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Nokia's Strategy

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Nokia in India

Introduction

Nokia, the global leader in mobile handsets had come a long way since it entered India in 1995.

From winning the CII Brand of the Year award in 2005 to being invited to Harvard to talk on

how the company had penetrated the Indian market, Nokia’s Indian operations had become a

global case study of sorts.

In brand surveys across Indian cities and demographics, Nokia topped the awareness list. More

than half of the 49 million mobile users in India carried a Nokia handset. Six out of every 10

people who bought a mobile phone in India picked up a Nokia. Many of them had made their

first ever-mobile call on a Nokia phone over a Nokia network. The 1100, the phone which was

'Made for India', had become Nokia's largest selling model globally.

Nokia had pursued a cost leadership strategy in India, looking for various ways to cut costs.

These included, setting up a manufacturing base for handsets in India, creating financing options

for cellphones and working with cellular operators to reduce airtime costs.

Nokia had also established a formidable distribution network that reached over 25,000 dealers, a

network that was about three times the size of Samsung's, six times that of Sony-Ericsson's and

one-fourth of Hindustan Lever’s (India’s largest fast moving consumer goods company). Nokia

had preferred to work with distributors associated with dealers of fast moving consumer goods

(FMCGs) and consumer durables. Many of Nokia’s regional distributors were former FMCG

middlemen who found the margins in the mobile phones business more attractive.

In the infrastructure business, Nokia Networks had become a key supplier to all five GSM

operators in the country; Bharti, BSNL, BPL, Hutchison, and IDEA. Nokia Networks worked

closely with operators to lower the total cost of ownership and usage for consumers. Nokia had

demonstrated its commitment to India by setting up three R&D centres (Hyderabad, Bangalore

and Mumbai) that worked on next-generation packet-switched mobile technologies and

communications solutions.

Background Note

Over the last decade, Nokia had emerged as the clear market leader in the mobile device market

in India. The company offered a wide product range to meet the needs of different consumer

segments, ranging from advanced business devices, high performance multimedia devices, to an

affordable range of entry level phones for first time subscribers.

In 1997, Nokia India rode to market leadership on its Nokia 2110 model. Subsequently, it

launched the Nokia 1610 and Nokia 8110. With India (along with China) having become one of

the two most happening telecommunications markets in the world, Nokia continued to increase

its commitment.

In September 2003, Nokia India signed a deal with Reliance Infocomm to offer CDMA 2000 1X

Nokia 2280 handset under Reliance Monsoon Hungama scheme. The development marked an

important step for Nokia towards strengthening its presence in the CDMA segment.

305-464-1

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In April 2004, Nokia and Idea signed a $24-million agreement for the supply of GSM/GPRS

network equipment and multimedia services across the country. In the process, Nokia became the

sole supplier of Idea's GPRS network. Nokia started supplying the complete range of Nokia

GSM/GPRS equipment such as Base Station Subsystems, Switching SubSystems, GPRS Core

Network, Short Message Service System, Multimedia Messaging centre expansion and Nokia

download solution.

In October 2004, BSNL awarded Nokia a contract for the expansion of its GSM/EDGE and

GPRS network in North India. The deal was valued at more than 200 million euros (Rs 1,120

crore). Nokia would deploy four million lines across towns, cities, villages and all major State

and national highways in Jammu & Kashmir, Haryana, Uttaranchal, Punjab, Uttar Pradesh (both

east and west circles), Himachal Pradesh and Rajasthan.

During his visit to India in 2004, Nokia CEO, Jorma Ollila expressed satisfaction at the way the

Indian market had changed since his last visit in 2000.

Ollila remarked1:

“Now, the volumes are very significant. We are looking at the situation to ensure that we

are both cost-effective and logistically efficient. We have three plants in Asia that have

served us well and we have no capacity problems. But with the market developing

rapidly, we have to keep a close eye on it.”

In May 2004, Nokia announced the establishment of a CDMA R&D facility in Navi Mumbai, its

fourth global tech centre after San Diego, Dallas, and Vancouver, to support CDMA

development work. Soren Petersen, Sr.VP and general manager of Nokia's CDMA business unit

remarked2:

...

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