Case Study : Can Nokia Regain Shares in India

Case facts: The mobile market in India is currently worth Rs. 35,946 crore growing at 14% year on year. Samsung is now the No. 1 brand in the country having overtaken Nokia after registering a growth of 47% last year. Indian brands like Micromax, Karbonn, Lava etc have also made inroads into the market, mostly at the expense of Nokia. The big change in the market has been the growth of Smart-phones with people increasingly happy to shell out a little extra for it. India is now the third largest smartphone market in the world with 9 million units sold last year. Which account for 15% of the total mobile phone handsets sold; the remaining 85% being feature phones. In smartphones category, phablets (screen size: 5 to 6.99 inch) now account for 30% of the category. The other big changes being reducing prices of fast 3G wireless technology and the expected launch of 4G technology on a national scale. Riding on these changes, data consumption is expected to grow, and this will in turn further fuel the growth of smartphones. This is also supporterd by trends in US, where 62% of the mobile subscribers use smartphones as of Quarter II 2013. Smart Phone Growth across Major Countries Country Q2 2013 (Million Units) Peoples Republic of China (Mainland) US India Japan UK Others Total 88.1 32.9 9 8.6 7.4 92.1 238.1

Q2 2012 (Millions Units) 42.3 24.2 3.9 6.9 5.5 75.4 158.3

Growth 108% 36% 129% 25% 34% 22% 50%

Smartphone Market-share India Samsung leads the smartphone market share with 26% and Micromax is a close second with 22%, According to IDC, local smartphone brands now account for over half of all smartphone shipped into India. The Indian smartphone market is highly price sensitive, in-fact around 70% of the devices shipped are priced at Rs14,000 or lower and 67% of the devices shipped are priced at Rs 10,000 or lower. The Nokia in India: Nokia was one of the first handset companies to enter the India market in the early nineties and almost became generic to cell phones. Their hold on the indian market was far stronger than their hold in the international market . Adding to this the fact that the Indian mobile phones market was growing at a scorching pace in the early nineties, Nokia even start one of its largest manufacturing facilities in India. However along with the rest of the world, Nokia lost its leadership position in India unable to capitalize on the smart phone trend. Nokia Vs. Competition (Overall) India S.No 2007 2008 2009 Nokia 62.5% 64% 52.2% Samsung 6.2% 10% 17.4% Micromax NA NA 4.1%

2010 2011 2012

39% 38.2% 27.2%

17.2% 25.3% 31.2%

6.9% 6.3% 8.7%

Current Range of Nokia Phones in India Feature Phones Number Series- These are basic feature phones within the Nokia portfolio. It has phones like 106, 207, 515 etc. Asha Series- These are also features phones but the differentiating factor is that the phone comes pre-installed with popular apps, the memory, processing power are all better than the number series phone.This competes with feature phones from Indian manufacturers like Micromax, Karbonn, Lava as well as foreign manufacturers like Samsung, LG etc. Smartphone Lumia Series- This is the smartphone sub-brand from Nokia. The models go from 520 to 1020 each differentiated by processing speed, cost and other high-end features. It is based on Windows OS. What Analysts say : The drop of shares of Nokia is possibly one of the most analysed and written about cases and analysts believe Nokia lost shares due to a combination of reasons: 1. High on feature and competitively priced products from global majors like Samsung, LG, Sony at the top end. 2. Entry of feature rich but cheap Chinese handsets under local brands like Micromax and Karbonn at the lower end 3. Its inability to find a universal platform like Android for its smart phones. This the analysts feel will hound Nokia much longer and much harder as the market continues to shift to smart phones from feature phones. The Current Situation: Facing competition and erosion from all sides, Nokia responded by reducing prices of the feature phones , introduced feature rich Asha range and finally jettisoned its OS for the smart phones in favour of Windows OS in mid 2011 with the launch of Lumia range of smart phones. The high profile launch of Lumia and subsequent marketing pressure has not really resulted in the reversal of fortunes for Nokia. In early September 2013 Microsoft finally buys over the handset business of Nokia, which has raised many more questions on Nokia than answered. The Problem: Microsoft bought over the Handset business of Nokia in order to popularise the Windows OS and possibly fight Google phones in the market. The board has however questioned whether the objective of the buy was to get quick access to manufacturing facility for handsets or was it to make the Nokia brand successful ? The future marketing and product direction would completely depend on the clearly stated objective. You are the head of Marketing for the Mobile Solutions business at Microsoft and have been asked to share your views on what should Microsoft do from here with respect to Nokia handsets division and why. As both the companies in question are live companies, you can gather additional information on their current strategies from secondary research. Write to : in not more than 500 words, your advice to the board of Microsoft.

Note: This is a case prepared by the author and not an industry review article. The figures used are from secondary research sources and used only as inputs for the respondents to device strategy. The author does not claim to have any first hand information from any of the companies mentioned here.

Vishwadeep Kuila Brand Vectors