Mobile handsets: Nokia’s smartphone troubles

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Updated: October 28, 2019 11:14:10 AM

While Nokia phones are sold on both Amazon and Flipkart, the company stays out of flash sales — a strategy that has become a staple for brands like Xiaomi and OnePlus

Nokia is betting solely on its software play in a market that is obsessed with hardware specifications.Nokia is betting solely on its software play in a market that is obsessed with hardware specifications.

Once a darling of the mobile telephony world, Nokia’s second innings, under the aegis of HMD Global, has yet to make a significant dent in the cut-throat smartphone segment in India. Once a market leader with nearly 60% share, the Finnish mobile phone brand now commands 1.9% of the smartphone market in India, according to Counterpoint Research.

However, in the three years since its comeback, Nokia has fared better in the feature phone segment. Since 2019, Nokia has claimed 9% of the feature phone market, and is ranked among the top five feature phone brands in India. As per industry estimates, feature phones account for around 50% of the Indian mobile phone market.

Nokia is betting solely on its software play in a market that is obsessed with hardware specifications. The brand is claiming to shun “planned obsolescence”, which it believes has come to define the smartphone category. Ajey Mehta, VP and region head, APAC and India, HMD Global, says, “With Android One, we promise two years of OS updates and three years of monthly security patches on all our phones. Therefore, users don’t need to keep changing phones to have the latest features.”

What’s new?
Sample this: in September alone, there were 60 new mobile phone launches across price ranges. Smartphone analysts believe that a majority of consumers prioritise new features and hardware specifications over software details like the OS and its upgrades.

“To consumers, freshness of features is very important,” says Navkendar Singh, research director, IDC India. “Consumers compare specs like battery life, RAM and camera quality.”

The problem with Nokia’s bet on software over hardware is that consumers value security and OS upgrades only after making a purchase, as pointed out by Tarun Pathak, associate director, Counterpoint Research.

From a sales perspective, Nokia’s Android One strategy could prove counterintuitive as users may end up buying fewer Nokia phones. But Mehta is not worried. “There will be a section of the market that will want the latest specs, but there will also be a sizeable chunk of consumers who will stay loyal to their Nokia phones. We do not want to compromise consumer experience to shorten purchase cycles,” he says.

Singh says Nokia should stay put in the high-volume, low-margin feature phone market, as it is expected to stay relevant in India for the foreseeable future.

Currently, Nokia is playing in the cluttered Rs 10,000-Rs 20,000 smartphone price band where competition is brutal. “Nokia must create desirable premium (Rs 25,000-Rs 40,000) flagship products. There will be users looking to upgrade from a Xiaomi or Realme smartphone,” he adds.

Mehta agrees that Nokia’s specs are not disruptive, but he insists they are “competitive”. Nokia’s latest smartphone, Nokia 7.2, comes with the flavour of the season — triple cameras — and is priced at Rs 18,599-Rs 19,599.

Lacking buzz?
Nokia has 500 exclusive distributors and is present in 10,000 stores across 300 cities in India. Yet, it has not been able to claim a satisfactory share of retail shelf space, owing to the popularity of Chinese mobile phone brands, the likes of Vivo, Oppo, Xiaomi and Realme, which are known to spend extensively on marketing. Some of these brands have different brand ambassadors for every new handset launch.

Pathak says Nokia’s low retail presence is a result of consumer behaviour. “Retailers do not push products anymore; the consumer today is hyper aware and knows which phone to buy,” he adds.

On the marketing front, Nokia revived its association with IPL team Kolkata Knight Riders in 2018. The brand also roped in Parineeti Chopra, Alia Bhatt and PV Sindhu as endorsers. But have these efforts paid off? “Visibility is relative. In the smartphone market, Nokia is not as visible as some of the other, more aggressively marketed brands,” says Dheeraj Sinha, CSO, Leo Burnett.

Nokia’s low visibility on e-commerce marketplaces, too, is conspicuous. While Nokia phones are sold on both Amazon and Flipkart, the company stays out of flash sales — a strategy that has become a staple for brands like Xiaomi, Realme and OnePlus. Furthermore, other brands also have strong online communities that contribute to word-of-mouth marketing.

As per experts, Nokia needs to market itself more aggressively by harnessing the power of its legacy to command a higher share of voice.

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