To succeed in smart TV segment, Nokia and Kodak must not bring past baggage

In Round 2, both Nokia and Kodak are pinning their hopes on smart TVs. To succeed they mustn't bring past baggage into their new relationships

What happens when a brand re-enters a market it once ruled but with a different product? Conventional wisdom suggests while the familiarity factor would give it some advantage, there would always be questions about why it quit during round one and whether round two will go the same way. The re-entry thus becomes a tightrope but while doing so, a brand can always learn from its past mistakes and from the experiences of others who seem to be getting it right.

Former mobile phone king Nokia and camera trailblazer Kodak — who were done in by rapidly changing technologies — are at it again. This time around they both seem to think their future lies in smart TVs, a potentially Rs 22,000 crore market in India.

Earlier this month, Nokia launched its television, the result of a partnership between the company and ecommerce major Flipkart, which will manage end-to-end operations from assembling to sales in India. This is some sort of a throwback to Kodak TV launched in 2016, again in partnership with an Indian player, TV manufacturer Super Plastronics Pvt Ltd (SPPL).

For the Finnish company Nokia, it is the brand name that still wields a lot of clout and will likely help its Indian partner. Statistics shared by the company show that it still has over 90 per cent brand awareness with consumers around the world and has a whopping $9.8 billion of brand value (Source: Brand Finance report 2019) besides over 26 million followers on Nokia branded social media accounts. Flipkart did not share the initial numbers for Nokia TV (sales started on December 10) but said those were encouraging and attributed “the strong brand promise of Nokia” as one of its plus points.

“Through partners, we are trying to bring meaningful technological experiences into people’s lives. Smart TV is in continuation with that strategy and in India, we see people rapidly switching over to streaming. In our offering, the partnership with JBL for the integrated audio devices is also important because the sound quality will be a key differentiator,” said Vipul Mehrotra, vice-president (brand partnerships), Nokia. 

Avneet Singh Marwah, director and CEO of Kodak’s partner SPPL, agrees that brand value does help a lot. “The best part about Kodak was that from the niche market to the lower-middle class, everybody had used a Kodak in the past and they had many fond memories including the nostalgia that the famous tagline ‘Kodak moments’ brought with it.”

He quickly adds that the task for the partner is to build on that equity. “You need to ensure that the product, product line, infrastructure and backward integration are strong when it comes to the Indian market which we did. So we had the infrastructure ready in India: From offices across India to 200 service centres when we first started (currently the number is 350) to the fact that the entire product is manufactured in India ensuring complete backward integration... all this helped Kodak to grow rapidly.”

Marwah claims a market share of around 4 per cent (in volume) for Kodak TV and sees other brands in the “affordable category” as his closest competitors, a list that includes the rapidly rising Xiaomi TV besides Vu and Thomson. He says the growth of these players have come at the cost of a decline in the shares of the big three — Samsung, LG and Sony — because “the customer now realises the futility of paying extra for the same technology”.

So is the situation similar to what we saw with assembled computers nearly two decades ago when the same configuration made consumers go for those ignoring the costlier branded ones? Marwah agrees and adds that the affordable TV companies offer even more. “Take the television panels. We use the same panels that Samsung uses in its own TV sets. Also, our post sales service is formal and much better than before. So when our company offers a 55-inch LED 4K-ready TV for Rs 28,000, many customers don’t see value in paying Rs 60,000 for a bigger brand just because their margin levels (sometimes even 100 to 150 per cent) are higher.”

He says that this fact has helped the market to grow and paved the way for newer players such as Nokia to enter. He sees Nokia as a brand that fills the vacuum between the premium and the affordable (Nokia sells its smart TV at around Rs 42,000). He credits ecommerce as a key factor pushing its growth. As he puts it: “Earlier there was too much pressure on the showroom owners to not display certain products. Ecommerce has provided a level-playing field to everyone.”

But any platform that sells other brands, sometimes exclusively, opens up the threat of cannibalisation. Is that a worry?

Pinakiranjan Mishra, partner and leader, consumer products and retail, EY India, says any brand would rather want that kind of cannibalisation because it will help them leverage their footprint to grow the market as a whole as well as offer higher margins.

That said, the Nokia-HMD Global smart phone — in 2016, Nokia re-entered the India smartphone market with HMD Global — hasn’t exactly set that market on fire. Plus successful smart phone players have already moved into or are eyeing the connected TV market aggressively and life for a new brand would be challenging going ahead.

Flipkart says it is buoyed by the response to Nokia television. “Not only did we sell out within a few minutes of the product going live, we have received excellent feedback from buyers and experts alike. On social channels, we have seen customers as far flung as the Philippines, Australia and South Africa asking for the TV to be made available to them. Customers have expressed happiness at the overall service experience provided by Flipkart as well,” says Adarsh Menon, senior vice-president of private brands, electronics and furniture at Flipkart.

It’s early days for Kodak too but its claimed market share in three years is impressive on face value, say experts. What then are the three key things these two should be mindful of? “First, never count only on the brand name. Second, if you are charging a premium, the product must justify that premium. And third, no matter how good the brand is, after sales service has to be bang-on and preferably at the doorstep,” sums up an expert.