It’s a tough call for new players as entrenched ones add more services and strenghthen ties with distributors
There’s a mad scramble for mindshare in the Indian telecom handset market with about 30 handset makers battling it out in the estimated Rs 20,000 crore (annual) cellphone market. However, with nearly 85-90 per cent of this market being dominated by brands like Nokia, Samsung, LG, Sony Ericsson and Research in Motion (Blackberry), analysts say it’s a tough call for newer handset vendors.
The mobile handset market crossed the 100 million unit mark in June this year, recording a growth of 6.7 per cent, from 94.6 million units in the corresponding period a year ago, according to IDC India. But Nokia led by far with a market share of 56.8 per cent, followed by Samsung with a 7.7 per cent share while LG stood third at a 5.4 per cent in the 12-month period ended June 2009.
Emerging mobile handset vendors (around 26) managed a mere 6.5 per market share for the the 12-month period ended June 2009. Nevertheless, this was a marked improvement over the corresponding 12 months ending June 2008, when only 11 emerging vendors represented a share of 1.2 per cent of overall shipments. IDC does not track the number of handsets brought on their person by passengers landing in the country or ‘grey market’ handsets.
“We see the market getting further crowded, especially in the lower- and mid-market segments,” opines Deepak Kumar, Associate VP, Research, IDC India. He, however, points out that simultaneously there’s an evolution in the market as the rising competition forces vendors to offer newer, richer features at attractive price points. “In other words, a combo of volume and value is at work,” he says.
The new vendors, for instance, offer feature-rich (dual SIM card, full QWERTY keyboard) and application-rich (IM-enabled) mobile handsets at attractive price points. They have also introduced entry-level models for the ‘price sensitive’ Indian consumer.
Spice Mobile’s multi-Sim functionality phones with prices starting at Rs 2,000 is a case in point, not to forget the Micromax handset with a 30-day standby time — all of them targeting niche consumers. Spice D-6666 offers the flexibility to choose between GSM+CDMA mode and GSM+GSM mode in a single phone. Users can simply switch between connections and decide if they would like to pair two GSM connections or GSM with CDMA. The devices host many applications like a mailing solution, Email2SMS, which permits sending, receiving, composing and forwarding of emails via SMS. The m-commerce application with N-GPAY is another feature to allow users to make bank transactions and pay bills. This flexi dual handset, loaded with multimedia features and value-added service (VAS) applications is currently available for Rs 7,999.
“Indian consumers have moved towards multi-Sim and flexi-Sim phones to avail the cost benefits of operator bundled services.” Spice Mobiles, that has an installed base of 6 million handsets, is now positive of 1 million handset sales per month within the next 12 months,” says Kunal Ahuja, CEO of Spice Mobiles.
Samsung’s Marine handset, too, is priced below Rs 10,000. Asim Warsi, GM (Marketing), Samsung India, says: “Our entry level Guru series, which starts at around Rs 1,500, has been a bestseller in volume terms followed by the Metro series that starts at about Rs 5,000.” Samsung is also wooing the youth segment with handsets priced at Rs 8,000–Rs 10,000 complete with features like social media applications and affordable touch screen phones.
The other major players, too, are not sitting easy which makes it tougher for the new players. They have both high-end and low-end models. Smartphones are their forte. The year 2008-09, for instance, saw the launch of high-end smartphones (such as Apple’s iPhone 3G and the Blackberry Storm). IDC India estimates there are 700,000 smartphones in the country.
Moreover, the big players have ‘priority’ centres, their own outlets and long-term tie-ups with distributors to promote their brand prominently on shelves. HTC India, for instance, has introduced nearly 16 models of which over 90 per cent are touch-screen ones. The company managed to sell close to 300,000 devices by end-2008. HTC bundles its phones with GSM players, and has extended this telco-driven model to CDMA player Reliance Communications, too and later to Idea Cellular.
This year, the company also launched India’s first Android-powered phones (popularly known as Google phones). “The Android-powered phone introduces a more natural way for reaching out to people and accessing information in a much easier and hassle-free manner. It has a fully customised user interface, called HTC Sense, which creates a distinct engaging experience,” says Ajay Sharma who heads HTC India. In keeping with its strategy, Airtel users of both its models — HTC Magic and HTC Hero — across India get free data download of 100 MB per month for six months.
And market leader Nokia with a 40 per cent marketshare globally (and over 60 per cent in India) has moved into services, too, to counter falling handset prices and increased competition in the high-end mobile phone market — particularly from the likes of Apple’s iPhone and Research In Motion (RIM’s) Blackberry.
This June, after a successful pilot in the state of Maharashtra, Nokia announced the commercial launch of Nokia Life Tools service in Maharashtra. It has a range of three primary services — agriculture, education and entertainment. And in late August, Nokia announced the launch of its Music Store service in India, offering music lovers access to over 3 million international, Bollywood and regional soundtracks. Since the services and devices are integrated, we want our consumers to buy a Nokia solution, notes Nokia India Director (marketing), Vineet Taneja.
“We do not talk about marketshare. But consider this. Around 80 per cent of all handsets are Rs 4,000 and below. And most of our handsets are priced at the mid- and high-end bracket — which means, above Rs 4,000. So are we talking about marketshare within this 20 per cent bracket?” says Anil Sethi, President, Sony Ericsson India, adding: “It’s a meaningless discussion. We know the youth love our phones.”
