N8 to be co's next killer phone for Indian mkt: Nokia

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Q: We were just talking that you have already managed to meet challenges with your innovations. Today you face very sophisticated challenges as I said on the top end, iPhone, the Blackberry. Where are your killers coming from?

A: We have a great product in N8 which we have announced already which is due out for release in a few weeks or whenever it comes out. I think it's a great product, it's a large screen product, it has got amazing touch capacity, it has got amazing convergence capabilities in that phone. I think it will be a big product for India.

One of the unique things about India is, in the urban market you are seeing penetration virtually saturating. So there is nothing left in terms of new users. But the replacement is kicking-in very fast and a lot of people who are coming into replacement are looking at higher technology and higher features like video, like e-mail and things like that.

What the Indian consumer truly wants is a combined product and not carrying a phone for e-mail, a phone for music, a phone for something else. He doesn't want that. And that's where I think Nokia's unique understanding of this market and being able to craft these solutions for the consumer is our winning formula.

Q: So in other words you are saying that a phone that will be both a Blackberry and an iPhone?

A: I won't say that. I will say we have a very good phone.

Q: Which is the more important market for you? The Urban market or the rural market where you have about 25% to 30% of your revenues coming in from now which is going to be the larger growth market for you?

A: If you look at our subscriber base in the country, I think at the end of last month in India we are saying that we have a subscriber base of about 672 million or so which means you still have at least another 200-300 million subscribers to go.

Where will they come from? They will come from rural markets definitely. There is no doubt on that. At 672 million we are the second largest market globally after China and we are the fastest growing market at net adds of 10 million plus every month.

Of the 200 million if you look at it, a bulk of that is women. So we needed a business model to attract women in terms of innovation. So we combined forces with a microfinance institute, with an operator like Airtel and we have gone and offered women a phone at Rs 70 per week so that over 26 weeks the woman owns a phone because she doesn't want to put a down payment of Rs 1000 or Rs 2000 one time. So that's a unique business model which we have done for rural.

Q: It's largely partnership and even if the phone becomes a commodity your offerings will make it unique?

A: Let me say the phone will never be a commodity in India, never ever.

Q: I called it commodity because you have a number of handsets being made brandless from China and they are being branded here. So in a sense it's already become a commodity.

A: I wouldn't say that. I think because prices drop in cell phones, people think that it becomes a commodity, no. In fact the personality value of a mobile phone is immense in a country like India.

I think as you go into the future you have the operator at one part in part of a partnership, you have the handset manufacturer like Nokia, then you have the content owner. It could be movies, it could be music, it could be education, it could be anything, it could be health and then you have the application developer.

I think the system is becoming much more open and much less proprietary in nature. People who understand that mindset to say how do I combine forces? How do I build an ecosystem where everybody profits in this ecosystem rather than building silos or walled gardens, that kind of mentality is what will work in the telecom markets.

Q:  Will entertainment always be the big driver here or Life Tools for instance is something that, not just entertainment, is something that will be useful to farmers, etc. Has that taken off because let me just quote Knowledge@Wharton , which quoted an Idea spokesperson as saying that it is yet to get traction, it is still to become a USP, very useful but nobody goes and buys something because it has a Life Tool. Do you see it happening slowly?

A: That's a good point. When the person was quoted, at that point of time we only had one operator on board. As we speak now we have five operators on board and we already have millions of users of Nokia Life Tools or Ovi Life Tools.

How that works is, one is awareness, and the second is you need a great device and that's why I say devices will never be commodities. When you have a great device then the service and the applications follow the great device. That's the chain of evaluation for the consumer. So entertainment will be big in India because we have amazing content.

Q: Finally let me get a view on the whole issue of banning technology and security grounds. I can completely understand where the government is coming from? But what is the solution that can address legitimate security concerns and also address legitimate issues of privacy, of the sheer not pushing back development by many years because you really can't ban something like technology and ask people to step backwards?

A:  think there are three parts to this sensitive topic. First is the government. If you look at it from the government point of view I think security in today's world is very important. We have seen what happens when you don't have proper security controls. So I think every government across the world has a view on security.

Maybe governments like India are saying look we want to implement our philosophy also which is fine. So what they are doing, it's not an ideology which is wrong, it's the correct ideology, that's one.

Second, as you rightly mentioned is the individual privacy. Every consumer thinks I want my phone, I want the messages I send on it, everything to be private. So this is individual privacy. And where does the government or the state step in and where does the individual step out is always the perennial matter of debate.

A third one which has not been put at the table by a number of people is the Intellectual Property Rights for a company like Nokia or a company anybody else is doing is because we are technology companies investing 10%-15% of our topline in R&D. There is a certain IPR we own. Now what happens when that is given out because that's a worry which a number of firms have. So balancing that, all the three is actually a very delicate act.

Q: Do you have a solution?

A: From Nokia's point of view it's very clear. We have been dialoging with the government. We are very clear that we will put up our servers here, we are putting up our local servers. As of November 5 of this year we will have the local servers here.

Q: Is that the only solution?

A: I think that's the best solution which the government is accepting and I think it's a win-win for all three, the government, the individual as well as Nokia. So on November 5 you will not have any issues with Nokia. We have co-operated completely with the government over the last six months. We have an answer which meets the government's requirements. If we want to operate in a country like India or any place I think you also need to respect the local rules.

Q: When will Nokia India overtake Nokia China?

A: I do not think that is a fair question.

Q: I am asking you to take a call on both the countries actually?

A: I would say Nokia China is a great company. It has got a great business going there. Nokia India is a great company and everybody who has worked here has done a tremendous job for building this brand and this company. I think we have enormous opportunities not just in devices but in services and applications etc.

To make a genuine difference to the average human being in India we can make big difference. If you go back over the last 15 years that mobility has been there, 10 years of these 15 years India has grown at 7.2% growth in GDP. I believe that at least 1% to 1.5% has come because of mobility. In the next 10 years India is expected to grow at 9% and I am guessing now that a bulk of it will again come from mobility.

So from being a completely off the mainstream technology it has become the mainstream technology. Nokia's contribution to average Indian has been immense and that respect and trust which we have from the Indian consumer is what keeps us going and not whether we overtake China or somebody else.