Staging a comeback

Last May, Microsoft announced the sale of the Nokia-branded featurephone division to FIH Mobile, a division of Foxconn, and HMD Global, a new company in Finland. It is this new company that is staging the comeback. The lesson to be learnt here is the need to march with the time – in this case technological and marketing evolutions and changing public taste

Ambassador was among the first cars made in India and Nokia was among the first mobile phone Indians, like much of the world. The two pioneering products spell a contrasting story today. The mobile phone has just staged a comeback, while it is end of the road for the once-iconic car. A comparison of the two per se may seem unfair, but the common lesson to be learnt is the need to march with the time – in this case technological and marketing evolutions and changing public taste.

Ambassador was the ‘king of Indian roads’ on which Prime Ministers, ministers and officials rode for over four decades; the production was stopped in 2014. Sturdy, roomy and large, it can fit in as many as 13 people. It commanded respect on the road. It was no pushover. The Ambassador reminds of a time when there was not much traffic in the cities. Those who rode it were very privileged, like Rajas on the road.

But last month, its plant, along with its logo was sold to Peugeot, the French automobile conglomerate PSA Peugeot Citroën (also known as the PSA Group). The company with its huge plant located at Uttarapara on the outskirts of Kolkata, was sold for Rs 80 crore – for a song considering the land alone a few kilometers into Kolkata would fetch many times more.

While this sale made for a brief, terse announcement, the news of Nokia making a strong comeback in the smartphone industry stormed the Internet and social media. Entering a fiercely competitive market, the once-a-leader in the mobile phone industry is trying to reclaim its glory through the launch of a new line of Android smartphones.

Its piece de resistance, however, is a new take on its iconic Nokia 3310. Fielded as Nokia 3310 (2017), the phone is estimated to cost Rs 3,500 –less than what it sold in its earlier avatar. It can take care of the lower end of a burgeoning market. It had sold an estimated 126 million units globally.

Nokia, which once ruled the smartphone market, before Apple, and Samsung destroyed its market share. Not a ‘smart’ phone, it seems a smart move considering this amount is advertised as an EMI – equated monthly installment – for the higher range offerings that cost eight to ten times more.

Founded in 1865, Nokia didn’t start out in the phone industry, but made a variety of products for a good century-plus. The company launched its first mobile phone, the Mobira Senator (Talkman) only in 1982.
The Finnish company focused on its mobile phone segment only after its other segments slowly moved away from the main corporation. Focusing on communications, Nokia launched its first mobile phone, the Nokia 1011, and had never looked back since. It even overtook Motorola in 1998 as the best-selling mobile phone company in many parts of the world.

Then, the downslide came for many reasons, such as the emergence of new smartphone leaders like Apple, Samsung and Blackberry. They came up with more features and better designs, while the Finnish company continued to market phones under the Symbian software and cumbersome design. These players also evolved better and sped up their technology in new smartphones leaving Nokia behind. Perhaps, the company’s stubborn approach led to its downfall. Ultimately, it had to become HMD Global.

Nokia is not the smartphone leader today, but, back then, it was the phone to own. The unwieldy design may not be sleek or slim – indeed it was too unwieldy to fit into one’s pocket – like the smartphones of today, but it was reliable enough.

When current smartphone brands talk about durability and toughness, Nokia already had models that have a longer lifespan. Nokia’s phones are known for their reliability. Perhaps that is still its strongest selling point. The new Android Nokia 6 launched this year will only be available in China that is, quite significantly, a major smartphone manufacturer and also one of the fastest-growing smartphone markets. That seems Nokia’s way of making a comeback.

Taking its mid-range Android phone to gear up the competitiveness in China’s market will certainly give other smartphone makers, including China, a run for their money. A mobile or a smartphone today is not just a phone: it has got to multi-task. After all, today’s users are tech-savvy and expect more from their smartphones, apart from an attractive physical design.

Hence, to stay in the competition, Nokia must consider more compelling features, such as better camera functions, security, longer-lasting battery power, and value-added applications. Of these, camera is the most important. See any smartphone advertisement how it flashes the camera and its configurations at the top.

Smartphone brands like the Chinese Huawei boast one of the better value-for-money ranges in the market. Huawei has partnered with Leica to boost its camera functions, which has certainly helped the brand to gain better footing in the market. Oppo, too, has made its name for affordability and sleek design to win a share of the competitive market. History has proven that nothing is impossible.

In fierce competition, size does not matter. Even leaders in the smartphone market have taken several blows and are still standing. Apple had some issues after the demise of its iconic leader Steve Jobs, and Samsung was faced with an exploding battery crisis in its Galaxy Note 7. Perhaps, a lesser known fact is that Nokia has India-content at the top. Its Chairman is Risto Siilasmaa, but the President and the CEO is Rajeev Suri. The board of directors includes Vivek Badrinath.

The comeback is on the shoulders of corporate strategising. In April 2015, Nokia purchased the French communications equipment company Alcatel-Lucent for €15.6 billion. The acquisition aimed to create a stronger competitor to the rival firms Ericsson and Huawei, whom Nokia and Alcatel-Lucent had surpassed in terms of total combined revenue in 2014.

Last May, Microsoft announced the sale of the Nokia-branded featurephone division to FIH Mobile, a division of Foxconn, and HMD Global, a new company in Finland. It is this new company that is staging the comeback. Ambassador’s evolution — or lack of it – would need to be seen in this context. That context must include the snail-pace at which India’s auto market moved till “Maruti revolution” came in the mid 1980s.

India was also slow to adopt pollution-control measures. And Ambassador’s makers, enjoying immense political clout, are said to have tweaked those norms in their favour rather than wholeheartedly adopt them. It was a restricted auto market and the Ambassador’s annual output never exceeded 27,000.

Unsurprisingly, it faced a steady decline over the last couple of decades, as it faltered against the more modern yet affordable cars which were entering India en masse. Sales figures of the Ambassador hit an all-time low in 2013-2014 with around 2,200 units being sold that year. This prompted the shutdown. The manufacturing plant in its final days was producing only five units per day. With the brand's sale to the PSA Group, the chapter on one of India's greatest cars has come to an unbefitting end.

Having made an unsteady presence in the Indian market so far, after failing to collaborate either with the C K Birla Group or encashing the goodwill of people who rode Premier Padmini, the French firm, it would seem, has purchased the goodwill the Ambassador has enjoyed over decades.

One can only hope it would keep the brand name going, unlike Padmini Premier or, in a totally different market of beverages, Coca Cola ended the reign of the more popular Thums Up.

Nokia has returned. Will Amby, too, return in a new avatar?