How Nokia fell from dominance and got pinned down by competitors

No company sold handsets better than it did. Not in India. It customised products as McDonald’s did with aloo tikki and sold them like Lux soaps in neighbourhood stores. This disruptive innovation landed Nokia India almost 60% of the handset market by 2005. The brand became a synonym for the product. Indians didn’t go to buy a mobile phone. They went to buy a Nokia.

Now many of them don’t. Increasingly, Indians go to buy a Nokia and come out with a BlackBerry, Samsung or Micromax. According to the latest 2010 (January-September) report by IDC, a provider of market intelligence, Nokia’s market share was 56.2% in 2008 and 32.9% in 2010. The brand has lost its X factor.

Nokia India, however, disagrees, claiming its market share in CDMA and GSM handsets today is 52.2%. Technology research firm Gartner puts the 2010 figure at 30.3%. GfK-Nielsen estimates it at 44.8%. Nokia says the IDC report does not include shipments from Nokia’s manufacturing facility in Chennai. Also, it says that IDC’s statement that most of its shipments from the Chennai plant were exports was “inaccurate and untrue”.

“IDC and Gartner are reputed global firms which have a history of tracking numbers and trends. We do extensive work on the handset industry and we often use their reports,” says Jaideep Ghosh, executive director, KPMG India.

But Gautami Srinivasan, 19, hadn’t given up Nokia on the basis of IDC or Gartner reports. A Delhi-based beautician, Srinivasan wanted a basic phone. Features didn’t matter, price did. What better than a low-end Nokia?

“The salesman told me that Micromax Q1 had a dual SIM, loud speakers, expandable memory and an ABCD [Qwerty] keypad. It was cheap but looked expensive,” she says.

Smartphone users have found different reasons to convert. Sweta Kumar, a 28-year-old consultant, was bored with her toy and wanted to buy a Nokia C7. But she ended up buying a Samsung Ace. The salesman at the multi-brand store pushed Samsung as “the top brand in smartphones” and the “leader in touch technology”. What nailed the deal was the phone’s Android operating system.
“The apps on Android are unmatched. They can even enhance the features of my phone,” says Kumar. It helped that at Rs 15,500, Galaxy Ace was Rs 2,500 cheaper than the C7.

Beyond the numbers what is significant is the fact that Nokia India market share almost halved at a time when the market grew rapidly. GSM subscribers alone grew five-fold to 543 million between 2006 and 2010.

Across all market segments, Nokia is playing catch up from the front. Globally, everyone knows how this came to be. The leaked memo by Nokia’s global CEO Stephen Elop made the reason official: Apple and Android. The first has creamed them in high-end phones by creating a new segment of smartphone users: “the iPhone fan club”. The other married utility with entertainment to create an efficient operating platform loaded with mobile apps.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: