Nokia: The crash and Resurrection measures

Nokia has lost a massive share world-wide. In smart phones segment it is badly hit by Samsung, HTC, Google Android and iPhone and in the low-end mobile category it has faced intensive competition by local players. The purpose of this post is to analyze the factors that lead to the decline of Nokia in India and then discuss some ways to bring back the Nokia brand into its fervor.

A quick look at some stats:

Nokia accounted for around 37.5% of the Indian mobile handsets market share in 2011, the same was around 49% a year back. It used to be around 70% in the year 2007-2008

On the other hand Samsung has grown exponentially over the last 2-3 years and now enjoys a market share of 28%, its last yr market share was around 20%. If the same rate continues Samsung is very well on its way to replace Nokia as the market leader. 

In 2007-08, Samsung sale was 2 lac units approximately in a month, while Nokia sold 40 lakh units. At present, Samsung is selling is selling close to 30 lac units per month but Nokia has marginally increased to 46 lac. It is not only Samsung that is hurting Nokia but problem is that Nokia has faced competition from both the lower end as well the upper smartphone category which has led to this decline in Nokia's market share (the company is still hugely profitable)Nokia continued to maintain its leadership in the market with revenue of Rs 12,929 crore showing a meager growth of little over 0.2 per cent as compared to its last year revenue of Rs 12,900 crore.

At the lower segment, Micromax, Spice and G'five have made great inroads into the Indian markets and badly hurt Nokia sales. Nokia used to sell on its Brand value, long battery life and tough handset trademark. The success of its Nokia 3310 and Nokia 1100 model is still fresh in our minds. But the local Indian handset manufacturer provides a host of features at affordable prices which is very appealing to the rural public, lower middle class and middle class consumers. Due to this reason and also due to some popular adverts by Dhoni, Micromax now enjoys a market share of around 7%.

At the upper segment, Nokia has failed to deliver any hit smart phones. 

Nokia has lacked a hit smartphone since the N95, which was launched in 2006, before Apple entered the cellphone market. The N95 was a big hit. Ever since they have struggled barring Nokia N8 which was also a successful smartphone. The move from Symbian to Windows 7 OS (Mango) is also not doing any wonders either. Nokia Lumia 800 and Lumia 710 could do little in reversing the dangling fortunes of Nokia. These phones were released on Nov 14, 2011 and ever since the share value of Nokia has fallen by over 20% (indicating the lack of confidence in these launches); sales of these new models have been good but not per the expectations. Now, the problem with win 7 phones is that there do not exist enough applications for win 7 OS (around 15000 apps exist as of now). On the other hand, Android has over 4 lac available apps, Apple's iOS which is used in iPhone, iPad, iPod etc, boasts of over 5 lac apps. So this is also one of the factor that goes against the sales of Win 7 phones. As a result of the app availability, better pricing by some of the competitors like Samsung and enhanced brand value of Google Nexus, HTC, iPhone etc. have affected the Nokia sales.

Secondly, Nokia is having a complete switch over to Win 7 now, so all its smart phones will be win 7 based. Only the old ones which i use like E72 will be supported on Symbian.  Samsung on the other hand has a portfolio of 13 smartphones across platforms. Factors which have spurred growth in these devices are affordability and availability across operating platforms - Windows, Android and Bada. Samsung's most popular handsets are Wave and Galaxy S models which have really increased the sales and brand value of Samsung. This brand value enhances the sales of other models as well.

Another thing to point out is that Nokia Lumia 710 is priced higher that Samsung Omnia W and Lumia 800 is priced higher than Samsung Galaxy S plus (these phones have similar features), which can also be a let down for the some of the prospective buyers. Even Samsung Galaxy S2 is priced lower than Lumia 800. Nokia needs to position its products with utmost caution!

Another interesting fact is that around 38.5% sales of mobiles sales were in the multi SIM category. Nokia has 6 cell phones in this category.  The phones are Nokia C2-06 - Rs.4790/-, Nokia C2-03 - Rs.4390/-, Nokia C2-00 - Rs.2475/-, Nokia X1-01 - Rs.1799/-, Nokia 101 - Rs.1399/- and Nokia C1-00 - Rs.1422/-.  

Nokia C2-00 and Nokia X1-01 are doing really well.

Also to add, 40% of the handsets shipped in Indian market are priced below Rs 2500 and another 48% are priced between Rs 2500 - Rs 5000.

As of now, Smartphones contribute to around 12% of the sales volume and Nokia is the Indian market leader in this segment also with a market share of 60% but with no great smart phones in forecast and with the rising popularity of iPhone, Google Nexus and Samsung Galaxy S2, the future certainly looks gloomy. 

A look at Nokia share over the last few years:

But is their no way out or is the company just gonna wait and burnout?

Lets discuss some ways by which Nokia can be revived....

Nokia is planning to invest heavily in Win 7 OS phones with Microsoft and trying to create a 3rd world ecosystem after Apple iOS and Google Android. Currently there are more than 36,000 developers creating apps for Win 7 platform. Nokia hopes that the popularity of Win 7 OS will eventually help it in selling its Smart phones. But the pricing strategy of Nokia is not up to the mark, no doubt customers are ready to shell out that premium price if the product is trendy, cool and stylish. A great brand name helps is this, as in the case of Apple. HTC, Google on the other hand are creating smart phones on Android for both high and low end market segment, which is helping them achieve great sales. Nokia does not have that stylish brand as of now; it carries more of a safe, reliable and robust image, this image is also getting reduced with time. They need to create some more stylish cell phones and then market it in a more youthful way, there is a serious need of image changeover.

Nokia is next planning the release Lumia 900 to compete with Samsung Galaxy S2 and Apple iPhone 4 S.

Nokia needs to get the pricing right for this new entrant since Lumia 710 and Lumia 800 did not fare well as they were priced higher than the competition and Nokia is not currently in a position to demand higher prices from its customers. They need to price their handsets aggressively, slowly recreate their market dominance and then they will be in a position to charge a premium price for their handsets. 

For now, Nokia is going to stick to Symbian and Win 7, their immediate road map for future smart-phones  lies with Win 7 phones, its sales might pick up with time. But in my opinion Nokia should also jump on to Android, this way they can offer a wider range of handsets based on the OS type and will surely help them increase their sales, much as in the case of Samsung and HTC.

The reason I am laying so much stress on the smartphone segment is that Nokia still has strong presence in the lower end market, but it has a bad footing in the premium or the smartphone segment. Though this segment commands only around 12% of the sales volume but their contribution to the sales revenue is more and in future their market share is all set to increase rapidly. India has 13.5 crore internet users currently, out of this 8 crore are mobile net users and 8.5 crore use PC/laptop for internet. In 2014, the internet users will be around 30 crore and mobile net users are expected to be around 22.5 crore and PC net users will be around 15 crore. Hence, smartphones are the way to go and a dominance in this segment is of utmost importance for a big player like Nokia. And if they are able to launch some successful smartphones in the market, their market reputation and brand value will further increase which will spur the overall sales of other models also. 

So, there is a need for Nokia to change its vision, it has to be more trendy and youthful. Nokia badly needs to re-invent its product, it needs to design and launch some great models. And most importantly Nokia needs to put the customer at the center: there should more surveys conducted on the look and feel of a new handset before it is launched in the market, more R & D on upcoming handsets should be performed, pricing of the new launches should be competitive. Nokia service centers are abundant in number, customers should be made aware about them. Nokia should also start some college level competitions to reach out to the youth of the nation, who along with young employees are their biggest audience as of now. Its high time for Nokia to connect itself with the youth of the nation, they can achieve so using adequate media channels and marketing campaigns.

Hence, all is not lost for Nokia, it is still in the game and can certainly re-invent itself with a more thoughtful, open and customer centric approach.

PS: All the figures and stats mentioned in this post are as per mid 2011, this is done since all the latest stats were not available. The latest update is that Korean major Samsung has overtaken its Finnish rival Nokia to become the market leader India. This is the first time that Samsung's share - both in volume and value terms - exceeded that of its rival, Nokia, which had the leadership position till now. 

Samsung's volume market share in November 2011 stood at nearly 38%, and value share at 35.2%