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'Recession is a time to build brand equity'

March 23, 2009 19:20 IST
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Nokia India has announced 1,700 job cuts worldwide and is also on a cost-cutting spree to reduce $909 million. However, in an interview with Pradipta Mukherjee, Nokia India's MD and VP-markets D Shivakumar says India has less to worry about as it is the second largest market for the company globally. Excerpts:

You are associating with Kolkata Knight Riders in IPL again this year.

Yes, considering Nokia was voted the second most visible brand during IPL last year, next only to Shah Rukh Khan. KKR property has been very successful for us, which is the reason why we are thinking of packing more KKR value-added-services on Nokia handsets, like cricket scores, player interviews, games and many others. Nokia is also thinking of introducing on-ground KKR activities for a consumer-connect programme.

Overall, what are your plans for value-added-services?

VAS is still at a low penetration level in India. For service providers, it makes up only 10 per cent of their revenues, equally divided between SMSes and other VAS. Nokia has formed a joint venture company with HCL for cashing in on this opportunity. We are currently working out the revenue sharing arrangements with HCL. For consumers, we are thinking of either launching new handsets with HCL bundled VAS, or through coupons that consumers can use for downloading VAS on existing handsets. We may also make VAS download available with our priority dealers. We will take a call soon on pricing too.

What will be your focus areas in 2009?

We will concentrate on growing the market and services space. Rural India will form a large chunk of our revenues as around half of our volume sales are from the lower-priced handsets. We also intend to launch close to 40 handsets and phase out a few this year. By June we will launch N97 and by the end of the year we will launch internet phones E75. Building on touch-screen handsets will be another focus area this year.

How do you combat competition from Chinese handset manufacturers?

At the end of the day, brand is very important for consumers. So, though Chinese handsets have flooded the market, Nokia as a brand is still the leader with a 62 per cent market share in CDMA and GSM put together, as reported by the current edition of Voice & Data.

Globally, Nokia has announced 1,700 job cuts at its devices and market units as well as in the corporate development offices and global support functions. Will it affect India?

India is the second largest market for Nokia globally, next only to China. Investments will continue to be in line with the opportunity here and so the impact of global job cuts on India will be minimal. In India, Nokia has approximately 10,000 employees, including nearly 8,000 workers at its manufacturing plant in Chennai.

Nokia is closing its interactive Mosh web site, which has been running since 2007 and has attracted over 137 million downloads. Why?

Nokia will launch its Ovi Store, merging its software download store with Mosh. Like Mosh, Ovi would allow users to upload free mobile content like applications, games, videos and ringtones to their phone. The best part is that a Nokia handset would be the gateway to access the Ovi digital store. These handsets would be priced at Rs 4,500 and upwards.

Nokia is planning to slash costs by around euro 700 million ($909 million) or more. How will this impact India?

Yes, Nokia aims to slash operating costs in the devices and services division, in R&D, sales and marketing and in general and administrative functions. Also, as announced earlier, Nokia is scouting additional savings in component procurement. I cannot disclose how we are planning to achieve this, but these are our focus areas as of now as far as cost cutting is concerned.

Nokia had announced a worldwide decline of 10 per cent in handsets sales this year. How is it in India?

India will be no different. The next financial year is a concern, but at the same time recession is a time to build brand equity. During recession, consumers tend to vouch for safer choices, and that is where Nokia can build its brand during the downturn.

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