Friday, January 18, 2008

‘Recall’ed from grace!


IIPM, ADMISSIONS FOR NEW DELHI & GURGAON BRANCHES

Is it the beginning of the end of Nokia’s dominance?

It surely Is it the beginning of the end of Nokia’s dominance?feels great to be there up on the cloud number nine. But a trip down to Earth from cloud nine can be equally hurting. And who can better understand this pain currently than the Finnish handset behemoth Nokia. Nokia has been enjoying a euphoric dominance in the handset market worldwide for years. But for quite some time now, with other players gaining momentum, it seems as if the ecstasy of Nokia’s dominance is at the beginning of its end. And the recent battery recall incident, has only made the situation worse.

All across the globe, 46 million batteries in Nokia phones are affected by this battery fiasco. However, Nokia claims that so far, only 100 problematic cases have been reported worldwide. The important consideration, though, is what would be the long term result of this battery debacle. As Jeff Kagan, one of Americas most influential telecom analysts, points out, “The customers may not like it. It’s something to worry about… if it happens again or if this worsens, we’ll have to watch the customer reaction.”

The damage however, is already reflected on the bourses. Nokia’s share prices were down by 3% in the London Stock Exchange as of August 17 against its prices on August 13, a day before the battery issue rose. NYSE, however, seems a little less reactive with a fall of 1.1%, but the damage is still there. The way Nokia handles this issue will actually determine the actual damage and Nokia’s fate in long term. As Albert Lin, Co-head, Director of Research, American Technology Research, states, “I hope Nokia does not commit some consumer relations mistakes…. Consumers are never tolerant, nor should one expect them to be for product performance issues.” Moreover, Nokia should also be careful to avoid repeated incidences of exploding batteries in next generation products because today’s buyers are vastly more concerned about what features they want and what kind of price they are willing to pay and are not willing to forget negative incidents like these in a hurry.

Another thing that Nokia needs to watch out for is that this should not turn into a fortune for other players for whom the incident is like an answer to their silent prayers. As Albert clearly states, “Nokia also knows that all the mobile phone makers are hoping that they do a poor job and alienate customers…” Five-six years back there was a time when almost everyone vouched to buy a Nokia phone. But off late, the handset combat zone has been simmering with the increasing popularity (followed by a similar trend in the market share) of other players like Motorola, Sony Ericsson, Samsung et al. Motorola has reached a global market share of close to 18%, thanks to its flamboyant models like RAZR; while Samsung commands a reasonable 12% & LG & Sony Ericsson corner 7% each. Though, Nokia still corners the lion’s share of the global handset pie with 35% market share, but the swift growth of other handset majors is surely a major SOS distress signal for this giant from Finland. It would have to see that this slip-up is last one but it could indeed take quite a while for Nokia to return back to cloud number nine.

B&E research: Pallavi Srivastava

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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