New markets spark fierce phone war

As developed mobile markets reach saturation, Nokia and Motorola have taken their rivalry to another battleground: the world's low-tier, emerging markets.

For Motorola, the task remains an uphill one, given a relatively recent entrance into some markets now dominated by Nokia. Since 1995, Nokia has captured the lion's share in many low-tier markets, claiming half of India's and a third of China's mobile phone users (IDC, Q1, 2006).

The US player's own emerging market aspirations have, however, received a major boost since it won a high-profile tender for the GSM Association's emerging markets programme 18 months ago, and turned the 'US$30 handset' catchphrase into reality with the C-series. It has since made significant inroads, particularly in India and China, where its market shares stand at 21 and seven per cent, respectively.

Given Nokia's brand edge in these markets, Motorola has unveiled a marketing strategy that is heavy on pricing and distribution. It has set up 'Moto-vehicles' — jeeps, motorcycles, vans and other vehicles that transform into Motorola showrooms to reach the rural masses.

The company also took a successful Nokia approach, circa 2003, with a 'Made in India' campaign that established manufacturing centres across India. As for branding, the company launched a major RedCard-created campaign for the C-series in March this year, commencing in India and rolling out across high-growth markets.

"Motorola has been having a healthy recovery," says IDC personal systems market analyst Aloysius Choong.

"Its Razr phone is doing very well in mature markets and it is now aggressively pushing into emerging markets."
The central plank of Motorola's strategy, adds Choong, is its willingness to embrace its low-price offer.

"The strategy is to provide the most affordable handsets for emerging markets, but with no compromise on form or functionality," adds Una Kent, director of communications, Motorola mobile devices, high-growth markets.

Nokia, on the other hand, has shied away from entering a price war, focusing instead on total cost of ownership and the use of bundled deals to attract lower-tier consumers. While the Finnish company cannot compete purely on price, it has the advantage of a broad portfolio of models with a consistent price-quality ratio.

This, along with its incumbent market position, has enabled Nokia to focus more on branding. Earlier this month, it launched an integrated brand push out of Bates Beijing, targeting emerging markets. The company has also utilised music marketing, introducing its high-end N-series in Vietnam through a raft of DJ parties, musician endorsements and bar events.

While Nokia looks set to dominate the emerging market scene for the foreseeable future, Motorola poses a significant threat through its tireless assault of new models and tactical pricing. But Motorola has clearly stolen some of Nokia's thunder in emerging markets. And while Choong warns that Motorola still needs a portfolio to truly succeed in an emerging market, the US giant may yet have the last laugh, after recently announcing the upcoming launch of Motofone, a slim, low-priced model (estimated at $40).

"The Motofone is crucial — it's a quality phone at a low price," admits Choong. "In the mid- to long-term, I think Nokia will need to respond to this new ratio."