 "Focusing only on hardware is not going to work: Shashin Devsare")
It is important to carve your own niche and hold on to it, Shashin Devsare tells Ankita Rai
Karbonn plans to invest Rs 800 crore over the next three-to-four years to build manufacturing capabilities in India. Currently, it is importing 100 per cent of its handsets. Why the change of plan?
There has been significant growth in smartphone adoption in India. Manufacturing in India makes sense purely for economic reasons. First, smartphones have higher selling price than feature phones and their share is increasing. Second, there is a big duty differential between imported and locally manufactured products. Third, we want to customise our devices as per the needs of the local consumers. To enable this, it is important to control the production of devices from chipset level onwards. Local manufacturing is important for any brand to be able to create long-term sustainability. We want to create a value proposition that goes beyond hardware specification and focus on services. We want to look at manufacturing as a standalone business. We will be open to contract manufacturing.
Experts say the Indian mobile market is reaching saturation. While smartphone shipments grew 44 per cent in the second quarter of 2015, the overall Indian mobile phone market shrunk by 6 per cent in the second quarter of 2015 on a year-on-year basis. (IDC).
You need to look at where the market stands. There are 800 million plus active connections in India at present. We have a long way to go given that smartphone reach is currently at 150 million. Saturation in the overall devices market also depends on what the industry can do to make products relevant to its consumers. So our emphasis on local language is aimed at making the entire smart telephony experience relevant. Vendors are primarily driven by hardware specifications. There is hardly any differentiation possible on the basis of hardware.
The current level of smartphone penetration is covering the English speaking userbase well. A five to six times bigger market is waiting to be captured. The consumer is literate but may not be fluent with English or digitally literate. Smartphones need to be simplified to make devices relevant.
Karbonn is aggressively targeting the volume segment (low-and middle-income segment) unlike its rivals. How does this impact your margin? With the 'budget' phone tag, do you think you will have difficulty moving up the ladder?
About 70 per cent of the market is driven by entry-level smartphones. The market is not becoming premium in the next five years. We genuinely believe in our mission statement of 'massifying technology'. We would be unveiling our 4G line-up in the coming quarter, around the festival season. If we are able to provide cutting edge technology at competitive prices and maintain healthy topline and bottom line, there is no need for us to be someone else. It is very important to carve your own niche and hold on to it.
Karbonn has focused on expanding its distribution and after sales network right from the beginning. The brand is also called the 'Maruti' of smartphones. Is that part of the plan?
Distribution is our key strength and we tweaked it heavily. Unlike other players, we first launched the phones at the district level and only later targeted the metros. That strategy really worked in our favour. Service infrastructure goes hand in hand with distribution mapping. So today we cater to more than 5,000 distributors and have 92 per cent district-level coverage. Our service network is the largest in the country with 800 service stations. Of this, nearly 100 are exclusive service centres. We are strengthening these centres so that the smartphone experience can be expanded. So whether it is the system upgrade or usage of application, these service centres are also acting as points to educate customers for smart telephony usage.
In 2012, we first started selling in metro cities. Since then we haven't looked at the market in the context of a rural urban divide. There are similar consumer segments in every market. So the profile of the youth buying our phone in metros is similar to the one buying them in semi-urban areas. Both these sets of consumers want to experience faster phones, betters screens and pictures.
How important is the online channel for Karbonn? Why has Karbonn stayed away from flash sales?
The online platform caters to specific consumer needs. There are consumers who want to experience the device before buying it. It is always going to be a mix of online and offline. It is important to be able to create differentiated offerings for each of these segments.
Flash sales is a good marketing approach, but I am not sure if it is the most consumer friendly way of marketing. So far we have only done open market launches. We are currently selling around 1.7 million units.
How do you see the Indian market evolving? Where will the next phase of growth come from?
Offering differentiator like services or local languages is a must. While we don't undermine the importance of hardware, focusing only on hardware is not going to work. Trying to copy another player's software strategy is also not going to work. You can't become somebody else. India is the third largest smartphone market in the world. The app consumption pattern in India is different from the others. While Indian consumers have the same hardware aspiration, the way they use services is different. For instance, Indian consumers prefer music and video apps over gaming apps.
Karbonn plans to invest Rs 800 crore over the next three-to-four years to build manufacturing capabilities in India. Currently, it is importing 100 per cent of its handsets. Why the change of plan?
There has been significant growth in smartphone adoption in India. Manufacturing in India makes sense purely for economic reasons. First, smartphones have higher selling price than feature phones and their share is increasing. Second, there is a big duty differential between imported and locally manufactured products. Third, we want to customise our devices as per the needs of the local consumers. To enable this, it is important to control the production of devices from chipset level onwards. Local manufacturing is important for any brand to be able to create long-term sustainability. We want to create a value proposition that goes beyond hardware specification and focus on services. We want to look at manufacturing as a standalone business. We will be open to contract manufacturing.
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You need to look at where the market stands. There are 800 million plus active connections in India at present. We have a long way to go given that smartphone reach is currently at 150 million. Saturation in the overall devices market also depends on what the industry can do to make products relevant to its consumers. So our emphasis on local language is aimed at making the entire smart telephony experience relevant. Vendors are primarily driven by hardware specifications. There is hardly any differentiation possible on the basis of hardware.
The current level of smartphone penetration is covering the English speaking userbase well. A five to six times bigger market is waiting to be captured. The consumer is literate but may not be fluent with English or digitally literate. Smartphones need to be simplified to make devices relevant.
Karbonn is aggressively targeting the volume segment (low-and middle-income segment) unlike its rivals. How does this impact your margin? With the 'budget' phone tag, do you think you will have difficulty moving up the ladder?
About 70 per cent of the market is driven by entry-level smartphones. The market is not becoming premium in the next five years. We genuinely believe in our mission statement of 'massifying technology'. We would be unveiling our 4G line-up in the coming quarter, around the festival season. If we are able to provide cutting edge technology at competitive prices and maintain healthy topline and bottom line, there is no need for us to be someone else. It is very important to carve your own niche and hold on to it.
Karbonn has focused on expanding its distribution and after sales network right from the beginning. The brand is also called the 'Maruti' of smartphones. Is that part of the plan?
Distribution is our key strength and we tweaked it heavily. Unlike other players, we first launched the phones at the district level and only later targeted the metros. That strategy really worked in our favour. Service infrastructure goes hand in hand with distribution mapping. So today we cater to more than 5,000 distributors and have 92 per cent district-level coverage. Our service network is the largest in the country with 800 service stations. Of this, nearly 100 are exclusive service centres. We are strengthening these centres so that the smartphone experience can be expanded. So whether it is the system upgrade or usage of application, these service centres are also acting as points to educate customers for smart telephony usage.
In 2012, we first started selling in metro cities. Since then we haven't looked at the market in the context of a rural urban divide. There are similar consumer segments in every market. So the profile of the youth buying our phone in metros is similar to the one buying them in semi-urban areas. Both these sets of consumers want to experience faster phones, betters screens and pictures.
How important is the online channel for Karbonn? Why has Karbonn stayed away from flash sales?
The online platform caters to specific consumer needs. There are consumers who want to experience the device before buying it. It is always going to be a mix of online and offline. It is important to be able to create differentiated offerings for each of these segments.
Flash sales is a good marketing approach, but I am not sure if it is the most consumer friendly way of marketing. So far we have only done open market launches. We are currently selling around 1.7 million units.
How do you see the Indian market evolving? Where will the next phase of growth come from?
Offering differentiator like services or local languages is a must. While we don't undermine the importance of hardware, focusing only on hardware is not going to work. Trying to copy another player's software strategy is also not going to work. You can't become somebody else. India is the third largest smartphone market in the world. The app consumption pattern in India is different from the others. While Indian consumers have the same hardware aspiration, the way they use services is different. For instance, Indian consumers prefer music and video apps over gaming apps.