Nokia faces stiff competition in the fast-growing touchscreen handset market. Can it outpace its rivals?
Nokia straddles over the market for GSM mobile handsets in India. All told, Indians buy about 10 million handsets a month, almost 70 per cent of which are Nokia. Next is Samsung with a little over 16 per cent of the market. The gap between the leader and the runner-up is huge. But there are reasons why Nokia needs to worry. In the fast-growing touchscreen space, Samsung says it leads the pack with a market share of 30 per cent. Nokia, on its part, says that it is the leader and Samsung is just a few short steps behind it, though it does not share market share numbers.
The touchscreen slice is already about 10 per cent of the market; and the industry reckons it could rise to over 20 per cent in a year’s time. Apart from Nokia and Samsung, LG too has turned aggressive and wants a bigger share of the pie. A clutch of street-smart local brands (Karbonn, Lava, Micromax, Videocon and Spice, to name a few) are active too. Together, they have cornered 17.5 per cent of the handset market with their aggressive price tags and high-decibel advertisements. Their share in the touchcreen segment could be equally high, analysts say.
But Vineet Taneja, head of marketing, Nokia India, does not seem unduly perturbed. “We have always had competition. There were five to six in the past; now there are just a couple of them,” says he. What he means is that worthy rivals like Motorola and Sony Ericsson are not as aggressive as they were in the past; its competitors are now only Samsung and LG. Sector experts believe that it will be a while before others can catch up with Nokia, such is its dominance of the Indian market; but they caution that it should keep an eye on brands that trail behind it. India, after all, is the world’s largest mobile market. The fight for global dominance starts here. That’s why it is the most competitive market on earth. And touchscreen could well be the future.
More than touch
Touchscreens contribute less than 10 per cent of Nokia’s business in the country. Nokia claims that it launched the country’s first touchscreen phone, the 6108, way back in 2003. (Samsung and LG did so full five years later in 2008). In other words, it is no stranger to the touchscreen technology. It has eight models in its portfolio at present. This is way short of Samsung (20) and LG (12). So, Nokia wants to double the number this year. But rivals aren’t sitting idle. LG, for instance, plans to come out with 15 touchscreens this year at different price points.
Nokia actually views the touchscreen phenomenon differently from others. “Touch is just an input mechanism. It can never become 100 per cent of the market. It is in vogue now but that’s about it,” says Taneja. “It is increasingly becoming more affordable and common in the handset market. We don’t get swayed by the short-term frenzy. Instead of being excited about the product itself, we are all about services that we are bundling them with the handsets.”
According to him, internet on the phone is the way to go, and touchscreen will only facilitate it further, “because touch enables interactivity a lot more than key phones”. For him, the edge is in riding the touch wave to “go beyond the hardware” and sell solutions like music, email and internet browsing experiences. Nokia’s primary target is the youth, obviously.
Nokia, which claims to be the only full-line handset player in the market, is betting big on its online digital initiative, Ovi (www.ovi.com), which is initially free and offers a host of services like music download, internet browsing, email services, online digital store and GPS maps. Taneja wants to dish out Ovi services from all of Nokia’s brand stores within the next few months to increase his presence in the market. “We are providing the online services (Ovi) in nearly 20 per cent of our stores already,” he adds.
A rural service called Nokia Life and mass awareness of internet in smaller cities makes another set of strategies that Nokia is taking to rural India for its edge over others in competition. “In just two years we will massify the entire touch form factor and push it into the rural markets. Internet is one service which the rural market is using first on the mobile handsets. We want to fast capture that experience. Touch will only help in achieving that,” says Taneja.
Mass push
He feels the rural market is moving from a penetration market to a replacement market where collaboration with the government and the operators will give it the edge to not only sell its hardware but also the services. For example, Taneja says, Nokia is currently working with operators to bundle various data plans for its customers in Tier II and III locations. “Nokia is the market leader in mobile handsets because of its biggest asset — the brand. We have a very clever balance of the global brand name and strong local presence,” says Taneja.
Will this be good enough? The results of Nokia’s strategy will be out in the months to come. But what is certain is that it will be a tough fight. Samsung, which is the leader in the touchscreen segment in the world, has segmented the touchscreen market with different products. And it has decided to strengthen its portfolio further. (At present, 20 of its 50 models in the market are touchscreens.) It has come out with a new model called Monte. More could follow. At the same time, it has embarked on a huge campaign to push its phones at the retail stores. Retailers have been guaranteed a 30 per cent return on all Samsung merchandise. Large multi-brand stores have Samsung attendants to push the brand. “At Samsung, we rely on our differentiated and innovative features to give superior value to the consumers,” says Samsung India Director (mobile & information technology) Ranjit Yadav.
LG too has drawn up ambitious plans in the category. There’s a big retail push on the cards. And it has come out with a new campaign for it’s the Cookie Pep with film stars John Abraham, Abhay Deol and Genelia D’Souza. “The insight for the campaign was that young people live their lives in gangs. The age of the smoldering loner is over,” says LG India Managing Director Moon B Shin.
And then there are home-grown players with cheaper handsets and aggressive marketing strategies. Aren’t they another area of worry for Nokia? “Not really!” says Taneja. He feels though the local manufacturers have been around for three or four years now, they lack the quality and uniqueness to compete in the long run. “There is no competitive advantage they have. Soon, one will kill the other,” says Taneja. He, however, admits that not always does innovation or uniqueness help in the market. For example, the 6108, which was the first touchscreen to be launched in the country was way ahead of its time and had come straight from the Nokia lab. It, therefore, could not fit in, had many loopholes and as a result did not click. Nokia can hope for better luck in the future.
