Brand loyalty is Nokia’s EM trump card for Microsoft

Microsoft’s acquisition of Nokia’s handset business has made headlines across the industry, but it is highly likely that the deal’s impact will be felt the most in emerging markets.

Despite the Finnish firm’s recent ailing fortunes and a general perception among many in developed markets that the manufacturer has fallen behind rivals such as Apple and Samsung, Nokia’s emerging market footprint is leagues ahead of its competition.

Nokia has indeed faltered after its dominant period between the mid-90s and the mid-00s, failing to produce a smartphone that has taken hold in developed markets. However, its feature phone business in emerging markets has remained strong, meaning that the Nokia brand is highly trusted in regions such as Africa. Microsoft would be naive to ignore this brand loyalty, and must focus on developing its business in emerging markets to make the most of its new acquisition.

Indeed, Ajay Bhalla, Professor of Global Innovation at London’s Cass Business School, notes that Microsoft stands to benefit enormously from what he refers to as “Nokia’s well-established infrastructure and competencies in emerging markets”, adding that the Finnish company “continues to retain an impressive market share” in many regions. He concludes that “Nokia has also poured billions into its handset business and has been showing signs of genuine turnaround.”

Jason Yeomans, CEO of PMGC Technology Group, also believes that the deal could be positive for Microsoft as long as the firm doesn’t lose sight of “how important it is for technology companies to have the capability to provide services and solutions to a whole host of markets and not just to concentrate on one aspect of technology.”

Vasileios Tziokas, Marketing Manager at Upstream, notes that the deal will definitely impact the future of devices in emerging regions. “Nokia’s phone business gives the company a direct route into the emerging markets – where Nokia devices prove to be extremely popular”, he says. “While the immediate focus for Microsoft is on hardware, having control over the device itself will mean that its other services, such as its Bing search engine can be preinstalled on the devices, which may eventually challenge Google’s Android stronghold in these regions.”

An attitude survey conducted by Upstream across Nigeria, Brazil, India and Saudi Arabia unearthed that Nokia devices are second only to Samsung in terms of desirability – 22% of respondents said they would like to own a Nokia handset. Nokia’s track record of producing low-cost devices for emerging markets is also likely to stand Microsoft in good stead, as 28% of consumers specified that they would not pay more than $150 for their device.

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