Monika India Case Study
A survey released voice & Data,a telecoms industry journal,showed hat Monika India was dealt two embarrassing blows in 2012-13. First,the mobile handset marker ceded the top spot in revenues to Samsung.
Second,in a market where the industry revenues grew a brisk 14. 7%,and its leading rivals by a multiple of that,Monika was one of the two companies in the top 10 whose revenues tumbled (by 1 8%); the other was BlackBerry (down 23%). These numbers don ruffed Bali,who says Monika India is in the midst of executing a strategy it set into motion about two years ago and is where it wants to be. We are a company in transition, he says.
Such a predicament good enough at the top and besieged at the bottom’s a familiar one for Monika India. In its sharp fall in market share, from 56% in 2008 to 27% in 2013, it lost out to Indian vendors at the low end and its inability to match BlackBerry, Samsung and Apple at the top end. Bali feels that, given what Monika is putting into its smartness,the swing might be in its favor this time. Consumers are forgiving of what you have done in the past and are more receptive to what you bring to their lives, says Bali. The needle swings very rapidly. Three-pronged Strategy: Monika Indians strategy pivots around three points. The first is driving innovation into its devices to differentiate them in the market.
We will focus on differentiation that gets created beyond Just the operating system,around imaging,entertainment and location services, says Bali. On its part,in each of these areas,Monika has some good things going. For example,in imaging,its offering a 41 PM camera on Alumni 1020 (which is yet to be launched in India),against the maximum of 8-13 PM offered by rivals,and another technology that allows users to take pictures even in very low light. Similarly,its purchase of Naiveté in 2008 has given it strength in maps. And its music store has a portfolio of nine million songs and does 10 million downloads per eek.
Elf you look at it two years on,have we executed that strategy 100% asks Bali rhetorically. Yes,we have. We have got 12 devices out.
Lately,it is trying to lure buyers with add-eons like theft insurance (premium of 1. 5% on sale price,launched in March) and a buyback scheme (RSI 4,000-6,000 discount on old Page 13 phone,launched in August).
Monika will gain as the wave of high-end cinematographers $600 (RSI done with, predicts Rajah Gaul,the former head of Microsoft India and currently CEO of SMS Info Systems. There’s a massive opportunity in the $200-300 (RSI smartened and Monika will come back in this space. The second plank is,in Ballads words,targeting the next billion of users,most of whom will come from emerging marketers-time users,converting from feature phones to smartness. R,affordable smart phones,which is where the Ash series comes in,though DC does not classify it as a smartened. Lets third plank is basic phones and feature phones,a segment the world is gradually moving away from and Monika wants to milk in India while it can.
Len India,about 160 million phones are sold every year. Judging by the last quarter,when 9. 1 million smartness were sold,2013-14 could see est. would be smartness,which means there is still another 90 to 100 million feature phones which are going to be there even in India, says Bali. Overcoming Aneroid: As a full-line player,Monika might be the only one present at all these points. But increasingly,that portfolio spread is counting for less.
At each of those price points,Monika faces intense competition,most of which,barring Apple,are powered by Goggles Android operating system. Hardware and SO are key in smartness,and on these,Monika is not back on radar as yet. Monika sells because of its brand loyalty, says Nail Sahara,a distributor in North India. Seven of the top 10 players in India are on Android. Adds Ship Putsch of Ovum Telecoms,a consultancy: Monika has invested in the Microsoft SO and finally has a portfolio of devices.
But they have to counter the entry-level Android wave to capture the market. Besides shaping buyer behavior,this preference also trickles down to app developers.
Developers don have a business case for Windows and BlackBerry, says Spencer of ABA. Although Monika APS have increased from 7,000 to 180,000 in three years,it pales before Apple ISO (900,000) and Android (850,000). The only way they (Monika) can make a dent is by building a big ecosystem of great mobile APS, says AAAS Urge,UP strategy,Embroilment,a Seabed mobile app developer.
However,this is not something Monika can do its own. Microsoft needs to accelerate the development of high-quality consumer and business APS. Ionians pact with Page 14 Windows ends this year. Bali did not categorically say whether Monika would consider Android, but did say that choosing Windows was absolutely the right move.
A senior official in a company that partners Monika adds: That shift is unlikely in a hurry as all f Ionians developments have been on the Windows platform.
Even on some of those developments,Monika is trailing the market. Samsung has moved to ACTA-core, while Monika is at dual-core, says Guppy of Forrester. The greater the number of cores in the chip, the more applications it can run simultaneously. Similarly,Monika is absent in the fastest growing smartened segment in India: pallets,or devices that combine the functionalities of a smartened and a tablet, and have a screen size of 5-7 inches. We would only do so if we could bring something differentiated to the market, says Pull
Amenorrhea,director-smart devices, Monika India Middle East & Africa.
Spencer says Monika NAS lost tale. L TTS evolves are GAO,out ten market momentum Is against teem Windows, price, developer community, ISO and Android domination, he says. They have to look at the mid- to low-end to maintain share, he says. Although there’s no critical mass of numbers to show it yet, Bali believes Monika has turned a corner and will benefit from the multiplicative effect characteristic of technology waves. A few quarters on,you will see us become significantly larger.
That is for sure, he says, excelling to quote specific targets. We will be a leading player, that much can say. Microsoft to Buy Ionians Handset Unit for $7. Billion: As part of the deal, MS will take on board ask Monika employees including its CEO Elope. Microsoft agreed to buy Ionians handset unit and license its patents for 5. 44 billion ($7.
2 belongingness to revive two smartened businesses that have struggled for a half-decade to gain share against Apple and Google. The devices and services unit,which accounted for half of Ionians 2012 revenue,along with 32,000 employees,will transfer to Microsoft,the companies said. Monika chief executive officer Stephen Elope,49,will return to Microsoft after a threaten stint running the Finnish manufacturer. The move stoked speculation he may be a successor to CEO Steve Babbler,who said last month heed retire within 12 months.
Monika shares Jumped as much as 48% in Helsinki as the sale removes a drag from losses in handset making and turns the company into a network-equipment supplier. For Microsoft, the purchase marks its biggest foray into hardware as sliding personal-computer sales threaten demand for the Windows operating system that made it the largest software maker. The question is whether combining two weak companies will get you a strong new competitor: its doubtful, said Paul Budded,a telecommunications consultant in Sydney. Both Monika and Microsoft really missed the boat in terms of smartness, and it is extremely difficult to claw your way back from that.
Page 15 Market-Share Decline: Monika,based in Spot,Finland,racked up losses of more than 5 billion over nine quarters as Elopes comeback efforts failed to eat into the dominance of Apple and Goggles Android platform in the smartened market. The stock has lost more than 80% in the five years through Monday, August 26, 2013.
The shares rose 42% to 4. 22 euros at 2:47 p. M. In Helsinki, valuing Monika at 15. 8 billion.
That compares with a $278 billion market capitalization for Redmond, Washington based Microsoft. Its shares fell 3. 8% to $32. 13 in early US trading. As part of the agreement,Microsoft will pay 3.
79 billion euros for Ionians devices division and 1. 65 billion euros for patents,according to a statement from the companies. The all-cash to Monika Investors approval,l’s expected to De completed In ten TLS quarter AT 2014.
Knock salad it will book a gain of 3. 2 billion,with the sale significantly creative to earnings. T also said it aims to return its debt,which is ranked Junk by all three major rating companies,to an investment grade.
Chairman Risotto Slamming,who will become Ionians interim CEO,said the company may return excess capital to shareholders. Big Transformation: Its a big transformation,but that’s what you’ve got to do in the tech business to move forward, Babbler told Tom Keen on Bloomberg Televisions The Pulse. The Microsoft purchase is the second major deal to be announced during the US Labor Day holiday on Monday. Verizon Communications agreed to pay $130 billion for Avoidance
Groups stake in their US wireless venture in the biggest transaction in more than a decade. The Microsoft-Monika deal is the largest for a wireless device maker after Goggles purchase of Motorola‘s handset unit in 2012,according to Bloomberg data.
For Microsoft,the deal including the payment to license Ionians patents is its congesting behind the $8. 5 billion purchase of Internet telephone company Keep in 2011 . Microsoft agreed to pay about 0. 35 times annual revenue,compared with the median of about 1. 4 times for 60 wireless equipment’s deals tracked by Bloomberg.
That also compares with the 0. 7 times revenue Google paid for Motorola Mobility,the data show. Google paid about 1. Times annual operating income for the handset maker,while Ionians device and services business reported operating loss last year,according to the data. Page 16 Deal Outlines; 10 Facts You Should Know..
. 1 . THE $7. 2-B DEAL includes sale of Ionians smartened,mobile phone businesses,its design,manufacturing and assembly & support teams 2. MONIKA WILL CONTINUE TO own and maintain the eponymous brand.
While Microsoft will use the Alumni bagging for smartness,feature phones will be sold under the Monika brand for 10 years. Monika sold 7. M smartness under the Alumni line dung Q,2013 3. THIS IS THE LARGEST DEAL for a wireless device maker after Goggles $12. 5-billion purchase of Motorola Mobility in May 2012 4.
MS WILL PAY ROUGHLY $5 b for devices and services division & $2 b for patents.
Ionians portfolio of patents stands at around 30,000 5. MONIKA TO GRANT Microsoft a 10-year non-exclusive license for its patents 6. THIS I HE SECOND largest patent-calculation deal Tort Maladroit,tater ten Keep Dud In 2011 7. MS WILL BECOME a strategic licensee of the HERE (Ionians location services and maps) platform,and will separately pay Monika for 4-year license . MS WILL CONTINUE to support its services and APS on other platforms such as Android and ISO 9.
AFTER THE SALE TO MS,Ionians biggest business will be network equipment 10. DRAWING FROM OVERSEAS cash resources,MS will give Monika 1. 5 b of financing in the form of 3 500 m trenches of convertible bonds page 17 WHAT THIS MEANS…
Better Customer Experience: Like Google (with Motorola & Nexus) and Apple (with phones),MS also gets the chance to better integrate hardware and software Cheaper Phones: Alumni has always been the most visible showcase of MS Windows Phone SO.
Since MS owe owns Monika,it doesn’t have to pay license fees,so Alumni prices may fall by as much as $50 Ranking: Android and ISO are huge and BlackBerry is failing. Microsoft acquisition is a strategic move to capture the third spot and stay there Brand revival: After MS failed attempt at tablets,Monika could very well be the brand name on a renewed line of Windows tablets. Page 18 26 year Journey of Monika…
1987: Produced the Mobile Acidity,the first handheld mobile phone. Nicknamed the CORBA after Mikhail Geographer,it weighed 800 GSM 1992: Monika sold off its non-mobile divisions and launched its first digital handheld
GSM phone,the Monika 1011 2003: Monika 1100 becomes not Just the worlds bestselling mobile phone (250 m unit in sales),but also the most popular electronics device 2011: Loses lead in lucrative smartened market,having been on the back foot since the launch of Apples phone in 2007 2011: Monika unveiled its first Windows Phone handsets,the Alumni 710 and 800 after its CEO Elope decided to ditch its own ailing Simian SO in favor of MS equivalent 2012: Samsung beats Monika to become worlds largest mobile phone vendor 2013: Monika speeds up product launches,including the unveiling of its Alumni 1020 with a 1 megalith camera. Announces a 1 5 phone,Lets scantest ever. Ells manages unlit to Microsoft Brand Monika Faces Tough Ride to Get its MAJOR Back: For thousands of Indians,what Marti is to cars and Colgate is to toothpaste,Monika most definitely is to mobile handsets. Len the early ass the Finnish firm played a pivotal role in the evolution of the concept of phone from the hackneyed dial phones to savvy mobile handsets.
But today Monika is a fading brand,with its India market share stumbling to 27% in 2013. Now,can software giant Microsoft $7. 17-billion,or approve. 48,685-core,deal to buy the handset business of Monika revive the brand Brand experts Outspoken to say it wont be easy infusing new life into Ionians laggard image and revive its business. Monika lost the plot both at the top and the bottom end, Santos Ideas,marketing expert and CEO of Future Brands,says.
At the top end while it lost the market to Apple and Samsung,and at the bottom end it could not survive the Chinese and Indian homegrown handset manufacturers assault.
While it tried to recover itself,the recovery was little too late, he says. Experts say Monika was a little too late to Join the smartened bandwagon,and that its current advertising and marketing strategy lacks focus and vision. Harris Bijou,brand-expert and CEO of Harris Bijou Consults,compares Monika to Dally,which dominated the Vanities market for decades before fading out because it became generic and failed to innovate. Monika was the first-mover in India,but it lost out to everyone else and became as generic a brand as Dally had become, he says.
While the public-sector TIT (Indian Telephone Industries) led the era of the rotary round-dial phones,Monika led the buttonhole era,and missed out on the smart touch-screen era altogether, Bijou says. As a result,Ionians market share in the.
5,946-core dodged-dog Indian mobile andantes market,stumbled from 73% in 2000 to 56% in 2008 to 27% in 2013. Even globally,the company was the largest mobile phone vendor last decade. However,with the rise in demand for touch-screen smartness,Monika lost the battle to Samsung and Apple. And the company’s share price fell from $40 in 2007,when it had a 40% share in the Page 19 handset market,to less than $2 in mid-2012.
Now Monika accounts for Just 15% of the global handset sales and a mere 3% of smartened sales.
Monika uses Microsoft Windows Phone operating system for its smartness while the market is dominated y Goggles Android and Apple ISO. Bijou says the last-mover status on smartness,and a rather confused advertising and communication strategy did Monika in,at least in India. The brand is using everything that everyone else is using. Advertising is very pair pass. Nothing,that stands out from the herd as yet. This needs to be corrected, he says.
Ideas of Future Brands says that although Monika brand has been more visible for the past one-and-half years,it lacks a clear vision in terms of marketing strategy. T misread the category when it should have stayed ahead of the game, he says. When Monika started its Journey in India,however,it was backed by an aggressive and effective communication strategy and managed to break ten paradigm AT a ‘premium versus popular’ Dragon Disease on price pilots,says Subtask Kamala,CEO and managing partner of BOB India. Subtask Kamala,CEO and managing partner of BOB India,says,Monika was unique in a way that it broke the common paradigm of a ‘premium versus popularized based on price points,which usually happens in other categories. Monika was aspirations at every price point,for people at different income levels or socio-economic strata.
Everyone wanted to have the latest Monika within what they could afford, says Kamala who is a former CEO of Bates that handled the creative duties from 2000-2007. Can Monika Change Microsoft Outlook: Microsoft is planning an Apple-like revival with its new deal,but restructuring in the midst of a management change is never easy. With its purchase of Ionians phone business,Microsoft is taking inspiration from Apples way of making products,bringing hardware and software under a single roof where they can be more elegantly woven together. But Microsoft already bears a striking resemblance to Apple the Apple of wow decades ago,not the trailblazer of the mobile era. The $7. 2 billion Monika deal is unlikely to change that and catapult Microsoft up the ranks in the smartened market.
That is because Microsoft,with its Windows phone operating system,is stuck in third place in that market,where all the oxygen has been drained by more established players App and Away: Apple and Google have won the hearts and minds of developers,who design the APS that lure consumers to their devices,while Samsung is the dominant maker of mobile phones,most of which run Goggles Android operating system. Although Microsoft ND Ionians products have won praise for quality,they have arrived late. What matters is not the phone per SE but a dynamic app and services ecosystem, said Brad Silverberry,a former senior Microsoft executive who is now a venture capitalist in Seattle. Microsoft predicament is a flashback to the situation Apple found itself in during the early sass.
At that time,Apple arguably had a superior computer product,the Macintosh,but it languished as PC’s running Microsoft Windows operating system engulfed most of the market.
One of the biggest problems for Apple then was that Microsoft had succeeded in gaining the allegiance of software pullovers,who produced a bounty of applications. They’re stuck in the same vicious cycle that Apple was in 20 years ago, said Benedict Evans,an analyst with Enders Analysis,a research firm,and a former strategist in the wireless industry. Page 110 Steve Babbler, Microsoft Coos Exit: The challenges for the marriage of Monika and Microsoft go far beyond support from developers.
Microsoft is in the midst of the biggest organizational changes in its 38-year history. Len meal-July,Steven Babbler,Microsoft chief executive,unveiled a plan to restructure the company’s often clashing fiefs into business groups designed operate more.
While organization seemed to set up Babbler as the maestro in charge of keeping the various groups in harmony,he stunned the tech industry late last month by announcing his plans to retire from Microsoft within 12 months. Babbler said he was leaving earlier than planned because he felt the company needed a leader prepared to stay longer. That fuelled speculation that Babbler was encouraged leave by Microsoft board.
Blending a major acquisition into a company is challenging enough in times of calm. Doing so with the unexpected management change at Microsoft could make t even harder,tech industry executives and analysts said. The issue I wonder about is the amount of complexity Microsoft is taking on its business by absorbing Monika at the same time it is reorganizing at the same time Windows 8 is faltering, said Michael Mace,a former executive at Palm and Apple who now runs an app development company in Silicon Valley,Zaire.
Lets scary from that standpoint. While Babbler plans to leave Microsoft after a successor is found,he was very much involved in cutting the Monika deal.
Over the past several months,Babbler and his deputies met in places like Redmond,London and Helsinki with counterparts in the talks,led by Risotto Slamming,Ionians chairman. The style of Babbler,an exuberant leader with a booming voice,was a stark contrast to the argumentativeness manner of Slamming,according to a person present at many of the meetings. Shadow of Being: Microsoft is under enormous pressure to reinvent itself for a world where mobile devices are the animating force in technology,rather than personal computers. Microsoft and Monika became partners over two years ago,when Monika agreed to standardize its smartness on Microsoft mobile operating system.