Nokia to make high-end phones at Chennai factory

The world’s top cellphone maker, Nokia, has said that it is upgrading devices it manufactures at its Chennai factory, which it set up three years ago. Till recently, Nokia was focused on manufacturing only low-end phones in the Chennai factory. Chennai is the largest factory for Nokia, overtaking those in China. Also, India is second-largest around the world in terms of contribution to Nokia’s global revenues as well as sales.  

Addressing a news conference in the capital on Wednesday, Nokia CEO Olli-Pekka Kallasvuo refused to divulge the number of handsets manufactured in the Chennai facility. However, he said that the devices being made there are being upgraded now, from just low-end till recently. According to the Nokia CEO, as opposed to the general perception, India is not a low-end market any longer. The high-end mobile phone series of Nokia are selling well in India, he said.     

Out of the total production in Chennai, Nokia is exporting more than half to other parts of the world, Kallasvuo said. To a question on where India figured in terms of contribution to Nokia’s global revenues, the CEO said the country was second after China, just like in the case of handset sales.

On whether the growing popularity of netbooks was a threat for a company like Nokia, Kallasvuo replied that computing devices and mobile phones market would subsequently converge and share the same space. Also, Nokia is exploring opportunities in the netbook segment as well.

Indicating the significance of the communications sector, Nokia shared the findings of a study at the conference. The communication sector would be a major driver of the Indian economy in the next five years, with a 15.4% of the GDP, or around Rs 8,65,031 crore, the company pointed out.

Communication is the fastest growing sector, rising by 25.7% in 2001-08. The sector’s share of total GDP has increased from 0.7% in the 1980s, 1% in the 1990s to 3.6% during 2001-08. In 2007-08, the sector accounted for 5.7% of the GDP.              

Reiterating that “the India market is critical” for Nokia, Kallasvuo pointed out that the company was all out to make available its handsets to the country’s masses, including in rural India. “India is second to none when it comes to importance”, he said. The country has 190,000 retail outlets of Nokia.                                         

On last count, Nokia had a global market share of 38%, against 40% a year earlier. Recently, Kallasvuo had said that recovery from the economic slowdown would take a long time. The company’s second-quarter earnings had fallen 66% due to the global recession. The company shipped 103 million mobile devices in the quarter, down 15% from the corresponding period last year.