Editor’s Note: This analysis was taken from an article that Ovum will be publishing in its subscriber newsletter in June, 2012.
Summary
Ovum recently attended a Nokia-hosted analyst event in Dubai, where the vendor explained its current business and future prospects in the Middle East and Africa (MEA). Nokia has traditionally been strong in MEA, and is now looking to consolidate on its lead. One of the recurring themes at the event was that of MEA, and Africa in particular, being the last frontier of growth for the telecoms industry. In 2016, Ovum forecasts that MEA will have approximately 1.4 billion connections, which will account for 20% of the global total. The majority of these connections will be in Africa, which will have approximately 1 billion connections in 2016. Another significant theme at the event was the need for vendors and operators to introduce the right product/service mix for the region, and invest in local market presence and distribution.
Nokia is restructuring for operational focus and execution
Nokia is undergoing a considerable transformation as it seeks to regain its position as a global leader. One of the most significant changes that it has made is the consolidation of its regional sales and market-facing teams. Previously, these functions were separated into eight “regions”, but they have now been consolidated into four. The former MEA region is now part of a new regional grouping called IMEA, which includes India, the Middle East, and Africa. As part of this move, the former head of India, Shiv Shivakumar, has moved to Nokia’s new regional headquarters in Dubai and will run the IMEA region.
As well as bringing greater operational efficiencies, the consolidation of these functions will help to align Nokia’s emerging market operations. Although parts of the Middle East are developed and already quite mature, much of the MEA region more closely resembles emerging markets such as India. Nokia believes that these markets will follow a similar trajectory to India, meaning that consumers will use many of the same devices.
Nokia is promoting its Asha line in MEA
When we attended Nokia’s event, we expected that its device strategy would involve a focus on basic feature phones, with smartphones targeted at some of the larger markets in the region. However, Nokia’s focus was primarily on its Asha line of “smarter” feature phones, and there was no mention of the Lumia being launched outside of South Africa. Asha devices are already available in several markets in MEA, and early traction has been encouraging for Nokia.
The focus on the Asha range has a lot to do with Nokia’s “connecting the next billion” strategy for emerging markets. However, it is also due to the vendor’s inability to launch its flagship Lumia line of smartphones across the region. Nokia is constrained by the slow progress of Microsoft’s Windows Marketplace app store in MEA, which is currently only available in South Africa. In addition, the Lumia is only available through South African operator Vodacom. Windows Marketplace is not available in the Middle East due to a lack of support for Arabic.
Microsoft’s timeline for the rollout of Marketplace in MEA is unclear. Given that Apple has already launched its app store in 15 countries across MEA, the unavailability of Marketplace is a major setback for the Lumia. Nokia’s partnership with Microsoft has generally been positive, and it has invigorated the vendor’s smartphone proposition. However, the slow global rollout of Marketplace appears to be taking a toll on Nokia. Despite its status as the largest Windows Phone vendor, there doesn’t appear to be much that Nokia can do to speed up the process or reduce its dependence on Microsoft.
In the meantime, Nokia will use its Asha devices, which have the enhanced capabilities of the Series 40 platform and the Nokia Browser, to plug the gaps in its portfolio. While Symbian devices based on the Belle update are still quite prevalent in the region, flagging sales and lukewarm marketing from Nokia lead us to believe that the operating system will no longer be a major area of focus for the vendor in the region. Nokia’s focus on the Asha range seems to be part of an overall strategy to counter the increasing prevalence of low-cost white label smartphones that retail for approximately $70. The Asha range also allows Nokia to leverage its partnership with Microsoft as the devices offer MS Outlook integration.
Developer traction for Nokia Store is encouraging
Another key focus area for Nokia is its relationship with developers in MEA. Given the unavailability of Windows Marketplace across the region, Nokia has been heavily promoting its Nokia Store and courting developers. The Nokia Store has grown significantly in recent years, and now offers more than 120,000 apps. It registers 13 million downloads each day, with a third of these for the Series 40 platform, and more than half coming from the IMEA region. This highlights the strong demand for Internet access and data services in emerging markets.
Developers in MEA have managed to gain significant traction through the Nokia Store. According to Nokia, 20 MEA developers have had over 1 million downloads globally, while five local developers have had over 1 million downloads in MEA alone. Nokia’s significant local presence and support makes it an attractive partner for local developers. Traction with the local developer base, even if it primarily oriented towards the Series 40 platform, is a promising sign for Nokia. The relationships that it builds now with developers across the region will give it a significant advantage when the Lumia range and Windows Marketplace are launched.
