Jan 2, 2009

Business - Q&A: Robert Andersson;Nokia

Priyanka Joshi

Nokia’s high-end N-series is under price pressure from Apple. In addition, products based on Windows Mobile 6 and others like Google’s Android user interface have been beating Nokia in the touch-screen market. This, however, is not causing sleepless nights to Robert Andersson, executive vice-president (Devices Finance, Strategy and Sourcing), Nokia, responsible for finance and strategy in the devices unit since January 2008. Credited with devising Nokia’s strategy to use its brand and distribution channel to build its growth in the emerging markets, Andersson tells Priyanka Joshi the company’s survival strategy for the fickle market conditions, riding on markets like India. Excerpts:

Nokia has launched a slew of low-cost devices in the Indian market. Are these really going to help the company generate revenues or just volumes?
Growing the entry-level devices segment of the consumer segment is critical to our growth strategy. Growth will also come from internet-based services crafted for phone users in 2009. The internet-based service is a business that will feed off Nokia’s instaled base and hence it will grow even if there is a fall in handset sales.

We will continue to introduce a range of affordable mobile devices, specifically for people in emerging markets, that leverage the power of the internet. Estimated retail prices of the new devices will range between Rs 1,700 and Rs 6,000. Our suite of internet services for emerging markets will be made available by early 2009.

How will Nokia design the services?
The first services that Nokia will offer in emerging markets will focus on e-mail, agriculture and education, which based on consumer feedback, present the strongest demand in emerging markets like India. These services use an icon-based, graphically rich user interface that comes complete with tables. These can even display information simultaneously in two languages. Behind this rich interface, SMS is used to deliver the critical information to ensure that this service works wherever a mobile phone does, without the hassles of additional settings or the need for GPRS coverage. Nokia will launch the service in the first half of 2009 with the Nokia 2323 classic and the Nokia 2330 classic as the lead devices in India. Later in 2009, this will then be expanded to Asia and Africa. Further, we are looking to focus our internet services on music, maps, media, messaging and gaming, that are estimated to be approximately ¤40 billion in 2011 world over.

How does the ongoing economic situation affect Nokia’s growth story?
Our goal is to gain market share in 2009. Our highly variable, low fixed cost business model allows us to scale in a declining market. Nokia also expects operator and retail distribution channels to go through a period of destocking, resulting in lower sales volumes by manufacturers than purchase volumes by consumers in the first half of 2009. This will be an industry-wide trend. We are not exactly going to have cheaper devices, but will have more services to augment the existing devices. Several of Nokia’s new products will be more than just product upgrades.

Will there be a decline in demand for high-end handsets which are seen as too expensive?
It would be a phenomenon for all handset vendors and not just Nokia. Everyone will feel the pressure on margins but being the market leader with almost 40 per cent global share, we are much better placed to survive the present financial environment than other players.