In addition to gaining in these defining markets, Nokia Corporation (ADR) (NYSE:NOK) managed to do what was earlier thought impossible. The IDC’s latest report shows that the Finnish handset maker, through its Microsoft Windows 8 powered Lumia handsets, managed to out-ship Apple in not one, but seven markets. This feat speaks volumes of the potential inherent in Nokia. The same report also shows that Nokia’s Lumia has shipped more than Research In Motion (NASDAQ:BBRY) in over 26 markets. I personally believe that this early lead could set the tone moving forward.
Brand recognition more important than ever before
Moving forward, brand recognition will be more important than ever before. Going by the undisguised saturation in mature markets, I’m inclined to believe that emerging markets will be the melting pot of smartphone wars in the next five years. In emerging markets, companies with already-established brand names will get a head start over their peers.
In India particularly, Nokia will gain immensely. Data released by CyberMedia Researchshows that smartphone penetration in the entire Indian handset market is a mere 7%. Although the smartphone market is dismally small, there’s huge growth potential. The research shows that the high end category of the smartphone market grew at a racy 35.7% to 15.2 million units in 2012, up from 11.2 million units the previous year.
Feature phones, on the other hand, grew 19.9% to 206.4 million units in 2012, up from 172.2 million units in 2011. In addition, Nokia dominates feature phones, while Samsung dominates smartphones. Bringing these figures into perspective, it becomes evidently clear that there is a feature phone glut in the Indian market. This, essentially, means that Nokia is the dominant handset maker in the entire market. The research actually pegs its market share at 21.8%, compared with Samsung’s 13.7%.
What does this mean for Nokia?
Nokia has the upper hand in India. Because of its solid footing and brand recognition, it will have an edge while guiding its feature phone customers through a smartphone transition. What’s more is that its Nokia Asha phones, which are sold at the price of feature phones but extend the functionality of smartphones, will provide a platform to woo consumers into considering mid-range smartphones like the Lumia 520 and the Lumia 620.
Conclusion
Nokia’s case in India is, in many ways, reminiscent of the situation in other emerging markets. As such, there’s a real possibility of Nokia transforming its huge presence in the feature phone market into a sizeable smartphone market share. This could give the company a huge edge over Blackberry/Research In Motion (NASDAQ:BBRY) in the race for third place.
Lennox Yieke has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft.
