With heavy competition from Chinese players and established brands like Samsung, can Nokia carve a place for itself once again in India?
HMD Global, sellers of Nokia phones, expects to double its revenue in India by the second half of CY 2018 on the back of its smartphone business as well as a growing feature phones vertical. It is looking at India as a cornerstone for future expansion. “We are now among top five smartphone players in 25 markets in Q2, including India,” says Florian Seiche, CEO, HMD Global.
HMD Global has so far launched nine smartphones this year in India and claims to be growing two times in H2 CY 2018. “While competition is huge, our strategy is to make the uniqueness of the Nokia brand of smartphones known to as many users as possible,” says Seiche.
Late to the party
But carving a place for itself may not be a cakewalk, with Chinese heavyweights and established Korean giant Samsung ruling the smartphones roost currently. The market has changed a lot since Nokia’s last stint with Microsoft. Even as India is the fastest growing smartphone market, the increased consolidation here is marginalising smaller brands. According to Navkendar Singh, associate research director, client devices, IDC India, the top five players (Xiaomi, Samsung, Vivo, Oppo and Transsion Group) hold about 75% of the market. A total of 35 brands fall in the remaining 25%. All brands, including Apple, have less than 2% market share.
And then there’s the online space to consider. For example, Xiaomi remained the leader with 56% of shipments in the online space and 33% shipments in offline channels in Q2 2018. Furthermore, Huawei is now seen as a long-term player in India. In such as scenario, where does a smartphone ‘newcomer’ like Nokia stand?
With two online exclusive launches — Nokia 5.1 Plus and 6.1 Plus — the brand plans to cater to the youth. “We are number eight in the smartphone market and number three in the feature phone market in India. With recent launches, we have focussed exclusively on the online channel,” says Ajey Mehta, VP, India, HMD Global.
The legacy advantage?
The three pillars of Nokia’s comeback strategy include a focus on differentiation in terms of design and service. The second is, teaming up with online and offline partners for distribution and third, engaging with fans. But is this innovative enough?
“Nokia was never about cutting edge innovation like Samsung or Apple. It was seen as a functional and dependable brand. On the brand side, the struggle is to find a new stronger value proposition,” says Ashish Mishra, MD, Interbrand India. “The value for money promise of Nokia is no longer relevant given the shorter lifecycle of the category.”
However, Nokia is pursuing value-driven marketing, unlike its Chinese
counterparts which have feature-driven marketing. “Nokia’s India strategy is more aligned to what it is doing globally. Its brand recall is always related to quality and durability of the product; it is relying on that,” says Pavel Naiya, senior analyst, Counterpoint. In fact, in the last one year, Nokia sold two out of three smartphones to people aged below 35 years. “The positioning of a superior durable product seems to be working for it for now,” Naiya adds.
But does this mean it has the potential to be present across price points from `1,000 to `60,000? “It is a people’s brand; however, the growth will come from sub-`20,000 — the belly of the market,”
Distributors tend to like Nokia — it has 550 exclusive distributors and is available at over a lakh retail stores. Legacy may be working for them, but end-customers are looking at tried and tested brands. “Xiaomi is about 30% of the market. Customers are looking for a tested brand, not Nokia of the past. But Nokia’s stock android experience could be a key deciding factor going forward,” says Singh of IDC.