Handset fortunes of global phone maker Nokia have been tested severely in the smartphone era, and the third quarter in 2012 meant another drop; a report by information technology research firm Gartner put Nokia’s global sales of mobiles at 82.3 million in Q3, down 21.9 percent year-on-year, but still better than expected. In a new push to promote its latest high-end handset, the Lumia, Nokia has chosen the Middle East as one of the markets where it wants to fight its way back into the hearts of smartphone lovers. Executive sat down with Tom Farrell, vice-president of Nokia Corporation Middle East, to find out how.
According to IDC Mobile Phone Tracker, Nokia has dropped out of the top five mobile phone manufacturers in the third quarter. Gartner said Nokia dropped to seventh place among global smartphone producers quarter-on-quarter and your overall market share for mobiles slumped to 19.2 percent, down from 23.9 percent in the third quarter of 2011. Can you comment?
I can’t talk about market share right now. We’re in transition and have been very open about that. What I can say is that Nokia is 147 years old and this is not the first time Nokia has started a new journey. We’ve had about six different journeys. The current one started in February 2011, the day we announced to the world that Nokia decided to team up with Microsoft to regain market share and ultimately leadership in the smartphone market.
How do you intend to catch up with your competition in the region?
In our industry a lot of people would say, “okay it’s over — Android, iPhone or whatever is the way the smartphone is going to be.” But we beg to differ. Innovation in smartphones is just starting and we have not forgotten how to make beautiful products people want to have on the table and touch.
We’ve launched the [new Lumia Smartphone] in seven markets globally: France, Germany, Russia, the United States, [United Kingdom] and in the Middle East here in the [United Arab Emirates] and Saudi Arabia. We are one of the few markets where the new Lumia with Windows 8 has launched, which is a measure of the massive priority this market has for us in terms of smartphones.
Why did you choose Microsoft as partner and provider of the operating platform?
We think Microsoft is the best opportunity for differentiation. It’s a partnership in which both parties have a lot at stake. There are 1.3 billion Windows machines installed today and over time they will migrate to Windows 8; it is the biggest launch for Microsoft since 1995. Even a modest number of that upgrading is a huge opportunity for applications.
Anyone can build on a Windows platform and the more [applications that] are based on the Windows eco-system, the better. There is a profound shift that has happened in our industry. Instead of it being product against product or company versus company, the glorious word now is ‘eco-system’, which means operating system, software, hardware etc. Arguably, the Android eco-system has had a lot of growth, Apple has its own eco-system and in our mind the industry wants a third — Nokia-Microsoft.
You’ve launched the Lumia 920 here in the UAE and ran out of stock. How many phones were on sale?
We don’t share numbers at this point. We are ramping up the factory lines for new supply in December.
So why in your opinion would I want to have one or switch from the competition?
Because it is the world’s most innovative smartphone — a pretty bold statement to make for three reasons: Firstly, we have the best camera with super mega pixels and multiple frame shooting, allowing for someone to be deleted from a photo for example, optical image stabilization, no blur in the video and the biggest aperture for low light in the market. The fact is that 50 percent of all photos are taken when people are out and about at night.
Secondly, it is the only device with a convenient wireless charging pad and third, we have the best mapping technology in the world because we acquired Navtech about six years ago. We launched an application on this platform called Cityland, which functions as an electronic ‘travel’ guide and pedestrian and car navigator.
Why is mapping so important?
There is a lot of talk in the industry about maps right now. Google created a whole topic around searching. The ‘what’ was the first huge innovation that drew people to the web 10 years ago. Then Facebook created the ‘who’ social networking and it is our belief that the ‘where’, [that is] the location, will drive the next wave of innovation on the web. We pack them with more and more sensors and data [for] where you are going; the opportunity to create amazing applications around this are just fantastic.
What is your marketing strategy for Lumia in the Middle East?
It is a global brand with consistency but sprinkles of localization. We tailored our message to multi-cultural feedback: camera, Cityland and no scratching. The phone is great value on par with the starting price for high-end smartphones in the market.
People here love to personalize and we believe bringing color back, [when] most smartphones these days are black, will do well here. And of course we have full support for Arabic with 5,000 free applications. Social connectivity is what defines this region.
The Lumia was doing well for Nokia but sales have not overwhelmed the competition. How do you aim to maintain your market share and stem further slides or even turn the growth back on?
The great thing about this industry is the pace, the things we already have in the lab that don’t exist, its non-stop innovation. People will copy but by that time we already have something else. Planning up to five years in advance to develop the leading edge of innovation is normal; location, social media and sensors are the next big thing in innovation. Pack the phone with sensors and create a platform in the cloud, pull it all together and they will come.
Are you betting on research and development? Bernstein Research data from last year says you spent $3.9 billion on R&D.
Yes, it is in the billions. Patents are a great indicator of investment [and] in the first half of this year we have filed more patents as a company than since 2007. That gives you an idea of Nokia’s innovation machine. Over the last 20 years we developed and today manage an [Intellectual Property Rights] portfolio of 10,000 patent families.
One patent family is an individual invention, for which we may file patents in more than one country. Our portfolio holds around 30,000 granted patents and patent applications, meaning that on average, we file three patent applications for each invention.
What are your growth expectations for the Middle East and Africa, and why focus on a region where many countries are regarded internationally as developing or poorly developed?
We’ve been here for 20 years. The investment in the Middle East region as one of seven markets for the most sophisticated smartphone tells you something, whilst Africa is our last frontier. Our affordable Asha brand — everyone deserves a smartphone — leads there.
We have the miscorrelation in our heads that income equals your technological mobility. Frankly, some of the most savvy consumers and services are in Africa, as there are few fixed lines. Kenya’s mobile payment system is more advanced than [any such system in] Europe.
