Cellphones are a scale and innovation business, says D. Shivakumar, vice-president and managing director—markets, Nokia India Pvt. Ltd. He says in an interview he is not losing sleep over Nokia’s falling market share because a majority of the 160-200 firms that have entered the cellphone business in India will be a “passing phenomenon". Edited excerpts:

Do you think N8 will give you an edge in the smartphone portfolio?

We’ve seen consumer traction improve dramatically. We’ve got our customers who tested N8 with other competitive offerings in the same category. In every single area, N8 has scored impressively. I would be very, very surprised if it was not the leader very quickly in its segment.

You are slashing prices aggressively.

The cellphone business is one of rapid innovation, of creating new platform architecture and dropping prices. It’s a natural thing. So it doesn’t signal anything else apart from the fact that that is the industry standard.

Positive outlook: Nokia India’s D. Shivakumar. Abhijit Bhatlekar/Mint

I think they are (a) passing phenomenon. The companies that were importing four months ago are not the same guys who are importing today. In that sense, what I am seeing today is a very Indian kind of a method—where there is an opportunity, 500 people will jump in.

But this industry has always been consolidating. The top five have always consolidated and I believe that will continue. There was a vacant slot created because of dual SIM and as the government gave many licences to operators. All of them came in with price moves of one paise or half paisa a second. So tariff arbitrage became the name of the game. They needed to hold it in their phone and that’s where it started. It will last for the next two-three years definitely.

Nokia missed on dual SIM capable handset demand in India. Was it deliberate?

We will not deliberately avoid something that’s important for the consumer. Dual SIM has been in this country for five years but a surprise war that started nine months ago got accelerated.

Dual SIM has been in China, but that is a market where two operators control 90%. India is a unique market, which has 14 operators. Technology platforms cannot be turned on and turned off. The development cycle of a good quality phone, which is what people expect from Nokia, is anything from two to three years.

We were not importing phones and slapping our name on it. That’s a game we don’t do.

Is the global leadership worried about the disruptive forces playing in the Indian market?

Nokia is a company which is very high on renewal. Nokia is humble. It takes seriously any competitive move. All of us are seized of the fact that there is a dual SIM vacancy.

Some of the Indian players are setting up manufacturing units.

That is their definition. You’ll have to ask them. I don’t want to comment on it..

What’s your view?

Cellphone is a scale business; an innovation business. It is a business which is increasingly becoming applications-led.

If you look at a player like Nokia, we have a global share of 40%. For that scale, we have eight to nine plants in the world. This is not a business where sub-economies of scale benefit.

To be a mainstream player, I think scale, innovation, etc. are very critical. You’ll have one success for a few months, but the follow-up is very critical. And developing the range is where Nokia scores.

What’s your market share in India?

It depends on which analyst you follow. At this point, I won’t comment on it. All I can say is some of the reports are exaggerated. The newspapers have to report something... Good news is not news.

Will you revise N8 price?

The consumer pricing is currently at Rs26,500. We have priced it in the most competitive way and in a way we can build thought leadership while remaining affordable for the consumer.

Telecom operators in other countries subsidize smartphones by bundling it with multi-year contracts.

Will that happen in India?

Never... There are a number of factors that contribute to it. Low Arpu (average revenue per user), tracking of a person, enforcing a contract, etc.