“A lot of people think that the new economy is all about the internet. I think that it's being
fuelled by the internet - as well as by cell phones, digital assistants, and the like - but that it's
really about customers.”
– Patricia Seybold
Today mobile phones have moved beyond their primary role of voice communications and have
graduated to become an essential entertaining device for mobile users. We are in an era where
users buy mobile phones not just to be in touch, today„s youth use it to express their thoughts, for
social networking, to show their interests, play games, read news, surf on the internet, listen to
music, chat instantly with friends & families and even check their bank balances. There are
various phone manufacturers providing handsets.
The Indian mobile industry is the fastest growing in the world and India continues to add more
mobileconnections every month than any other country in the world. The telecom boom in the
country provides great opportunity to handset manufacturers and the hottest segment for these
manufacturers is the entry level segment. Among the fastest growing sectors in the country,
telecom has been zooming up the growth curve at a fiery pace. The last few years saw India
adding many firsts to its list of achievements. Some of these are-the world's lowest call rates (1
paisa/sec), fastest growth in the number of subscribers (15-20 million per month), fastest sale of
a million mobile phones (1 week), the world's cheapest mobile handset (`777), and the world's
most affordable 3G phone (`4,999).
The market in India is dominated by mobile. For mobile we have 840 million-plus users, unlike
many other markets, mobile is becoming the dominant device for voice, for value-added
services, and increasingly for mobile Internet also. It„s somewhat similar to what we saw in
Japan in 1999 where, because of the limitation of broadband and computing. There„s a whole
host of services being created around mobile. An effective management of mobile services
requires an understanding of the factors that underlie the evolution of the market. Factors such as
market potential and timing and speed of adoption are of great importance for telecom operators
for capacity planning. Understanding the evolution of mobile phone market and its likely future
trend is equally important for policy makers.
India is currently facing the onslaught of cheap sub-standard Chinese phones, which occupy as
much as 25 per cent of the market, thanks to the liberal import policies of India. The boost to
exports to mobile phones and their parts will encourage local manufacturing, which is the best
answer to compete with the cheap sub-standard Chinese phones imports. Mobile phone exports
from India could double as a result of Commerce Ministry granting 2 per cent Focus Product
Scheme (FPS) on mobile phone exports in the Foreign Trade President of Indian Cellular
Association said that the special incentive accorded to mobile phone exports could result in the
doubling of exports in the next 3-5 years from the annual level of `13,000 crore to `14,000 crore
if other enabling policies are put in place. India is already a base for worldwide quality
manufacturing of mobile phones.
SWOT Analysis of Nokia Ltd
Nokia is the world's largest manufacturer of cell phones as well as has the largest
distribution network around the world.
It is the top selling mobile phone company in the lower segment of Price ( Rs.1000 Rs.4000 )
The Phone in the lower segment are termed to be the most durable and reliable phones
across the mobile phone market. The Nokia 1100 is the world's highest selling phone till
date and no particular model has even come 1/10th of its sales.
The Nokia phones till date have a very good resale value.
The Operating speed of the system and the battery life of Nokia phones are considered
the best in the industry.
The Company lacks innovation in their products. Competitors have gone way forward in
the market by introducing new Innovative technology in their products.
The Upper range phones of Nokia are excessively priced.
The company from the beginning had very minimal presence in the United States and
The After sales service of Company is not up to the mark
The company doesn‟t focus more in advertising its low range phones.
In 2013, the global cell phone industry expected to grow by double digits
Youth today want Mobile phones which could be their handy partner at all times, so by
introducing latest technology and features mobile companies could reap new profits.
Today, Asia-Pacific mobile phone industry is one of the fastest-growing industry in the
Developing countries like China, Bangladesh, India, Brazil and Pakistan have enormous
Consumers are becoming more complicated in the choice of Mobile phones due to new
technology and features available in them, hence Nokia is losing a lot of market to new
Apple, Google's Android and other different sellers have created strong pressure for
Nokia for the past 2 years by introducing latest technology and features in their phones.
Difficult for sellers to differentiate their products and retain loyalty.
Nokia‟s strategy is to target its customer groups, customer needs and to differentiate itself from
its competitors. As Nokia states on their website, almost one out of three phones used is a Nokia
and they impact millions of lives with their product. They want to be known for their innovations
and for their emphasis on protecting the environment throughout the cell phone process.
Nokia is targeting a large customer group that ranges in ages and demographics. They use new
technology such as online access, apps that allow Facebook and Myspace access and even music
downloads for younger customers that want to listen to music on their phone. Nokia is also
targeting older customers that may need additional help using their cell phone. For instance, in
2009 Nokia marketed a product called Loop set LPS-5 that allows customers with hearing aids to
use their cell phone hands-free to connect to their Bluetooth or other device without interference
with their hearing aid. Marketing more services to older generations such as the Baby Boomers
will allow Nokia to retain, if not gain, more growth in their products due to the growing demand
from this generation of customers.
Nokia also researches customers‟ needs each year to see what consumers want and need as well
as what they use in their cell phones. They use the research results to help formulate how to
improve their products, services and even way of business.
While Nokia wants to be innovative, they have missed an opportunity by being slow in offering
the newest technology that other companies offer such as touch screen phones or apps for
business. While Nokia has started offering these specialty items, they have been unable to
compete because they were so late-to-market especially for business and industries. For instance,
more than 87% of the healthcare industry‟s apps for smartphones is offered by Apple and onetenth of that number is offered by Google‟s Android which comes in second (Chester Street
Publishing). Nokia is not even mentioned because its healthcare apps are just becoming
available. With a growing industry like healthcare, Nokia needs to become more aggressive and
innovative in order gain market share to succeed in the future.
One way that Nokia differentiates itself from the competition is through its strong emphasis on
being environmentally conscious. Nokia prides itself on being a responsible citizen and keeping
environmental concerns a priority. Nokia's creating cell phone devices that use less electricity
and less material to be more environmentally-friendly. They even give tips, recommendations, to
Nokia users on how to be more energy efficient with their phones with tips from unplugging the
phone when it has been charged to turning off phone applications when they are not being used.
They also stay aware of their impact throughout all stages of development, production and even
distribution of their phones.
Reasons of Loss of Market Share
Apple Inc. came into the smartphone market that would later put pressure on Nokia. Although
originally launched in 2007, the iPhone continued to be outsold and unfavoured by Nokia
smartphones, most notably the Nokia N95.Symbian had a dominating 62.5% market share as of
Q4 2007 – ahead of its closest competitors Microsoft's Windows Mobile (11.9%)
and RIM(10.9%). However, with the launch of the iPhone 3G in 2008, Apple's market share
doubled by the end of that year, YoY, and iPhone OS (now known as iOS) operating system
market share pulled ahead of Windows Mobile. Although in Q4 2008, Nokia was still by far the
largest smartphone maker with a 40.8% share, it had a decline of over 10% since Q4 2007,
mirrored with Apple's increasing share. The N95's successor Nokia N96, released in late 2008,
proved to be much less favourable, although the Nokia 5800 XpressMusic was mainly
considered to be the iPhone 3G's main rival. Despite the brilliant critical and commercial success
of the Nokia E71, it was not enough to stop Nokia's smartphone market slide. On 24 June 2008,
Nokia bought the Symbian operating system and the next year made it open source.
In early 2009, the Nokia N97 was released, a touchscreen device with a landscape QWERTY
slider that focused on social networking. It was overall a commercial success despite its mainly
mixed reception. The N97's closest competitor was the iPhone 3GS. 2009 was a successful year
for Nokia's business smartphone market – several key devices were launched such as the Nokia
E52 which gained positive reception. However, Symbian market share dropped from 52.4% in
Q4 2008 to 46.1% a year later. RIM increased its share during the same period from 16.6% to
19.9%, but the big winner was once again Apple who increased the share from 8.2% to
14.4%. Android grew too but at 3.9% it was still a minor player. 2010 was a bad year for Nokia
and Symbian, and a very successful one for Google. Pressure on Nokia increased dramatically as
the Linux-based operating system Android continued to make extraordinary gains. Other
Symbian makers including Samsung and Sony Ericsson chose to make Android-powered
smartphones instead of Symbian, and by mid-2010 Nokia itself was the only OEM of the
operating system outside of Japan. Nokia developed the next generation Symbian platform,
Symbian^3, to replace S60. In April 2010, Nokia officially announced the Nokia N8smartphone,
packing a 12 megapixel camera with Xenon flash, a metal aluminium body, and the first device
running Symbian^3. It was released in October. Despite several improvements in Symbian^3, it
was still not favoured by the public. The Guardian for example, put the N8 review's headline
as Nokia N8 review: like hardware? You'll love this. Like software? Ah.... ZDNet stated that the
Symbian's operating system is not as intuitive as Android and iOS. The Guardian said that
despite Symbian's touchscreen improvements over S60 5th Edition, it was still not a good
experience. By Q4 2010, Symbian's market share dipped to 32%, whereas Android made a major
rise to 30%.Despite losing market share, the smartphone unit was profitable and smartphone
sales increased in absolute numbers every quarter during the year 2010 it has been estimated that
4 million units of the Nokia N8 have been sold in Q4 2010.
Nokia‟s stint with Microsoft was also not successful with the Lumia series. Nokia than decided
to do away with the Symbian series and have windows operated phones under the umbrella of
Nokia Lumia. Even though it was appreciated for its display and OS it wasn‟t able to capture the
imagination of the crowd at large because its major competitors, Apple and Samsung, had
already made huge strides in other areas, namely its App store and other hardware upgrades.
Coupled with this Nokia had over priced it phones while launching in the market. This increased
the sceptism in peoples mind regarding the mobile.
PORTER’S FIVE FORCES
COMPETITIVE RIVALRY WITHIN AN INDUSTRY (INTENSE):
It is an oligopoly industry. An oligopoly is a market form in which a market or industry is
dominated by a small number of sellers (oligopolists). However, the rivalry within the
industry is very intense among the sellers.
There is not much differentiation in the products in terms of the basic products.
Exit barriers have to be evaluated in correlation with value chain analysis.
BARGAINING POWER OF SUPPLIERS (LOW):
BARGAINING POWER OF CUSTOMERS (HIGH):
More choice of Products and limited Differentiation
Less Asymmetric information
Less switching cost
THREAT OF NEW ENTRANTS (LOW):
Huge Capital Requirements
Economies of Scale
Absolute Cost Advantage
Governmental and legal barriers
THREAT OF SUBSTITUE PRODUCTS:
Depends on the impact of substitute products
Variety of secondary functions
Other completely substitute products like tablets, PDAs etc.