GOA/NEW DELHI: India's 30,000 crore-a-year mobile handset market witnessed a skirmish between two big global names, with market leader Nokia disputing figures from influential research firm IDC that showed its hold over the domestic market was weakening — and at an alarming pace.
IDC, whose data are closely tracked around the world, said Nokia's share of the Indian handset market — its second biggest after China — plunged to 36.3% at the end of June from 54% at the end of 2009, providing the Finnish giant's critics more proof of its failure to keep pace with rapidly changing customer preferences.
The IDC report showed that sprightly domestic handset makers led by Micromax, Spice, Karbon and Lava had capitalised on Nokia's misfortunes, with their share of the market doubling to 33% during the last six months.
Nokia, which analysts say is struggling to compete at the top end against rivals such as Apple's iPhone and BlackBerry devices, disputed IDC's findings, saying there were flaws in the numbers.
Nokia disputes IDC figures on marketshare
"The figures are way off the mark. They are not correct," Nokia India managing director D Shivakumar said. "Nokia continues to do well in India across all segments," the company said in a statement which questioned IDC's figures and said that the so-called 'shipments' cited by IDC "were not equivalent to actual sales and market shares".
"According to IDC, the dual-SIM category accounted for 38.5% of the overall market. As per our estimates, the dual-SIM segment represents 22% of the Indian handset market currently," Nokia said, adding that IDC did not count shipments from its Chennai factory.
But Vishaal Bhatnagar, associate vice-president at IDC India said the research firm's figures were subjected to 'vigorous' vetting both in India and overseas and it tracked sales and shipments extensively before issuing its report. "In India we have been in this business for six years, while globally, we have been engaged in tracking handset sales for 10 years. We stick by our numbers," said Bhatnagar, adding IDC's research calculated that most of the handsets produced at Nokia's Chennai plant are exported.
The figures will add to the sense of siege enveloping one of Finland's proudest corporate names, which transformed itself from a conglomerate that produced rubber boots to toilet paper to become the undisputed leader of the handset market in 1998.
The numbers are particularly embarrassing for Nokia, which commanded a market share of more than 70% just two years ago. By contrast , homegrown handset makers had a meagre 0.9% share of the market in 2008, their stupendous rise almost entirely on the back of so-called dual-SIM phones (even triple-SIM ) which allowed thrifty consumers to have two numbers on a single device and effectively exploit plunging tariffs in a cut-throat mobile services market.
Data compiled by IDC showed that nearly 39% of all handsets sold in the country during January to June this year were dual-SIM phones, a segment that Nokia did not have a single model until recently. Nokia introduced its first dual-SIM handset — C2 — in India in August, a move some analysts called a 'startlingly late reaction'.
IDC's conclusions got qualified support from rival research firm Gartner, whose lead analyst in India, Anshul Gupta, said Nokia was losing marketshare, although he declined to comment on IDC's figures or give his firm's assessment of Nokia's market share.
"Of course, Nokia's share is dropping. In India, they are being hurt in the low-end segment as competition is much more fierce there. Initially, the domestic players were just competitively priced, but now they richer in features. Therefore, they offer value for money," he said.
Founded in 1865 as a paper mill, Nokia was the toast of Finland — the company is that country's largest private employer and accounts for 1.6% of its GDP and more than 10% of exports — for a decade beginning the late 1990s on the strength of its cutting-edge and reliable phones, but its failure to keep pace with the touchphone revolution triggered by Apple's iPhone launch in 2007 has cost it dearly.
Its top management ranks have seen major upheaval, its shares have fallen and in Millward Brown Optimor's ranking of global brands this year, Nokia dropped 30 places to No. 43.
Correcting the slide in India will rank as one of the top priorities of Nokia's new CEO, Stephen Elop, a Canadian who headed Microsoft's business division and the first non-Finn to head the company in its 145-year history. Elop begins his tenure this week.
Nokia still accounts for more than one-third of all phones that are sold in India, but analysts say it's stranded in the middle of the market. The IDC figures showed that South Korea's Samsung managed to increase its market share to 8.2% and retain the No. 2 position, while Chinese brand G'Five took the third position with a 7% market share, dislodging LG. The research firm said overall mobile handset shipments in India rose to 38.6 million units in the second quarter, up 60% year-on-year.
Newcomers into the India market have employed the same distribution model that Nokia relied upon for rural markets — piggybacking on kirana stores and other regular shopping destinations — and are fighting the company using tactics it employed very well. A major reason for Nokia's early success was its product innovation — it fused cameras, torch lights and FM radios to phones — to cater to rural India. But now the initiative appears to have been wrested by the newcomers.
Micromax, which according to IDC is the largest domestic player with 4.1% market share, first launched phones with a 30-day battery backup. Its portfolio of 26 handsets includes a phone that doubles up as a universal remote for television sets and air-conditioners and 23 of them are dual-SIM .
Samsung launched Marine, a phone powered in part by solar energy. Spice Mobile threw in an ultra-violet torch that would help detect counterfeit currency and has recently come up with a model with two memory cards that serve like double cassette decks of yore, allowing for easy transfer of data.
IDC's Bhatnagar says the success of domestic players is on account of their penetration in volumes markets in rural India.