Ericsson yesterday signalled a fresh price war in the Indian cellphone market when it announced that it would introduce its top-line model _ the GF768 _ at between Rs 15,000 and Rs 18,000. The phones will be available in the Delhi and Mumbai market by mid-October.
In pricing the GF768 at such a low price (another version of the phone with more features sells at nearly $400 or Rs 17,200 in foreign markets), the Swedish telecom vendor will subsidise the sale of the cellphone model in the country, Rajeev Kapoor, director, mobile phones, Ericsson India, said.
If the phone was not subsidised, Ericsson would have to hawk it here at over $600 (nearly Rs 26,000). Cellphones attract an import duty of 53 per cent which vendors pass on to buyers. Kapoor, however, did not specify the exact extent of the subsidy.
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Kapoor said, "We feel the cellular market is going through a very dull phase currently and as a market leader, we want to take the initiative of introducing one of our best product offerings at an incredibly price to open up the market." The monthly growth in the Indian cellphone market has flattened out to a lowly 4-5 per cent after a promising start in 1996 and 1997.
Ericsson, Kapoor revealed, would introduce a special version of the GF768 in the Indian market. The new model is quite similar to the GH768, which until now billed as the smallest cellphone in the Indian market. The GF768 weighs 135 gm and is one of the smallest and lightest in the international markets.
The Ericsson move to price the GF768 in the Rs 15,000-18,000 range is meant to attract cellphone buyers who would normally buy instruments from the grey (or illegal, since the goods sold are smuggled) market.
Explained Kapoor: "We are trying to wean away people from the greay market and encourage them to pick up phones legally. In our mock customer surveys, the feedback we got was that a number of people would pick up the (GF768) phone if it was priced at around Rs 17,000-18,000."
Cellular handset prices in the country have been dropping steadily at some 40-50 per cent a year. An estimated 70-80 per cent (on a total half million) of handset sales are concluded in the grey market.
Of the remaining 20-30 per cent (some 100,000-150,000), nearly 85,000-127,500 sell in the sub-Rs 10,000 category.