While at the CES 2010 show at Las Vegas , companies were showing their mightiest and greatest , a mighty great company’s CEO was showing their bottom line device at his Key Note address .
It was Nokia’s CEO Mr Olli Pekka showing Nokia 1661 a $32.00 phone meant for emerging markets .
Why at an event where the companies spent a huge amount to show their prototypes and upcoming technologies costing thousands of dollars someone will choose to show the lowest category of device at an event like the Keynote ?
Answer simply is commitment to be a true Global company . Sure Nokia has it’s high end devices as N900 , N86 , X6 on display at their booth but Nokia’s ambition is not to make the next $100 million but how to make the next billion mobile users use their devices .
Why this strategy ?
IF we look at Nokia’s portfolio , Nokia’s high end devices are facing stiff competition from Apple , HTC ( including Google’s Nexus One ) RIM and Samsung , everyone is up for $300 plus devices to make a killing in profit but the market on the top is small . On the bottom of the pyramid lies the Taxi Drivers in India and Pakistan , Factory Workers in China and Farmers in Indonesia , India , Brazil and Africa for whom , a phone which can make calls , send and receive SMS , have a torch and FM Radio and can be used in a local language is most advanced piece of technology around which their universe revolves and these consumers are not in millions but billions in number .
This is the market Nokia is tapping with low end phones like 1661 , other companies can sell a million phones at $300 each and Nokia can sell a couple of hundred million phones at $32 each , with capacity of 19 phones per second , meeting this goal is not difficult for Nokia .
Again low quantity , high profits isn’t that the ideal business model ? what Nokia will make selling a hundred million phones others can make selling a million phones –
With this strategy Nokia is not planning for today but for the future . In a village where multiple users use the same phone , when individuals go for their own phone , they will buy a Nokia , for this market a reliable brand matters as $32 or above could mean a month’s pay for some and they want to make the investment with which they are familiar and have trust on . The $32 phone user will eventually upgrade as their livelihood increases ironically because of the phone and there is a fair enough chance that the next phone will be again a Nokia.
So Nokia has a long term plan , first go for the maximum market share at the bottom , create a user base of loyal customers among the emerging markets which on betterment of their lively hood will upgrade to another Nokia . The large user base will increase brand recognition which will eventually means high end customer will also be attracted towards it .
But phone is not the only medium to attract customers , while Nokia is aiming the lower segment there also lies Samsung , LG and numerous Chinese manufacturers which could be cheaper than Nokia and has plenty of bells and whistles , though not as comparable in quality as a Nokia .
To counter them , Nokia is also offering services in emerging markets like Nokia Life Tools in India and Indonesia and Nokia Tej in India with OVI Services and upcoming Nokia Money
The added advantage of Life Tools is the main attraction for farmers in India and Indonesia towards a Nokia , a builtin Application in selected Nokia models and for a low affordable monthly fee , they can access market information , weather conditions , entertainment news ( very big in India where some Bollywood idols are demi gods for many ) and education yes ,a unique approach of one word a day to teach English to farmers in rural India and all the services available in multiple regional languages make it an attractive and useful tool for them .
With Nokia Money , Nokia is again targeting the low end market providing them a medium have a bank account without all the hassles and intimidations of going to the bank . With Nokia Money , a Taxi Driver in India can deposit his daily income to his Nokia Money account , transfer it immediately to his family back in the village through his phone , can accept payments via phone all without worries of his money being lost or stolen with the security of his phone .
With Nokia Tej , Nokia has provided a useful order tracking system to middle class businessman in India where from placing an order to order dispatch all activities can be done on phone via SMS or installed application sans any paper work and much more quickly than before.
Nokia’s vision is to be the first device on which the masses of the world access the internet and much of it’s low end devices are internet ready and with builtin database for operator settings as simple as plugging in the SIM Card and using the net which is extremely useful for businessman looking for new leads to student needing help for their assignments and keeping in touch with their piers through Facebook and Twitter.
Through it’s OVI Services , Nokia is also helping the low end of the market without access to internet and a a computer to have an email account through OVI Mail , a 1GB free email account , which has seen creation of 5 million email accounts in the first year of it’s launch which is more than first year figures of Yahoo , Hotmail and Gmail combined. With Ovi Mail , Nokia has proved that internet and email is not only in the domain of high end phone users like E Series devices , many low end S40 phones like Nokia 2700 has the buitin application to create and access the OVI mail account directly from the phone, infact S40 devices were the first to get the OVI Mail application with S60 devices following much later .
Nokia is not all serious business applications for the users , entertainment is part of a common man’s life too , in terms of hardware , many low end Nokia phones now come with FM Radio and Nokia 5080 even features a builtin FM Anteena so no need for head phones to listen to FM Radio as with all other models including Nokia’s own high end models such as E72 and N 97 Mini and N900 . In terms of services with OVI Share and OVI Music Nokia has provided a platform for the common man to share his media and photos and be able to download and listen to music while on the move.
Nokia is not stopping here , in software and services industry it’s very easy to replicate one’s success and although other phone manufacturers are no where near Nokia is terms of services but trying to work things out as Samsung has started their online store for apps and movies , for the future Nokia has set aside $1,000,000 ( 1 million USD ) in the first “ Nokia Growth Economy Venture Challenge “ in which Nokia will invest One Million Dollars to make an idea meant to promote mobility and improvement in life at the developing / emerging economies where the average income of people is less than $5.00 a day .
The competition is aimed at all the developers and with figures like 300,000 developers in China alone , expect a large number of creative entries and a stiff competition meant for the betterment of the world.
Will all these technolgies and announcements Nokia has just scratched the surface on what they have in store for us , they got cultural anthropologists on their board like John Chipchase , whose job and passion is to see how people make use of their phones , learn from them , get ideas derived from real world usage and develop them for future use ranging from now to the next 15 years , for those waiting to see what else Nokia hold in store , in words of OPK , “ The exciting thing is we’ve only just begun “ .