokia?s cumulative investment in the plant to $285 million. The facility not only continues to feed India?s fuelling handset demand, but also of other countries. ?We currently export over 50% of our production to 58 countries in the Middle East, Asia, Africa, Australia and New Zealand,? says Sachin Saxena, operations director OLS, Nokia India.
According to Gartner, mobile phone production in India is expected to grow at a CAGR of 28.3% to reach 107 million units in 2011. Though, for most of the players, domestic mobile phone production currently caters mainly to local demand, over the next five years, Gartner expects as much as 30% of production to be exported to other countries. In tune with its reputation, Nokia is already at it.