New Delhi: Mobile handset manufacturer Nokia Oyj, which reported a first quarter operating loss of €1.34 billion (Rs 9,125 crore today) for the three months ended 31 March, attributed the sequential decline in its mobile phone volumes to reduced sales mostly in India and Europe.
India is an important market for the company considering that it generated the highest sales of mobile devices after China in 2011 and 2010.
India, which accounts for a large chunk of worldwide handset sales, is a key market for device manufacturers due to its huge untapped potential. According to Nokia, the decline in sales was driven by lower seasonal demand for feature phones and aggressive price competition, especially in entry-level feature phones, even though it was partially offset by sales of recently introduced products. It added that the company faced increased competition from more affordable smartphones and competitors with broader portfolios of feature phones with more smartphone-like experiences, such as full-touch devices.
Over the last few years, the Indian telecom market has seen a deluge of Chinese and local manufacturers selling devices at rock-bottom prices and migrating to the smartphone category (many based on Google Inc.’s Android software), leading to intense competition for companies such as Nokia.
According to estimates by market research firm IDC India, mobile device sales in the country are forecast to reach 208 million units in shipments in 2012 from 183 million devices in 2011. Nokia’s India market share dropped from 50% in 2008 to around 30% in 2011, said G. Rajeev, senior market analyst (mobile devices and tablets) at IDC India.
This “was expected”, he said, since Nokia is in transition from its Symbian operating system to Windows. Rajeev expects the company to “bounce back” with models such as the Lumia 610 that are very “competitively priced for the Indian market” along with the low-cost Asha range of phones.
“Nokia will have a bigger play in the mass market considering their brand equity in the country,” he said.
The company reported a 28% drop in net sales of devices and services in the Asia-Pacific market to €945 million in the last quarter. The drop was heaviest in Greater China at 70%. In 2011, Nokia’s overall sales in India amounted to €2.92 billion, compared with €2.95 billion in 2010.