relocated from Singapore to Gurgaon as India was added to the portfolio of countries under his charge. As vice-president (Asia Pacific strategy), and cluster president for India, Thailand, Indonesia, the Philippines and Vietnam, Motorola, his brief is to leverage the Indian opportunity for Motorola's whole range of businesses including networking solutions, mobile handsets, broadband and software development.
The cut-throat competition makes the road ahead anything but comfortable for Sharma. But his credentials are impeccable.
An MBA in international business from Wharton, he has worked with McKinsey in New York as a core team member of the firm's electronics and marketing practices. Before signing up with Motorola in 1992, he was vice-president (strategic planning and business development), GE Capital.
In his first interaction with the media after taking over the Indian operations, Sharma spoke to Business Standard about his roadmap for Motorola.
Excerpts:
When you say that the Indian market has taken off, do you mean the mobile handsets market or the entire spectrum of products ranging from mobile networks to handsets?
The entire spectrum, but with a certain amount of phased lag. We look at cellular first and foremost because two of our main divisions "" cellphone and infrastructure "" are concerned with that market.
Therefore, barring China, there is no other market showing that kind of growth. There are prospects for such sustained growth for the next two to three years.
The other aspect of our business is broadband. We are one of the largest players in broadband, at least in the US and Europe. Whether its cable modem or set-top boxes, we play both in the infrastructure that the service provider would install, and the equipment that goes into the home.
We are going to see the same kind of take-off as in cellular, which will be a huge opportunity.
Are you saying the opportunity in broadband is as large as in cellular telephony?
In absolute size of market possibly no, but it's pretty close. There are 55 million cable and satellite homes growing at about 20 per cent every year.
If 20 per cent of these get converted to two-way digital cable, as opposed to the current one-way analog, the numbers could add up to over 10 million. I see entertainment and Internet becoming a powerful combination.
Is this market of 10 million large enough for you to set up a manufacturing facility in India?
I think it would be essential to work on localisation of products to suit this market, which will include some element of redesign or development.
Some of it is just to become more competitive, which is where manufacturing would come in. Localisation would be critical because the Indian customer has a different set of needs and is highly value-conscious. At a certain point, we will manufacture locally "" either ourselves or with a partner.
The mobile handsets market in India is booming. Motorola, though it started quite well, has lost out to other players like Nokia and LG. What went wrong?
Like I mentioned, the Indian consumers are value-conscious. They want the latest ingredients and brands, but there is a limit to the premium they will pay.
Therefore, to succeed in this market, you need to have a good balance between mass market products where you make the bulk of your revenues, and high-tier products that give you your image and are more profitable. It took us a little time to understand that and, therefore, we need a complete product line.
In the last six months, we have had a determined focus on that, particularly on the GSM side. If you look at our GSM product line today, it is as compelling as any of our competitors. And we are regaining share in the marketplace.
On the CDMA side, you have a situation where there are only two players right now. The end consumer does not really buy the phone. The two operators decide which phone they are going to stock.
The bundle schemes are driving the volumes. Depending on a deal cut, a particular supplier gets the order. This market is not consumer-driven yet. We just have to find products at price points that work for these kind of bundle deals.
So is the CDMA market totally price-driven?
I am not saying it is totally price-driven but the decision maker is somebody looking at a couple of million phones to launch a particular scheme.
Negotiations are different when you are talking of a million phones than when you are talking of a large distribution chain covering, say, 1,000 towns and 20,000 outlets. CDMA has the characteristics of a large industrial deal.
How do you plan to make inroads into this market?
Currently, our CDMA line up is mainly mid- to high-tier. In India, up to 80 per cent of the business is done at the lower end. We need a more compelling range of low-end products, a gap we are addressing.
So Motorola is developing new, low-end phones. Is this project driven totally by the Indian market?
India will be one of the key markets driving this particular project. Ultimately, the same phones will end up in Indonesia or east Europe.
Do you have the same strategy for the GSM market?
We looked at various categories like appliances, TVs and DVDs. In each category, 80 per cent sales are of the entry-level product. You must be competitive in the mass market or you won't get the initial user.
Once you have got him, you must have products that take him up the curve, each offering more features at a little more price. If you try to take him over a big jump, you will lose him.
India is one of the drivers of the mass market product line. It is the most competitive market. If you learn to do it successfully here, it becomes easier to take it to other markets.
We are pretty much there with the basic building blocks. Now it is a question of refining and improving it. We have products from $ 50 to $ 500. We have products that will work on GSM as well as CDMA.
Motorola has been slow in its communication strategy as compared to others in the business.
To make maximum returns on your advertising dollar, you want to link it to a point when your product line is competitive and when you are launching new products.
You will see a step-up in activity towards the end of the year when we will launch new and more competitive products. But you are right; our spends have been low, thus affecting the recall of the brand.
LG has talked of making GSM handsets in India provided import duty is not brought down any further from the current 5 per cent. Does Motorola have similar plans?
We have just gone through an exercise where we have consolidated a large number of factories into just a few large manufacturing locations.
In Asia, all manufacturing that is not contracted out is done in Tianjin in China and at a smaller location in Singapore. On the other hand, there is a whole bunch of contract manufacturers, including Flextronics in Malaysia.
So, we have a number of sources of supply. As volumes pick up, we will watch this market carefully. There could be a situation where we could get one of our contract manufacturers to come and manufacture as opposed to necessarily setting up our own factory.
Motorola was amongst the first to take up software development in India. How will you take it forward?
There are many areas where the core software is being done out of India. There is going to be more of it.
In due time, there might be some engineering also being done here. I can see a scenario where a certain element of hardware design and customisation is done here, partly because we might need it for the Indian market and partly because the skill sets are suited for that.
We have seen a consolidation in cellular services in India. What does it mean to a vendor like you?
With consolidation, there will be concentration of buying power. With more players, each vendor could get some business. But with consolidation, there will be a widening of the gap between the top two vendors and others.
Also, large consolidated operators with a unified licence will offer the triple play of telephony, Internet and video. The complexity of networks will be much higher. There will be a shakeout and a flight to technical quality.
How long do you expect the current telecom boom to continue?
We expect it to continue for a while. India is tracking China with a lag of four-and-a-half years. When it caps out is a function of disposable incomes. In the next five years, we do not see this market capping out.
What is the position you are aspiring for in India?
We want to be the undisputed number one in infrastructure, number two in subscribers' business and number one in broadband over the next two years.
