Microsoft-Nokia deal: Emerging markets to the rescue?
If Microsoft leverages Nokia’s advantage in emerging markets, it may be able to stay in the game.
The market is still buzzing about Microsoft’s acquisition of Nokia’s mobile phone business and how it will impact both brands. Many voice doubts about the prospect of the partnership, some even say it was a mistake that will cost them in the future.
The concerns are not unreasonable. Nokia has fallen far behind the front-runners Samsung and Apple, which accounted for 31.7 percent and 14.2 percent of worldwide smartphone sales, and other rivals such as LG, Lenovo and ZTE in smartphone race in Q2 2013. And despite becoming the number three mobile platform in the world, Windows Phone holds a mere 3.3% global market share. It seems obvious that both brands are not going to reach the top of the high-end smartphone market anytime soon.
So is it that bad? Not really, as long as Microsoft knows how to seize opportunities in the emerging markets.
In growth markets in Southeast Asia, Africa and Latin America, features phones have always been the mobile phone choice for most people because of their cheap cost, long battery life and durability. Being one of the biggest feature phone makers, Nokia enjoys strong brand equity, an established customer base and well-developed distribution network in those markets.
Recent research has shown that smartphone outsold feature phone for the first time in second quarter of 2013. With the strong demand in low-cost smartphones, the developing markets offer huge potential for Microsoft to target the segment of first time smartphone users. It is crucial for Microsoft to leverage the Nokia / Lumia brand and its strength when it introduces Window Phone to trade-up users so that they will stay with Nokia.
The acquisition is unlikely to help Microsoft topple the big players in mobile business in the next few years , but by knowing how to use the right tools (low-cost, entry-level smartphones) at the right place (emerging markets), it may just help Microsoft to stay in the game.
31.7% Samsung (2013 Q2)
Data source: Gartner (August 2013).
Written for Kantar by Sophia Ng, Executive Director Oracle Added Value Shanghai.
Sophia began her career as an advertising executive after studying in Hong Kong, Taiwan and the UK. Over the past 18 years, she has developed expertise in brand development and communications with a particular focus on food and beverage, dairy, personal care, credit card service and luxury. She has helped well-known brands, like Samsonite China, Kellogg’s and President, achieve significant growth.Sophia joined Oracle Added Value in 2012 and now leads a team of brand consultants across Greater China.
Image source: Nokia-Microsoft