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Nokia in low-cost feature phone offensive in SA

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 08 Oct 2019
The fourth-generation Nokia 105.
The fourth-generation Nokia 105.

Fading cellphone brand Nokia is continuing with its drive to capture the low-cost feature phone market in SA.

Yesterday, HMD Global, which operates the Nokia mobile phone business, announced the South African launch of the fourth generation of its most popular feature phone – the Nokia 105.

This is despite communications minister Stella Ndabeni-Abrahams recently saying the adoption of basic feature phones with no Internet access will hamper government’s plans to connect 22 million South Africans by 2020.

Earlier this year, mobile operator MTN introduced its “smart feature phone” – the Smart S – which retails at R249.

The new Nokia 105 comes after the 2017 model and keeps its design but is a bit taller.

The Finnish company says the Nokia 105 will be available in black at MTN and Vodacom stores for R249 from 15 October.

Lasting power

In a statement, Nokia says the Nokia 105 has “sold in tens of millions across the globe, proving its popularity and timeless quality as a legendary phone”.

It says the Nokia 105 is known and loved for a lasting battery. The Nokia 105 comes with six try and buy pre-loaded Gameloft games, including Tetris, Sky Gift, Airstrike, Nitro Racing, Ninja UP! and Danger Dash.

“As a business, our aim is to keep getting better. With this introduction, we are bringing the reliability to first-time mobile users, as well as the quality our most popular feature phones are known for, with even better functionality,” says Shaun Durandt, general manager at HMD Global.

In contrast to the smartphone market, which contracted for the first time in 2018, the feature phone market has continued to grow over the last three years, says market analyst firm Counterpoint Research.

It estimates that in 2019, a little more than 400 million feature phones will be sold globally. Further, feature phone shipments are expected to cross one billion units by 2021, says Counterpoint Research.

Sticking with what works

World Wide Worx MD Arthur Goldstuck comments that Nokia has a dual-device strategy.

“On the one hand, it produces more affordable smartphones for both entry-level and mid-range markets. On the other, it still meets the massive demand for low-cost feature phones.

“It [Nokia] has always been the dominant player in this segment, and its basic phones remain in demand in emerging markets. The volumes are massive, and the previous editions of the 105 have sold in the tens of millions of units,” Goldstuck says.

He points out that when HMD took over the Nokia phone brand, it reinvented the entire smartphone range, but maintained the existing line of feature phones. “It was a classic example of don’t fix what isn’t broken.”

Goldstuck comments that Nokia is not competing with the likes of Samsung, Apple and Huawei. “In the feature phone segment, it all but owns the market.

“It [Nokia] has gradually been moving up the value chain, and competes effectively with Samsung and Huawei in the mid-range. However, it is not chasing market share for its own sake, as that requires massive marketing budgets, R&D, and extensive distribution networks. It is building its market share in specific segments, and will compete with the key players in each of those segments. Nokia is already doing so effectively.”

He believes feature phones may not be lucrative, but still represent a large volume market and the revenue flow that Nokia needs to build up its broader offering.

“When the original Nokia 105 was launched at Mobile World Congress in Barcelona, it was a sensation, which is saying a lot for a feature phone.

“The reason is that, for only EUR15, you had a device with alarm clock, calendar and torch, and it was dust- and splash-proof, with a standby battery life of 35 days. In other words, ideal for remote and rural areas, and perfect for emerging market needs. It has kept building on that value proposition through four generations of the handset,” Goldstuck notes.

Basically cheaper

Arnold Ponela, research analyst at IDC, comments that HMD is one of the few businesses still investing in feature phones and it sells more feature phones than smartphones.

“The 105 is the perfect low-cost phone for people who only want to stay connected, whether it’s as an emergency phone or as a primary phone in places where affordability is key.”

Ponela points out that even though the feature phone market is declining, there are some important categories that never decline, and it’s these segments HMD is interested in.

“The phones are more design-led, with a better feature set, for those who want more, but not from a smartphone. It’s so much cheaper to produce a 2G feature phone than even the lowest-cost smartphone,” he says.

Nonetheless, he believes “Nokia has the potential to stack up against Samsung, Huawei or Apple but previous decisions can't be quickly undone (Windows phones gave users a horrible experience).

“Nokia simply didn’t adapt according to the market and the consumer's changing wants and needs. Samsung, Huawei and Apple went on to dominate the smartphone market by making the right choices and focusing on customer satisfaction.”

He adds that Nokia smartphones are some of the least expensive around, including the Nokia 9 Pureview, which costs much less than many overpriced and overrated flagships that are full of issues like Google’s Pixel line.

Ponela says the company has slowly been making inroads this year, launching its smartphones.

“There’s no doubt HMD will find itself entering a battle with the likes of Apple, Huawei and Samsung. The company’s strength in the mobile industry lies predominantly in feature phones and mid-market smartphones.”

For Ponela, feature phones cater to the needs of the continent’s huge low-income population (mainly in rural areas) by providing basic mobile communications that are priced very competitively.

“Feature phones have become smart by adding new features that were until now performed by smartphones. Like smartphones, feature phones are also upgrading from 2G to 3G and now 4G phones.

“Applications and facilities which were only a part of smartphones are trickling down to feature phones as well. The increasing number of smartphone models priced under the $100 mark will be the main driver of consumer migration from basic and feature phones to smartphones. However, the transition has not been as expected, with feature phones still playing a crucial role in the mobile phone industry,” Ponela concludes.