Nokia Pakistan: evolving in a new era

KARACHI: Nokia Pakistan is a part of multinational cellular technology company, Nokia and sells Nokia devices in Pakistan. The management started operations in Pakistan about four years ago. Prior to that, business in Pakistan was managed by distributors.

In this interview, Haseeb Ihtisham, head of marketing Nokia – Pakistan & Afghanistan, talks about the local mobile phone industry and how Nokia is dealing with competitive challenges.

BR Research: Tell us briefly about the basic of operations of Nokia in Pakistan?

Haseeb Ihtisham: Nokia Pakistan runs almost the full range of Nokia devices available anywhere in the world. A team of 200 people work directly with Nokia or with third parties on Nokia projects. Majority of the workforce is involved in retail sales, followed by the after-sales-services and the management functions, respectively.

Our handsets are manufactured in seven locations around the world and supplied to over 100 countries, including Pakistan.

BRR: Is Nokia’s market leadership position gradually eroding due to direct and indirect competitors?

HI: We’ve maintained market share in Pakistan. In fact, we have gained it in the last 5 years. Because of the huge product portfolio and the various types of consumers, in absolute terms we are not losing market share when it comes to the number of devices or the value of devices.

There are major competitors, though, such as the iPhone in the high-end market, Blackberry in the market for executives, and Chinese manufacturers at the low-end

BRR: How big is Pakistan’s share in the global market?

HI: Pakistan has over 100 million mobile phone users, according to the PTA, while at least 60 million people own a Nokia handset in Pakistan. Globally, in terms of volume, Pakistan has a significant market. But in terms of value, the share is not as strong. In countries like the Saudi Arabia and European countries, the average price of a handset is very high. In Pakistan, the average price of a handset is below $100.

BRR: How would you describe the Pakistani market?

HI: The Pakistani market has just turned into a replacement market. A few years back, masses in Pakistan purchased their first handsets, which is a very different mindset than purchasing the second or third handset.

But the major portion of the market is below $100. The profile of the market is changing as they move from the first to the second handset – they look for more specs (short for specifications). In that sense, Pakistan is a growing market because now 100 million Pakistani users are replacing handsets every month for either better value or specs.

BRR: So the assumption that Pakistani market is not very tech-savvy and not aware of the technicalities in a mobile device is not correct?

HI: Only two years back we launched our application store called the Ovi on our phones. Even though the application is not compatible with all models of Nokia phones available in Pakistan, about 70,000 applications are downloaded from our Ovi store everyday. We are ourselves amazed by the response from the Pakistani market.

Even if a small 3-4 percent of Pakistan is tech-savvy, it is a good number in absolute terms, and it is increasing consistently. Besides that, the number of people using social media sites and browsing the internet via Nokia devices is also high.

We’ve been focusing on providing features that are of interest to consumers and that help customize phones as per user requirements.

BRR: Can you elaborate on those features?

HI: We’re working on some interesting projects such as educating females in rural Pakistan who cannot go to school because of social or financial reasons. For example, they’d be able to download reading material on their phones. We are also developing various other applications for ladies, banking related applications, and very soon, applications in collaboration with restaurants.

BRR: How do you go about developing these features?

HI: It’s not just about a phone’s looks anymore. It’s more about applications and platforms – the ecosystem that you develop around your handset.

The ecosystem involves various developers who create applications for phones. But third parties such as banks and restaurants also need to be collaborated with to develop an application.

BRR: Would such a level of innovation also require collaboration with mobile operators?

HI: The kinds of applications software developers come up with require third party collaboration. Many interesting projects are going on with third parties, which include mobile operators who are actively engaged with us. We are bringing down GPRS costs for mobile users in Pakistan and there are certain technology areas where we are collaborating with operators.

BRR: Since the subscriber base has crossed the 100 million mark, do you think Pakistan has reached teledensity saturation?

HI: To an extent, yes. Growth in mobile telephony is slowing down. 100 million mobile subscribers out of 180 million people mean that people who are really left out are children, very old, or terribly financially constrained people. There’s not much room for growth.

But for both mobile operators and manufacturers, like us, the game starts here. The challenge is to offer value-added services to users such as MMS, radio, etc. One key step is localising the internet for the Pakistani population. For example, a farmer in Sahiwal may not be able to use the internet right now. Providing an Urdu news paper one click away on the phone will be a major breakthrough.

Globally, we are targeting the next billion people to be accessing the internet on their phones and not on their PCs. That can be achieved only through localisation.

BRR: Do you think the Pakistani market is ready for 3G technology?

HI: Data usage in Pakistan has reached a level where 3G would be feasible. Once people start exploring more and more applications, it would warrant the use of 3G technology.

It will also help operators tremendously. It would also provide a better experience for users of phone applications and thus support mobile phone manufacturers like Nokia.

BRR: How have you dealt with competitors such as Android, Apple, and various Chinese manufacturers?

HI: At the low-end, we are fairly well-entrenched and striving to bring down prices further than Chinese manufacturers. Nokia’s value-added services on low-priced phones and ease of use and reliability give us a strong footing in the lower-end of the market.

Android caters mainly to the mid-tier market and our series-40 phones are a tough competition for those.

At the top-end, Apple is a very strong competitor and has made inroads in the US and European market.

To compete in this market, Nokia has announced a strategic partnership with Windows, which will enable us to come up with a system that will offer a challenge to all competitors.

BRR: What about the fact that Windows is not known for being as innovative an interface as, for example, Mac is?

HI: You are comparing things as they exist today. When we went into evaluating the platforms available for Nokia to adopt, there were options like symbion and Android besides windows. We went into detailed discussions on all the options, and windows seemed to be the best option for Nokia.

No doubt Apple is a premium brand when it comes to PCs, but Windows has been the market leader in most countries. We plan to come up with something different and innovative with Windows as far as mobile phones are concerned, and we believe this to be a very strategic move for Nokia.

BRR: What was the reason for diving into such a strategic move much later than your competitors?

HI: We kept on developing symbion; symbion-3 was launched last year, and is a very good platform. We have been looking into what needs to be done in the meanwhile. We have the MeGo platform, which will also come into the market. This should be in September/ October this year, offering something new to customers besides Windows-Nokia phones.

BRR: But why the delay?

HI: It’s easier said than done. To develop an innovative platform takes a lot of time. It takes time to come up with something which is better than the kind of product Apple offered. This requires a lot of R&D.

BRR: How is the competitive scenario different for Pakistan?

HI: Pakistan primarily is a below-$100 market – 80 percent of it. The price point, consumer understanding, requirements, etc make the game very different here. We need to increase capabilities and bring smart phone-like capabilities to below-$100 phones as well. But it’s important for Nokia to be the first company that brings local content for Pakistani consumers.

The response from Ovi stores in Pakistan is very encouraging. We are fairly strongly entrenched in the Pakistani market and we don’t see any real challenges here.

BRR: Tell us a little about E7.

HI: Getting emails on phone is not the only requirement of a modern executive. Based on this research and understanding, we came up with E7. The phone allows connectivity to television sets, and has multiple businessmen-friendly applications as well as in-built channels like CNN, BBC, MSN, etc.

We are already getting an excellent response for the device and we believe modern executives will like this device a lot.