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India's homegrown smartphone manufacturer Intex Technologies is eyeing value-added services to fuel the next phase of growth, amidst the slower growth in mobile business.
Keeping pace with bigger rivals like Micromax, Intex is working on creating a services and content ecosystem for its devices. This includes content, video, shopping, gaming, hyperlocal services or classified and utilities among other things, in addition to an inbuilt mobile payment services.
“The value-added services will drive the future growth. We are working on our services ecosystem and will launch a mobile wallet for our devices in December,” Rajeev Jain, chief financial officer at Intex, told Business Standard.
The fourth-largest smartphone manufacturer has recently partnered with mRupee, a Tata Teleservices subsidiary, to create a mobile payment platform that will be integrated with Intex devices.
Globally, companies like Apple and Samsung have been sharpening their focus on connected ecosystem of products and value-added services to enhance user experience. Similarly, Chinese smartphone firms like Xiaomi and Le Eco are also betting on the ecosystem of content, services and applications, primarily in India, which has seen value-added services gaining traction with increasing 4G adoption.
This comes as the company deals with internal restructuring and consolidation in its mobile business, which is expected to see flat growth this fiscal.
“After such a rapid run, on mobiles, we will be consolidating. This year we will have turnover on mobile front similar to last year. So we will consolidate, pause for a minute, do the internal restructuring of people and leadership, strategise as to how to move forward,” said Jain, adding, “Now the competition is intensifying and you need build your muscle right now before you take the step forward.”
"We will be back on track by next year," he added.
The company clocked revenues of Rs 6,200 crore in FY16, which is expected to reach Rs 6,500 crore in the current fiscal. However, the mobile segment, which contributed to 77 per cent of the total revenues last fiscal, or Rs 4,800 crore, is projected to grow marginally by three-four per cent in the current financial year, Jain said.
Of the total mobile revenues, smartphones contributed almost 42 per cent, or Rs 2,000 crore, in FY16, which is likely to grow to between Rs 2,200 crore and Rs 2,400 crore this fiscal, while the feature phone market is expected to decline.
According to IDC, Intex, slipped to fourth position in Q2, 2016, from third, as its shipments dropped 9.8 per cent sequentially and 30.1 per cent over last year. "While Intex is undergoing internal management changes, vendor is facing stiff competition from other Indian vendors in entry-level and Chinese vendors at mid-level," said IDC in a recent report.
“The industry dynamics are changing. Earlier, everybody was focused on hardware, which is no longer the case. When users are buying smartphones, they are not buying hardware, they are buying services,” said Vineet Singh, head, value-added services at Intex. “Value-added services are going to drive future market and create stickiness and long term user engagement,” Singh added.
According to Jain, the contribution of value-added services is expected to go up from 15-20 per cent of the net profit in FY16 to 30-35 per cent this financial year.
