Bloodied by Market Losses in the Smartphone Category and Hit by Scathing Critique on its latest N8 Launch, Nokia’s Leadership Position is under Serious threat. Given its Reticent Posture, The Worst could come This Year.
Nokia still commands 84% of the market share in the price band of below Rs.2000. This price band fulfils the need of those looking for handset for voice and text messages. Nokia brand value works on this front. However, when it comes to the price band of Rs.3000-4000, where the mass market exists, Nokia’s market share stood at just 23% for the quarter ending March 2010 (IDC). The segment is dominated by the Indian branded handsets, which offer several options to the customers in the band. Players like Mircomax, Karbonn, Lemon and Lava command market shares ranging from 1 to 13%. For a long time, the handset giant has been missing being the first as per industry benchmarks and has become a laggard follower in more cases than one. Nokia’s Express Music series, for example, came only after the success of Sony Ericsson Walkman series. Again, the touch screen phones of Nokia came much after the immense success of the iPhone.
Even globally, Nokia’s branded value and market share have been falling at a similar pace. The Helsinki-based company, which accounted for 1/3rd of the market capitalization of Helsinki Stock Exchange till 2007, has been involved in a patent dispute with Apple. In 2009, Nokia filled a case against Apple in the US citing that the latter has infringed on 10 of its patents. Apple, in return, has filed a case accusing Nokia of 11 patent infringements. At a point during the dispute, Nokia asked the court of law in the US to stop imports of all the Apple products including iPhones, Mac and the iPod. The allegations and counter allegations couldn’t do anything to Apple, which continued to rock with its products, while Nokia’s performance became disappointing.
As per Gartner, in the third quarter of calendar year 2010, Nokia sold 110.4 million units. Its volume sales were slightly lower than expected due to shortages of components, such as camera modules and displays, which restricted availability of lower cost devices. Demand for lower end products was met through some destocking in inventory volume that helped Nokia take its sell through volume to 117.5 million units. This resulted in a market share decline of 8.5% yoy.
The company is trying to ride the growth engine of smart phones and has launched N8 in the global market. But in the segment, Nokia’s performance has been dismal. N8 has features like the 12 MegaPixel camera, but Nokia’s software and Ovi services still do not make a mark in the eyes of the seasoned smartphone user. A lot of work has to be done on the software front, where Nokia has been found wanting globally. Is this the end of the road for Nokia? While that may not be, but the September 2010 JD Power and Associates Smartphone Customer Satisfaction Survey placed Apple at number one, and Nokia at the last position. Amusingly, even the moribund Palm got a better ranking than Nokia. Clearly, something’s going horribly wrong in the Nokia camp, and the faster they wake up to this new reality, the better for them.
Even globally, Nokia’s branded value and market share have been falling at a similar pace. The Helsinki-based company, which accounted for 1/3rd of the market capitalization of Helsinki Stock Exchange till 2007, has been involved in a patent dispute with Apple. In 2009, Nokia filled a case against Apple in the US citing that the latter has infringed on 10 of its patents. Apple, in return, has filed a case accusing Nokia of 11 patent infringements. At a point during the dispute, Nokia asked the court of law in the US to stop imports of all the Apple products including iPhones, Mac and the iPod. The allegations and counter allegations couldn’t do anything to Apple, which continued to rock with its products, while Nokia’s performance became disappointing.
As per Gartner, in the third quarter of calendar year 2010, Nokia sold 110.4 million units. Its volume sales were slightly lower than expected due to shortages of components, such as camera modules and displays, which restricted availability of lower cost devices. Demand for lower end products was met through some destocking in inventory volume that helped Nokia take its sell through volume to 117.5 million units. This resulted in a market share decline of 8.5% yoy.
The company is trying to ride the growth engine of smart phones and has launched N8 in the global market. But in the segment, Nokia’s performance has been dismal. N8 has features like the 12 MegaPixel camera, but Nokia’s software and Ovi services still do not make a mark in the eyes of the seasoned smartphone user. A lot of work has to be done on the software front, where Nokia has been found wanting globally. Is this the end of the road for Nokia? While that may not be, but the September 2010 JD Power and Associates Smartphone Customer Satisfaction Survey placed Apple at number one, and Nokia at the last position. Amusingly, even the moribund Palm got a better ranking than Nokia. Clearly, something’s going horribly wrong in the Nokia camp, and the faster they wake up to this new reality, the better for them.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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