Smart enough?

Nokia is ready with a slew of phones and an overhauled operating system to take on smart phone rivals. Can it outwit the competition? After spending most of 2009 in the shadows of rival smart phone makers like Apple, Nokia is eager to get its share of the limelight. At the core of its strategy is an overhauled operating system called Symbian 3, a slew of smart phones with aggressive price tags and a brand new operating system, MeeGo, which will be showcased later this year.

India is the largest market for mobile phones in the world — 11 to 12 million are bought every month. But competition is cutthroat. All the world’s top brands compete with over two dozen Indian gutter fighters for a share of the pie. Little surprise, the lower and mid segments of the market are not meant for the fainthearted. At the top end, the world of smart phones, there is still some sanity left, though it could soon be a free-for-all there too.

As incomes rise, lifestyles improve and prices tumble, more and more Indians want to own a smart phone. Mobile phone makers estimate that of the 138.6 million handsets that will be sold in 2010, 7 to 10 million could be smart phones. That’s 5 to 8 per cent of the market. In 2009, smart phones were just 2 to 3 per cent of the market. The segment is clearly gathering momentum.

According to IDC estimates, Nokia is the top vendor of mobile phones in the country with a market share of 36.3 per cent in terms of units shipped. But its dominance is under threat: A year ago, its share was over 50 per cent. For profitable growth, smart phones make sense. Analysts do not track smart phones separately, but the rivalry is intense. Samsung, for instance, has set its sight on a fifth of the market. “By the end of 2010, we plan to a have a portfolio of 8 to 9 smart phone models and expect to notch up a 20 per cent market share,” says Samsung Director (mobile & information technology) Ranjit Yadav.

The challenger
The gap in Nokia’s smart phone portfolio was a touchscreen — something Apple, Samsung and HTC have leveraged to good use. Smart phone hardware has more or less converged upon the touchscreen format for all vendors, and software has become the defining factor in the user experience. Thus was born the Nokia N8.

The marketing strategy for the N8 was initiated some six months ago when Nokia India Managing Director & Vice-president D Shivakumar asked his colleagues to think of out-of-the-box ways in which the company could launch the device in India. “Besides the fanfare of a launch function, we decided to broadcast the N8 launch to all customers live through a webcast,” says Shivakumar. Almost 100,000 unique users logged in to catch the telecast. As a result, the online pre-sales bookings of the N8 surpassed those of older devices like the N97. The N8 works on the Symbian 3 operating system. Bollywood beauty Priyanka Chopra will soon talk about its user experience on television.

The USP of the N8 is Symbian 3. It promises a complete overhaul of the dominant but ageing software platform that has been used till date on Nokia devices. With this, the company hopes to lure the younger masses. Along with more efficient memory management, allowing more mobile applications (or apps) to run in parallel, Symbian 3 also includes support for high-definition multimedia interface (HDMI); so a user can plug his device into a TV and watch a high-definition movie. The new graphics architecture will use hardware acceleration to offer an improved interface. A range of network improvements including the ability to automatically switch from cell network to wireless local area network (WLAN ) without user interruption is an added feature for power users. The platform is also ready for 4G networks.

With a 12-megapixel camera like the Sony Ericsson Satio, the N8 is aiming to leapfrog other top-end models like the HTC Desire, Samsung Galaxy and Apple iPhone. The N8 is priced at Rs 26,259, which suggests the competition is Samsung, LG and lesser-known Android licensees rather than the Apple iPhone. The N8 also scores high on design — it looks expensive. Nokia claims it can give five hours of video playback and 3G talktime. Gartner Principal Research Analyst Anshul Gupta says: “Price remains the main criteria when buying any consumer electronic device in India, including a mobile device.”

Shivakumar looks confident that Nokia has a giant killer in Symbian 3. “We have made it clear that in 2010 and going forward, a key theme for Nokia will be the improvement of user experience; the N8 is the first step in that direction. We have to tell the consumer what is the new operating system and why is it a step up from the older Nokia phones and other handsets in the market.” Nokia India Director (operator channel) V Ramnath indicates that a family of smart phones on Symbian 3 will be launched in the next few months. “These are smart phones which are tightly integrated with enhanced services and apps, and reinforce Nokia’s vision of a mobile industry that is increasingly being defined by socially connected, location-based devices and experiences.” Nokia will launch three new Symbian 3 devices — the E7, C7 and C6 — in the near future.

But Shivakumar is looking beyond Symbian 3. He wants to launch smart phones in the price category of Rs 5,000 to Rs 10,000. “We can and we will develop smart phones for the masses — for the first-time users. They will get apps, features, good-looking devices and overall the trust of brand Nokia. No other player has the capacity or the retail penetration to achieve Nokia’s scale.” Thus, Shivakumar is closely monitoring the customer’s pulse. Extensive internal research has been undertaken where executives are sent to spend a day with smart phone users and understand their usage and any gap that needs Nokia’s attention. Shivakumar even had Nokia’s global researchers study the Indian smart phone consumer for a year before launching the N8.

Nokia is also slated to introduce a second line of high-end devices running on the MeeGo operating system developed with Intel. Gartner Vice-president & Distinguished Analysts Nick Jones writes in his blog: “MeeGo is a very big bet for Nokia; it’s Nokia’s chance to compete with Apple, and it’ll probably only get one decent shot at it. So the first MeeGo release needs to be outstanding. It will be entering the market at a time when Microsoft will also be putting a huge effort behind the launch of its Windows Phone 7 premium handset platform which will compete with MeeGo.” The first of the MeeGo devices is to be announced later this year.

Smart moves
All that may be fine, but rivals aren’t twiddling their thumbs. While Nokia has managed to launch just one handset, the N8, from its new high-end line based on Symbian 3, Apple’s iPhone 4 is already flying off virtual shelves across the world with 600,000 pre-orders. Other vendors are rolling out models almost every month with Google’s Android software. RIM too has upped the ante in India with its latest BlackBerry Torch which sports a new operating system and social media features. Gartner analysts expect manufacturers such as Samsung to launch many low-priced Android devices in the next few months, which will drive Android into the mass market. Others such as Sony Ericsson, LG and Motorola are expected to follow a similar strategy.

While smart phones were a standard feature of the business world, with private users getting into the picture, apps will be the next big thing for every player. Arguably Apple’s iPhone App Store is still more popular worldwide than any other, but Nokia’s Ovi (online apps store) has overtaken Apple in crucial high-growth emerging markets in Asia-Pacific and South America, according to Wireless Development Survey. Ovi reached the milestone of 2.3 million downloads per day with India among the top three users. Nokia India Head of Product & Services Marketing Jasmeet Gandhi says: “Smart phones are made for apps, and we have more than 50,000 apps on Ovi.”

App developers can distribute applications to approximately 175 million Nokia Symbian smart phones that are being used across the globe. Gandhi claims that Nokia has made enhancements to the Nokia Qt Software Development Kit (SDK), which will result in a 70 per cent reduction in the number of lines of code required when developing apps for the Symbian smart phones. “Developers who will create mobile apps using Qt SDK can port the same app to newer platforms like MeeGo and Windows 7 too,” he says. The Nokia Qt SDK is a tool to help developers build their applications with a shortened workflow, simplified development and intuitive user interface libraries.

Last year, Nokia’s ex-CEO, Olli-Pekka Kallasvuo, had talked about Nokia’s focus on user experience in these words: “In 2010, we will drive user experience improvements, and the progress we make will take the Symbian user interface to a new level. As an operating system, Symbian has reach and flexibility like no other platform, and we have measures in place to push smart phones down to new price points globally, while growing margins.” The company has done its bit; over to the market place.