After-sales service, brand name give Finnish company an advantage

Nokia’s launch of Android-based devices is being perceived as a threat to Indian vendors, especially smaller ones focusing on the ₹7,000-10,000 price bracket.

Market sources indicate that the Finnish handset-maker’s brand-name and reliability in terms of hardware (phones) give it an edge over its low-price-focused Indian counterparts. Better after-sales service is an added advantage.

“It is obvious that Nokia wants to cater to the entry-level smartphone segments, especially, those who look to upgrade from feature phones. While Asha was falling short of the criteria, Android-based phones should help with better penetration,” Faisal Kawoosa, Lead Analyst, CyberMedia Research Telecoms Practice, told Business Line.

Apart from volume players in the low- to mid-end segment, Indian companies trying to scale up the value chain with premium offerings (above ₹12,000) – will also be impacted.

Likely hit

According to Ajjay Agarwal, CMD, Maxx Mobile, premium products from Indian companies have faced low demand because of hardware and after-sales-service issues. However, those selling below the $50 price range (around ₹6,000) will be least affected, he feels.

“The impact on Maxx will be minimum as our target audience is different. But those looking to scale up through premium offerings are the ones who should be cautious,” he said.

Market sources indicate that the likes of Lava or Micromax might face trouble. Both these brands have been trying to go premium over the last year.

Lava’s SN Rai said he would not like to say anything “immediately” while Micromax declined to comment.

Price Differentiation

The biggest differentiator, as some said, will be price, with Indian vendors having an edge.

A Nokia phone at ₹7,500 will have fewer features and lower specifications than an Indian vendor’s offering at the same price, said an official from a home-grown handset company.

“Nokia is a late entrant in the Android space. It lost on the dual-SIM phenomenon and later on in the smartphone war. With Android as its operating system, it has to do a lot of catching up,” said Sanjay Kumar Kalirona, Business Head, Mobile, Intex Techonologies.

According to Kalirona, Nokia is now just “another player with Android offerings”. However, market watchers believe that Nokia is no pushover. It staged a comeback in the dual-SIM phone segment. So, it will not be a surprise if another such story is round the corner.

(This article was published on February 24, 2014)
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