That Nokia phones are no more the preferred brand of consumers and newer brands like the South Korean Samsung or the home-grown Micromax have eaten into its once dominant market share become clearer with the company’s declining revenue and profitability in the Indian market in the last few years.
The Indian business of Nokia, which is now owned by Microsoft, reported a 95% year-on-year drop in its net profit profit to R30.8 crore, on the back of a 51.53% decline in turnover to R11,072 crore in fiscal 2014, according to data with the registrar of companies.
In fact, Nokia, which was among the first to enter the Indian market and once dominated the market, has seen its revenues and profitability decline by 60.25% and 96.24%, respectively, in the last four years.
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An email sent to Nokia’s spokesperson in Finland didn’t elicit any response till the time of going to the press.
Nokia, once India’s largest handset seller, doesn’t even feature in the top five any more. It has an overall share of around 10% in the mobile phones market as of June (including smartphones and basic handsets), according to research firm IDC.
In the highly lucrative smartphones business, however, Nokia’s market share was around 4% as on June 30. This is in stark contrast with the quarter ended March 31, 2012, when the company had an about 30% share of the overall handset market in India.
Nokia held the record of being the world’s largest handset maker for 14 years in a row till the March 2012 quarter. It lost out to the success Google’s Android-based and Apple’s iOS-based smartphones, which severely dented the Finnish company’s fortunes. The company eventually ditched its own operating system Symbian and started making Microsoft’s Windows-based smartphones, but that didn’t help it compete with rivals like Samsung and Apple much.
In India, the fall in Nokia’s market share has been attributed to brands like Samsung, LG and Sony rolling out feature-packed and competitively priced high-end smartphones. The entry of low-cost Chinese smartphones sold by local brands like Micromax and Karbonn also impacted Nokia further.
With the Indian market shifting from basic feature phones (where Nokia is still the market leader) to smartphones, the company faces an uphill task of regaining market share. In April 2014, Microsoft acquired Nokia’s mobile phone business for $7.2 billion. Since then, the US-based company has made several changes to Nokia’s strategy of selling devices, including shutting down NokiaX, the forked Android smartphones, and discontinuing the low-cost Asha range of handsets. It was also reported that Microsoft was contemplating rebranding Nokia’s phones as Microsoft Mobiles.
Soon after the acquisition, Microsoft announced that it would cut 18,000 jobs at Nokia and around 550 employees from Nokia India moved to Microsoft.
Since November 1, Nokia has suspended production at its Sriperumbudur plat in Tamil Nadu, following the termination of a service agreement with Microsoft, to whom the plant is of no strategic importance any longer. An asset freeze imposed by India’s tax authorities prevents Nokia from selling the plant. At its peak, Nokia’s plant and ancillary units in Sriperumbudur’s special economic zone used to employ around 40,000 people.