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‘Companies need to play offensive’
Photo Credit :
markets, Nokia India
(Pic By Tribhuwan Sharma)
Few global corporations defy the law of averages as much as Finland’s Nokia. The world’s largest handset manufacturer has a 40 per cent global market share, while the nearest competitor has less than one-fourth of that. Its dominance is more prominent in India, the world’s fastest-growing telecom market, with a market share of over 65 per cent. BW ’s Rajeev Dubey met Nokia India’s managing director, markets, D. Shivakumar to ask how Nokia will retain leadership in the slowdown. Excerpts:
With agile organisations such as Samsung at your heels, what is the biggest challenge that Nokia faces?
When you are a large player, the minute you go to market to take up a challenge, what you do not do is what becomes their (competitors’) opportunity. So you need to constantly watch what you could do because what you do is virtually part of the course.
How has the current economic slowdown affected Nokia’s investments, employment and advertising?
Nokia continues to invest in advertising, in the brand and in retail. Our investment in Nokia-branded retail and our outlets remain the same. Our investment in a big property called Indian Premier League and Shah Rukh Khan stays the same.
At this point of time, there has been no impact of the slowdown on Nokia.
How do you prioritise your market share protection by segments? Maruti faced this situation in the early 2000s when every new player ate into its market share. Yet, they retain 50 per cent of the market.
When large companies play defensive, they lose. They need to play offensive. Over the past 14 years, Nokia has consistently done things — invested in brand, people and solutions — ahead of the curve.
Nokia set up its Priority Dealer Network; today, we have 700 stockists where you get the company guarantee. That was the first stage. In the second phase of the past three years, the days of independent growth were over. We had to think of dependent growth with operators and organised trade. We have forged good partnerships. The third one is now. We have a base of over 300 million subscribers. This was essentially about voice. We are now adding 10- million plus every month. And it won’t be about voice any more. By 2006, Indians were waking up to alarms, and taking pictures more on cellphones. By 2007, they were listening to the radio on mobile phones. Two years from now, they will be emailing and browsing the Net more on mobiles. If we take that train of thought, we believe the future is about solutions. So, it will be an email-led solution device, it will be a music-solution device.
How has the share of plain vanilla mobiles transformed into these kind of devices in Nokia’s case?
There are few devices that do not have a radio or a torch or an alarm clock today. We believe that there is durable convergence at the bottom end which is ‘alarm clock plus a torch plus an FM radio’. Separately, it will cost you Rs 800-900, but it will cost you another Rs 300-400 if you have a mobile phone. This is a four-in-one product at the bottom end, and we will see similar shifts at the top in terms of music and emails.
Has that transition shown up in your numbers as a percentage?
Yes. In fact, India is a bi-polar market. There is enough value at the top end, and there is enough volume at the masses. Our company has done solid innovations at both ends; relevant innovation priced at the right value point.
From low-end phones to high-end ones, what has been Nokia’s market share in the past, and how has it changed?
It has roughly been similar.
What is the ratio for low-end versus high-end phones?
In value terms, it is split roughly equally between mid-ends and high-ends. And for the rest, it is equal. This is because innovations at high ends have been pretty good.
What has been the biggest mistake Nokia has made in India?
I am really searching. I do not want to be arrogant or complacent. I think we have done things well.
You have made no mistakes?
Let me put it this way. There might be failed experiments, (but) there are no mistakes.
Like which one?
There could be so many. We tried so many things, not one or two. And our culture is one where we encourage people to try many things. And if things do not work out, we move on. But the few that worked (out) have been very big. Culturally, when we fail, we fail gracefully; when we win, we win humbly. We continue to win more than we lose. One mistake I would say is something which is personal — we can move much faster, much, much faster.
Any market niches that you thought competition got into ahead of you?
In 2006, there was a concept of the slim phone, which we did not have. But today the only slim range is from Nokia.
How crucial is your 70,000 sales network to your leadership? How come nobody has been able to replicate it?
Why isn’t it replicable? It is not just about advertising a product. It is about educating trade, it is about managing the price erosion. To do it at that scale and consistently at a given time is what Nokia has mastered. It involves super human execution capability. We have data by each outlet.
So the key to that would be your dealer’s confidence that if there is a price erosion it will be taken care of?
He knows the Nokia sales system will come every second or third day to serve. We will take care if something goes wrong.
(Businessworld Issue Dated 27 April-04 May 2009)