Nokia confident of keeping lead

  • Business
  • Wednesday, 24 Sep 2003


NOKIA (M) Sdn Bhd, which has more than 50% of the local market for mobile phones, is confident it would be able to retain and grow its market share through the introduction of new phone models as well as customer retention and loyalty programmes, its new managing director Barry Lee said. 

In his first media interview since taking up his new position in May, Lee told StarBiz the company would continue to roll out a range of innovative and attractive products targeted at the different market segments to stay ahead of the competition. 

Barry Lee

This year 30 models would eventually be introduced locally, although 35 are slated for the global market. 

About 80% of these models are data-enabled, catering for MMS (multimedia messaging service), colour display, and GPRS (general packet radio service) since the trend is increasingly towards mobile data. Although pure voice handsets are still in demand, their growth is much lower these days. 

Besides introducing new models, Lee said, Nokia was placing greater emphasis on customer retention and loyalty, one reason being that the replacement market was as big as the new entry phone market. 

“We want to ensure our customers have access to information and are able to enjoy some of the benefits as loyal Nokia users,’’ he said. 

Lee expects the replacement market to grow by 10% in the future although market consultancy firm Frost & Sullivan said that at this point it equalled the new entry market. The mobile phone market was currently growing at a healthy pace, said Lee. 

But how often does a Malaysian change his handset? Lee says it is about one year to one-and-a-half years. In the Klang Valley the rate is less than a year, and that is why the replacement market is an important one for Nokia. 

As for the trend in mobile handset, Lee said it was still about features and functions, but size, colour, weight and design were also essential, for mobile phones were now considered fashion accessories. 

About 220,000 to 250,000 new mobile phones are sold in the local market each month. While Nokia is a brand name that has positioned itself well in the marketplace to command a lead spot, other players such as Samsung are eager as well to carve out more market share. Samsung is now in second spot with a market share of over 25%. The balance 25% is shared by Alcatel, Ericsson, Fujitsu, Motorola, NEC, Sagem, and Siemens. 

While Nokia manufactures its own handphones, many of its competitors, due to rising costs, have outsourced it. 

According to Lee, one other thing that differentiates Nokia from the rest of the pack is its distribution outlets and service centres. 

It has seven nationwide centres in the country, four Nokia care centres, 10 authorised service centres, and thousands of dealers that sell its products. The wide reach allows for greater market penetration, one of the reasons that Nokia is able to maintain its lead position for so long. 

But Nokia has its challenges, too. And one that keeps Lee on his toes is the import of parallel handsets. Of the handsets sold each month, about 20%–30% are parallel handsets. 

Fending off competition from other hand phone makers can be tough, but beating the parallel handsets can be trying. That is why Lee advises consumers to only buy genuine sets, and not be short-changed by parallel handsets that may at times be cheaper. 

“The issue is about educating consumers not to go for parallel handsets,’’ he added. 

Vendors are often blamed for not introducing the latest handsets as fast as they should. GPRS was one example. One operator launched the service with only two choices of handsets, and the lack of handset choice is the reason for the slow GPRS take-up. 

Lee pointed out that not all vendors could come up with handsets at the same time. He added that operators had also been late in introducing services – one example being MMS – even though handsets readily were available. 

“Even though we have the handsets, the service is not there. So we are not able to capitalise on the market. We have about 10 models that offer MMS in the market,’’ he said. 

Nokia’s phone prices range from RM300 to RM3,000. 

It is critical mass that drives prices of handsets, although at the onset prices can be hefty, Lee explained.

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