Connecting People To Everything: Imran Khalid Mahmood, Chief Executive Nokia Pakistan

The cell phone is referred to by many, as an added appendage. A part of you that, well, most of us can’t live without and as our communication needs have evolved, companies have rolled out phones that are faster, smarter and better able to match our demands. You’ll rarely see people without it and irrespective of the level of education that someone has, they’ll be talking on the phone with someone else. With the evolution of communication and all the access points which influence our lives, the way we use information or even access it, has changed dramatically. A cursory look at the number of cell phone connections that have come online over the past several years and you can see how quickly the overall teledensity has expanded.

How does Nokia keep up with the changing needs and ensure that those needs are catered to? The handset you have is has to suit your needs. With tens of millions of phones out there, how does Nokia make sure that, now pay attention, you know that they have a phone for you? And that bit about ARPU and how Pakistan, though has tremendous mobile penetration, also has one of the lowest Average Revenue Per User?

“Pakistan has a fairly advanced market in terms of the infrastructure that it has. Most of our applications and content which are driven in the current market are already in place because the infrastructure allows for EDGE and GPRS connectivity within the GSM protocol,” begins Imran Khalid, CE Nokia Pakistan.

There are two sides to IP enablement: one is if your phone can make IP calls and whether they are ready for the IP protocol. To this Imran says, “Nokia has worked with Cisco and Avaya on their IP protocols and there are some devices, especially in the E series, which were enabled. However service can’t be enabled just because we did our bit. When you’re talking about making an IP call, an IP call over a cellular network has to be possible. But you have to understand that we are in the business of partnering with our cellular operators, and our intention is not to bypass their network because then the IP that goes through their wireless broadband domain, doesn’t add to their revenue. But the enabler would probably come in when we become broadband compliant. I am a true believer in this – that’s the next domain.”

But you enable that, and imagine this: if you have an IP-enabled PABX, you can go ahead and map any communication device as long as you are a part of that network. But the infrastructure is key in playing the critical role required to make this possible. Voice-Over-IP-Over-Cellular is a reality. Voice-Over-IP-Over-Internet is also a reality. “Both domains need to match. Once you have interconnectivity, then you can benefit from the services seamlessly.” Nokia works very closely with several stakeholders to make sure that the progress remains active. Infrastructure manufacturers who, in their case are, Nokia-Siemens Networks, the Device Platforms to make sure that the devices are compliant with the clients and applications that are required to make cutting edge communication a reality.

“Different segments have different needs and since there is just such a diverse set of needs out there, we believe that there is only so much content that our operator partners can create. The rest of it has to be created, produced, generated by the people out there, and this is something that is already being done.”

How has content creation mechanism changed at all? “Nokia has a development forum called Forum Nokia where developers are encouraged to come in so we can look at their requirements. Since the content world in the devices business is constantly enriching itself and that’s something which sits outside the operator domain. Of course there is this entire new world that we’re opening up for users. The question we need to start asking is why there is still a need to download content through GPRS or an existing reservoir of content when you have the ability to access the Web through your handset. Hence we enable access to rich media which is an absolute new world of content. In the old world where applications were being created and moved to the devices, the focus has shifted to the user. Your content is your own domain. You create and access what you want as long as you have access to the virtual world beyond the applications of your handset.”

“Voice is predominant component of the entire value proposition over cellular networks in Pakistan, whereas 3G has to do with capacity. How much more do we have to go before hit saturation and how do we optimize our spectrum. Spectrum is cash, it’s a commodity.” And here’s a terrific example of how Nokia manages to lead growth.

“The Web shouldn’t be tied to a native device. It’s up in the cloud and we want people to be able to access it and build what they need.”

As market leaders, the company knows where it’s responsibilities are, which is why they take it upon themselves to not only create the awareness about trends in convergence takes place, but also to ensure that the devices are ready to handle what the people want. “It’s our responsibility. We enable people to be able to use their mobile devices to do everything they do on their desktop. To keep the masses glued to what is coming in – that is part of our responsibility to the market,” says Imran. Nokia’s strong presence in the country today ensures that the Pakistani market gets the benefit of having the devices that are available anywhere else. “It actually gives me a great deal of pleasure at how aware my market is when we get calls asking for specific features or specific phone sets. That not only keeps us on our toes but shows us that we have very intelligent users who understand technology.”

Pressing the right buttons

While everyone talks about teledensity and GSM growth, Imran shares some pertinent facts which help to place the significance of mobile telephony into better perspective. “Every 10 million subscribers make 1% contribution to the GDP.” A device that started off just connecting people is doing more than that – it is connecting people to everything around them. Just like you require some kind of vehicle for travel and transport, you also require a mobile phone to communicate.

“In some of the research that has been conducted, we find that in the rural areas, people benefit more from cellular services and let me explain a heartbreaking trend. When more than 30% of the menfolk from the rural areas leave their homes to go and work overseas, their families used to have very limited means of keeping in touch with them. Just imagine that.” In a day when there is almost 98% penetration of terrestrial-based television channels and we see communication methodologies in real time through the content displayed, is it fair to consider the ability to connect to a loved, a luxury? “For those who have access to the basic cellphone devices, they can keep in touch. It’s a simple need. A basic need.” Imran focuses on the “need” aspect of the service which the phone provides.

With the announcement of this fiscal year’s budget, the Pakistan Government announced a tax on all luxury item – this also included mobile phones. If you base the assessment of the cellular market on what Imran says, then a large part of the local market is very price sensitive and below a certain range, the phone has become a utility device. “It’s really no longer a luxury items. The fact that cell phones have been declared a luxury hurts a large chunk of the market below a certain price point. Sure, some devices are, but the entire range is certainly not luxury. The principle of putting a uniform tax structure on all price points and devices, seems harsh.” It is estimated that 70% or more population of cell phone users are located in the urban areas. “The places where the populations are most dense, is where the traction builds up. We are very strong believers that the next growth is in the sub-urban areas, however most of these people are daily wage earners. The phones, even the basic ones, become out of their financial reach.”

An estimated 67% of the population have a daily earnings of less than $50. You need an economist to convince you that with this situation, the basic phones which cater to the basic needs of this segment have been redefined by the Budget, as luxury items. So we understand that this is work in progress for the Government, but what message does this send back to Nokia? “The company obviously understands that this can happen anywhere – they have to have diverse expectations because they deal with every imaginable market out there. We’re trying to convince the right stakeholders to relax the imposed taxes so that the lower income segments are not as heavily impacted.”

According to the GSMA (GSM Association), the Total Cost of Ownership on a connection is calculated as the following: more than 70% of the cost is spent on services, 14% is spent on a device and 15% on taxes. But we’ve come a long way if you compare that back in 1984, a cellphone used to cost $1800. Today, it costs an average of $50, so it’s all about economies of scale. “Pakistan was a model country in keeping the TCO below $5. You see,” Imran explains, “the higher the TCO the lower the penetration. In the past several years, Pakistan has enjoyed phenomenal growth and penetration into the consumer and corporate markets. With the imposition of taxes and inflation, this becomes a more difficult task as time goes by.”

And taxes are actually just the starting point for bigger problems. The tax adds more complications. The way it has been imposed, it isn’t generating as much as it should for the Government, which puts pressure on the fair trade markets, giving rise to the demand in the grey market. “This means that people will be unable to spend their money in the fair markets, which means companies will be unable to invest, which will ultimately have an impact on the economy. Remember, money in the ‘parallel markets’ never comes back into the system. We have 9000 retailers tied to our brand and cover 2400 locations ourselves, so we are very committed to the market. However, despite our commitment, with everything going on, the smaller retailer, part of Pakistan’s own fair business ecosystem, will be severely impacted because of the trickle down effect.

But Nokia has strong belief in Pakistan’s potential. “We understand the dynamics of a market that has 165 million people Pakistan, a fairly advanced telephone network, a .. hugely mature cellular market and between 70-100 million subscribers already being served. It is in everyone’s interest that we continue to bring in the latest products and off this advanced market, meaningful devices despite the downward trend in the economy.”

Connecting more people through experiences

So you have a product which drives services and everyone has a good idea about the value proposition it brings. Then how to you market the new media to the markets? “A key part of our marketing strategy is experiences,” says the CE. “Bringing a virtual experience on the device and making it real. You’ve seen what an N96 can do, on the web with all the power that the internet provides to the end user, that ‘demo’ looks no different than any other animated ad. It doesn’t ‘do’ anything for the end user except show him the features.

Nokia has increased it’s level of BTL activities, in fact, refined it’s strategy towards marketing their higher end, complex smart phone devices to the markets. “For this, we are focusing less on the electronic media or print, but more through experiences. We want to go into where the masses are to show them how to do everything they need to do in the optimized fashion. Explaining to our consumers that they can access their Gmail on the E75 just as easily as they can access their corporate email is what we’re focusing on. We want to bring that experience alive for them. Showing people that it takes 5 simple steps to set up your email on almost 14 Nokia devices today available in Pakistan. That’s the experience we want to share with our customers.”

It’s more than just a phone. It’s more than just a service. A phone is really an extension of the diverse culture and relationships that people have amongst themselves as well as with the rest of the world. When you answer the phone in any country, a ‘hello’ means pretty much the same no matter where you are – that’s the only indication you need on how much of an integral part of our lives this small device has become. You have multiple means through which you can reach out and touch someone. Taking that one generation further, Nokia captures the very essence of what communication is all about and connects you to the world through a device that quite literally fits in the palm of your hand.