With the boom in mobile telecommunication, Nokia has emerged as a strong player in the Asian market. Not only are they bringing new languages in the mobile phone but also exploring other cost-effective technologies to cater to the rural population. Jussi Siltanen, System Marketing Manager, Entry Business Line, Mobile Phones, Nokia Corp. in conversation with Anuradha Dhar explains their strategies to overcome the challenges of the emerging markets.
What was the genesis of Nokia telecommunications in 1960s? When did it enter the Asian Market?
It started in our home country, which is Finland and very soon there was a demand in more markets, such as the Nordic countries, Europe, US and Asia. Nokia has been in the Asian market for a long time. Today, Nokia is strongly present in many Asian markets such as South East Asia, Japan, China and India. Currently we are building up a production site in Chennai. This factory will be manufacturing not only mobile phones, but also solutions for mobile operators, especially in India. We produce mobile phones in many countries and we also export the phones to other markets.
How do you see the market in India as compared to markets in other countries?
Many of the entry markets are characterized by strong growth. But for India, we are probably yet in the beginning of growth, which is very strong when we look at the penetration of mobile phones in India. You start to see mobile devices everywhere. So definitely there are some of the characteristics of a strongly growing market, and then there are some special characteristic such as the rural aspect.
What is the strategy of Nokia to explore the rural market in India?
Our strategy lies very strongly in mobile telecommunications. We believe that mobile telecommunications is the most cost effective tool especially in the rural areas in order to access communications. That’s probably not just in the Indian rural areas but also in other rural areas in different parts of the world. Another thing in strategy that we see in India is the rich culture. In India, there is not just one solution to explore, but there has to be many solutions and we are willing to work with the operators in order to explore them. Most concretely,onsumers can see that in Nokia we are adding new languages in mobile phone.
Depending on the mobile phone model we can have up to 9 Indian languages supported in a mobile phone and this is of course increasing all the time. Languages are very important. We try to make user interface more practical for people who have difficulty in reading and writing. Often I hear that someone had bought a Nokia mobile phone and didn’t have to read the handset manual because it was so easy to start to use. We are also working on having interfaces in mobile handsets, which are more graphical, more intuitive. Also, in some of the new handsets, you can learn already, over the handset how to do certain things, not just by reading but also by watching. It is like watching a learning presentation before you start to use your mobile.
Then we also need to invest in new technology. So ideally, the kind of technology that we have already, i.e. the GSM technology, we can expand through it cost-effectively. GSM also provides a very good coverage. Then there are smaller technologies, which are affiliated to GSM, which help to expand coverage, for example radio technologies such as AMR (Adaptive Multi-Rate Codec) and SAIC (Single Antenna Interference Cancellation). Nokia supports all these technologies.
Are you focusing on research to get the user’s feedback?
For us, it is very important to do a lot of consumer research and do it as locally as possible because then we know that we would get the correct information. It gives us a lot of benefits.
Which are the countries, according to you are the emerging markets?
There is not a single country. Some markets are growing more strongly than the others. But still we see that in emerging markets, there is still very strong growth in expansion like Latin America. Already, in some Latin American countries, they are beginning to show signs of mature markets, like for example Chile. There are also economic factors and we have seen that for example, increasing penetration of mobile phones can contribute to the GDP of the country. Countries of Africa and the Middle East are going to be the places where the mobile phones penetration is going to be the strongest in the next 4-5 years.
What about Asia and South-East Asia, particularly?
In South-East Asia it depends from country to country. There are some countries, which are mature markets already, like Singapore, Malaysia. But if you would look at India, Pakistan, Sri Lanka, Bangladesh, Indonesia, and put all these countries together, the growth rates would be at the rate of the whole of Africa – a strong growth. I am not talking of growth rate in percentage terms. Emerging markets are what we call the dual markets. There is one section of the population who can afford to pay for more expensive phones, there is also the volume market, for whom buying a mobile phone is a little bit like an investment, it’s a strategic purchase for them.
Is Nokia working on a strategy by which people have more affordable mobile phones?
We work for example with mobile operators, we show them that they can implement technology, which make their costs going down, and they can target new customers with lower prices. One thing that is the characteristics of emerging market is pre-paid. One major factor is if you wanted to buy a recharge voucher card, the price was usually like something US$5. And people, who are earning only 50-100 dollars a month, do not have 5 dollars just like that. But when micro-prepaid was introduced, it means you no longer have these paper vouchers. Paper vouchers cost very much to print and distribute. So now you have electronic vouchers, you recharge your phone through SMS. So if I am a seller and you are a customer, you are giving me, lets say Rs. 50 and I will, with SMS, transfer Rs. 50 from my account to your account. Micro prepaid make mobile communication more affordable for new users in a cost effective way. Operators have already introduced very successfully micro-prepaid for example in the Philippines
Compared to other Asian countries, what are the challenges that you face in India?
India is special because it is a very large market by area, where distribution both for handsets and the service must work well.
You must be aware of mobile governance. It is still at nascent stage in India. In developed countries it is a very upcoming and people are using it to interact with government. As a mobile phone company, what role you can play in this direction?
I think our role is to work with different companies to have better knowledge in doing things. We work with smaller companies; we try to see who is the best in the market for doing that and then work together with them. I think that in India, we do a lot of cooperation with smaller Indian developer companies to develop mobile technology, because we clearly see that they are going good work so why not affiliate with them. For this we have special programs like Forum Nokia. Forum Nokia is a programme for developers because there are a lot of people have ideas; they can propose this to Nokia through Forum Nokia. When they publish it in Forum Nokia, some other people may say- hey! this is a good idea and we may develop it in this way. We provide them opportunity to spread the idea and sell it.
In rural India, we have a large number of self-help groups, micro-finance groups, is your company trying to empower these groups with mobile devices, probably at a cheaper rate.
We have started to work with micro-finance companies. We announced last year in October regarding our collaboration with Grameen Foundation, which is the leader in micro-finance. Currently with them, Nokia is doing a project in Africa, where Grameen provides micro- finance in order to get a village phone, which comprises a Nokia mobile handset, a car battery boaster antenna, and a koppler, which connects the phone to the antenna. We prefer to collaborate with Grameen, as they know the market, rather than starting something completely new. The package, which I described above, is something like US$200. The entrepreneurs in the village, who are doing that can pay the loan in 1 year and do meaningful business.