Blackberry is hurting Nokia in Nigeria

Nokia is definitely the largest maker of any type of phone in the world, from the penny pinching Nokia 1100 to the super sexy N900, the mainframe of smartphones.  While market penetration is good with the cheaper phones, the more expensive smartphones offer more profit margins.

Look at it this way, in Nigeria the cheapest of Nokia phones go for about N3,900 ($26) retail price from which Nokia, the distributor and retailers must have eke out their profit. I can only imagine how much each can get out of that phone: It is probably a game of numbers. The bread and butter is from the more expensive phones. Analysts have opined that Nokia makes as much as 25% margin on the more expensive phones. Generally profit margins on smart phones that can play movies and send e-mails can be 10 percentage points higher than standard devices.

Then Blackberry came to the party.

Blackberry was launched in Nigeria circa 2006 with Glo. It was so expensive that only large organizations could give them to their very senior executives, who were only able to connect to the enterprise email servers. But Blackberry was smart; in time, they lowered the cost of devices, expanded to all GSM operators (is MTEL an operator?) and then brought in the democratic Blackberry Internet Service (BIS). The BIS allows anyone to have a Blackberry which connects to free email services such as Yahoo, Gmail, Hotmail, and just any other POP enabled email address.

Unfortunately for Nokia, the traditional high end buyers, who normally trade in their expensive phones after every 9 to 12 months, are selling out instead of cross selling. Blackberry has become the new fad as sales are ramping up massively; so if you don’t have a Blackberry, you don’t know whatzup. Every Blackberry sold is at the expense of Nokia phones.

Mobile Internet and email are the primary reasons why people are migrating to Blackberry (save for the few senior executives who are entitled to official Blackberry devices). What Nokia is not doing is to push these capabilities in their phones enough. In my own opinion, on a good day, a Nokia phone will tromp a comparative Blackberry device any day, feature for feature, value for money.

How this would play out in the end is left to Nokia. Considering that Nokia has done so much in Nigeria, it is going to be sad if it allows Blackberry to eat its dinner.