Nokia in India - Part 1

Wednesday, December 26, 2007

This is the first of the two-piece article I wrote about Nokia in India for Sramana Mitra's site.

Nokia (NOK) has the most global footprint in the wireless industry today. While there are several facets of the Finnish company worth discussing, I would like to focus on one of my pet themes – Nokia in India.

Let us start by getting some perspective on the Indian handset market –

  • In August 2007, the number of mobile subscribers in India hit the 200 million mark. To give you a perspective, there were only 100 million subscribers in May 2006. Note also that India’s population is over a billion of which around 750 million are in the 15-64 age group. So, there is a substantial portion of the market yet to be tapped considering that the teledensity of around 20% is nowhere close to the 60’s that we see in countries such as the U.S.
  • The total number of handsets estimated to be shipped in 2007 is about 80 million, which is a 33% increase from last year’s 60.62 million units. This is 7.2% of the total world-wide handset shipments for 2007.
  • There are around 100,000 retailers for mobile phones in India.

Besides, there are a couple of things I noticed about the demographics of the Indian mobile customer when I visited Chennai last year.

  • When cell-phones took off, it was either the executive or the jazzy college-going kid. Later, it was in the hands of every other college kid, meaning that the middle-class Indian was coming around to the fact that the mobile is after all not a spoiling influence on the kid but more a utility. Today, more and more of the conservative working class which typically eyes utility, wants to be mobile. This explains the popularity of the Ultra-low cost handsets. With a vast majority of India still rural, the profits lie in the volumes. For the subscriber-base to keep growing, this section will have to be served the phones they can afford. So while there will always be a market for costlier phones and convergence devices, the lower-end phones will play a key role.
  • India is no longer two or three years behind in technology. The status-conscious urban consumer wants and gets the latest.

With these points in mind, I will, in the sequel, investigate how Nokia is positioned to maintain its leadership position in India.

Posted by Vijay Nagarajan at 7:00 AM  


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