Can Nokia win market share in iPhone era with its first Windows Phones Lumia 800 & 710?

Like its fall, Nokia's rise to glory would make a epic story. Will its first window phones- the Lumia 800 and 710 - launched this week and the company's comeback in the dual segment , be its beginning?

Weight watchers will know how it feels: to cut the flab and get going with more energy, more buzz. Stephen Elop is now on that side. The Nokia president and CEO has got two new phones, Lumia 800 and 710, out of the lumbering giant in under nine months. They were launched in India three days ago.

For a moment, ignore Lumias' specifications (they don't read half bad). Don't compare them with other Windows Mango devices. Consider what it means for the company. From idea to the store shelf, the Lumia journey is a quick turnaround from handset industry standards. Benchmark it to the old Nokia, it looks like a sprint.

But the real mad dash was the slew of dual SIM phones. More than two years late into India and other emerging economies, the company has announced seven such phones since June. And though late, Nokia came good. It loaded the dual SIM phones with features: Ovi services and specific innovations. The result: it shipped over 18 million such phones since their launch.

Elop is already gushing. In a media interaction in September he claimed that the success of dual SIM phones had a "halo effect on our single-SIM phones. India has shown that brand plus team plus great execution can deliver strong results".

Innovation and agility at both ends of the handset market: does this signal that Nokia is getting its act back together? Or do the achievements pale against the goings on in Apple, Samsung and local manufacturers in emerging economies?

ET on Sunday dissects the anatomy of the dual SIM success to find out whether it can be replicated across phone segments and questions whether Nokia's Lumia can win mind and market share in the iPhone era.

BEST LATE THAN NEVER

There are a lot of things that Nokia did right in the dual SIM segment. But the most important one is that it entered this market at all. Many consumers bought Indian brands because there was no Nokia option. As soon as they had one, the choice was Nokia.

"The brand enjoys high credibility, especially at the low-end. It did the right thing by launching handsets at competitive price points. A consumer did not have to spend more, if anything at all, to switch from an Indian brand to a Nokia dual SIM," says Kunal Bajaj, director India, Analysys Mason, a telecom consultant.

But Nokia did not rely on brand power alone. It included relevant value-additions and innovated for the consumer. Says D Shivakumar, managing director, Nokia India: "We refused to treat the dual SIM market the way the industry was treating it, as a vanilla commodity. We segmented the dual SIM user on parameters like form factors and usage patterns and addressed the pain points of owning multiple SIMs."
For instance, the devices have nudged the second SIM slot on the side of their phones so that users don't take out the battery each time they swap SIMs. They also remember settings of up to five SIMs which spares users the hassles of re-configuring the phone each time.

Jaideep Ghosh, executive director, KPMG India, a consultant, says Nokia's job was made easier as the launches coincided with the period Indian handset manufacturers started struggling: "Most local brands did not invest in the market or build robust supply chains. The import-cheap Chinese-and-sell model is not sustainable for long without any back end. These brands will inevitably suffer when MNCs like Nokia enter their domain. Many of them are now stuck with a lot of inventory as they are also facing credit issues with the distribution network."

Nokia has played on its strengths: great build quality, innovations like a touch-and-type dual SIM phone and support from an FMCG-like distribution network. But some analysts say the low-end is a low-hanging fruit for Nokia. In India and other emerging economies, the brand is synonymous with durability and value-for-money. Smartphones, the real money spinners, is another matter. "Lumia won't have it so easy. Its task is cut out," says Bajaj.

NOT-SO-LUMINOUS FUTURE

It is the segment which clobbered Nokia in the West: smartphones. And though there is cheer at the quick launch of the Lumia range, the numbers of Nokia's profitability must dampen Elop's spirit.

According to Asymco.com, Symbian's share in smartphone platforms fell to 16% in the quarter ending June, from a high of 47% in the same period of 2008. In this quarter, Nokia was one of the four vendors to make losses whereas Apple grabbed two-thirds of the operating profit. Nokia's third quarter performance is better: the company is profitable again. But at $180 million, the profit is about 2% of the top eight brands.

What should worry Nokia more is that Windows Phone 7 remains a no show. The operating service it is betting its existence on has scraped up only 2-5% of the market. This despite all the biggies, HTC, Samsung and LG, launching an assortment of handsets with Windows.

"First, Nokia must convince existing and new smartphone users to consider the Windows Phone OS. Then comes the even more difficult task: to convince users to try it out," says Bajaj.

Few doubt Nokia's hardware capabilities. It has long been famous as an engineering-driven organisation. But the choice of software drives a smartphone. Consumers want more apps, simpler user interface, multitasking capabilities and higher speed on their smartphone. Everything that the Android offers, at very reasonable prices. Does Lumia offer any reason for users to move away from the super-hit Android or the super-niche iOS? 

TOO MANY WINDOWS

Nokia's biggest threat maybe the iPhone and Android-powered devices, but there is a battle heating up in its backyard. New-found partner Microsoft is not committed to Nokia alone. Windows Phone 7 or Windows Mango is the operating system for Samsung ,HTC, LG, Dell and Acer. So what is special about Nokia's Windows?

If you go by the Lumia, not much. You can draw similarities between Lumia, HTC Titan and Samsung Focus S. But there are some 'Nokia only' apps and designs too.

"Given the limited time which Nokia has had to design, build and release the phones, it has suitably differentiated the Lumia devices from other Windows Phones. On the hardware front, the Lumia 800 has a unique and identifiable industrial designs on any smartphone and the 710 is the only Windows Phone to feature changeable covers. From a software perspective, there are applications and services which are unique to Nokia, such as Nokia Music, Maps and Drive, and they are expected to build their differentiated offering in 2012," says Nick Dillon, an analyst with UK-based telecom consultancy Ovum.

Nokia has other plans up its sleeve. For instance, a few months ago, it killed the Ovi brand in favour of the Nokia Store. Ovi Contacts is the latest to be booted out. Experts claim that Nokia is planning to extend the visibility of its services through the Windows OS on other phones. Imagine seeing Nokia Maps on a Samsung Windows phone.

This is speculation. What's sure is that 2012 is critical for Nokia: Operation Rolling Thunder, codename for launching phones across price points in the US, will be in full show. Rumours are that the Lumia 900 will debut by March and a Windows 8 tablet in summer. Nokia's future will be clearer then.

Nokia report card: Year One of Stephen Elop
 

  BEFORE 2010... Nokia misreads Dual SIM as a market fad. Does not launch any phone in the segment Indian companies cash in on demand. Brands like Micromax, Spice and Karbonn lead the way Nokia's low-end consumer base shrinks 

COMEBACK STRATEGY

Nokia enters the market about 3 years late with two models: C1 and C2

C1(about Rs 2,000 ) is a vanilla phone aimed to challenge cheap Indian brands

C2 loaded with Ovi Mail and Ovi Life Tools. Boasts hot swappable feature: the phone can switch SIMs when it is on

Nokia brand credibility draws consumers from local brands as all dual SIM phones priced to compete with them

At low price, the phones loaded with more features. For example, the C2-03 saves settings of 5 SIMs

Attention to small details, second SIM slot on the side and not under the battery -enhances user experience

Real challengers in mid-segment emerge: Android-based dual SIM phones


Source : ET