Trendy low-cost handsets

Feature-rich, low-cost handsets dominate the Indian market in terms of sheer numbers. The competition is intense in this segment and manufacturers are aiming to move up the ladder by offering smartphones at sub-Rs. 5,000 price points By Manjari Juneja The low cost handset market is thriving in India. Currently, the availability of low-cost handsets coupled with cheaper operator services is triggering purchase decisions, thereby stimulating telecom demand in India. According to Gartner, the mobile handset market in India is expected to show steady growth through 2014 by when end user sales would surpass 206 million units. Of this, a large volume of mobile device sales would come from the low-end device segment. The low-cost mobile handset market in India has tremendous potential and, therefore, it is getting more competitive by the day. New Indian brands are entering the scene and building their customer base in a market that was hitherto dominated by multinationals. With technology moving forward by leaps and bounds and the cost of offering advanced technologies going down, Indian manufacturers are looking to use the same to their advantage, by offering full-featured handsets, which, in turn, gives them the advantage of capturing market share amongst those consumers, who want the latest technology, but are not able to afford handsets sporting the same from bigger brands, which tend to be on the higher side when it comes to pricing. The average monthly sale of handsets in India is about 13 million units. Of this, over 50% sell for below Rs. 2,000 and another 25% for below Rs. 3,000. In addition, this happens to be the fastest growing segment of the market. According to IDC's India Quarterly Mobile Handsets Tracker, 3Q 2010, Nokia had the largest share of 31.5% in terms of units shipped during 3Q 2010. G'Five emerged as the runner-up in terms of unit shipments and Samsung stood third. The number of emerging vendors in India's burgeoning mobile handsets market has grown to 68 and together they garnered 41.2% of total shipments (sales) for the first time during this quarter. This represented a steady rise from only five new vendors representing a 0.9% combined share of units shipped in Q1 2008. The India mobile handsets market got even more crowded and fragmented in the lower- and mid-market segments with the entry of new players offering innovative models at attractive price points to lure buyers. Anshul Gupta, Principal Research Analyst, Gartner, said, There is huge demand for feature-rich, low-cost handsets. Of the total handset sales, the majority of sales fall in the price band of below $75. That is where the majority of the volume is and that is where you will see the majority of the Indian and Chinese
"One can get a handset for Rs. 2,000-3,000 with features like good memory, touchscreen, QWERTY, camera, dual-SIM, longer battery life etc." Anshul Gupta Principal Research Analyst, Gartner

manufacturers playing. Going forward, the market is going to grow at a rate of 15-20% yearon-year. Low-cost devices will grab 60% of the market over the next three to four years. People are looking for devices with greater value. That value could be in terms of features like QWERTY keypad or touchscreen etc. One can get a handset for Rs. 2,000-3,000 with features like good memory, touchscreen, QWERTY, camera, dual-SIM, longer battery life etc. The majority of Indian manufacturers are in the low-price band and that is why market is looking quite competitive. However, if they move up the price band, then they will face competition from global players. Sushmita Das, Country Head, Kobian, said, Indian manufacturers are meeting the demands of the market by incorporating touchscreens and other features. When the low end segment customers go for repeat purchases, they go for low cost mobile phones with extra features. In fact, many of them are ready to pay a higher prices for these new features and vendors are taking advantage of the psyche of the customers by adding these features. Target group Generally, the target consumers for low-cost mobile handsets would be the general population of Tier 2 & 3 cities in India as well as the student community, who have a limited budget but would still like to buy feature-rich handsets. Usually, the target group is young, 15 to 35 years of age, living in B and C class towns or the B & C class localities of A class towns. Arshit Pathak, Managing Director, Kingtech "Almost 50% of the market is a replacement market and this is mostly Electronics (India) Pvt. Ltd., said, As of an upgrade market." now, almost 50% of the market is a Arshit Pathak Managing Director, replacement market and this is mostly an Kingtech Electronics (India) Pvt. Ltd. upgrade market. A customer who bought a monochrome handset at Rs. 2,500 three years back in a growing economy like India would have grown to be in a position to buy a mobile phone valued at Rs. 5,000 today. At this price, he can buy a smartphone of sorts and thats exactly whats happening. This category of consumers is being focused upon by both operators and device manufacturers. Technology enhancement, cost innovation and growing demand is driving this category. Das said, Our present target group consists of the middle and lower middle income groups in districts and suburban areas in the east, north east and northern states. These states account for close to 70% of sales of low-cost mobiles. Low margins, high volumes Many vendors have obviously gone in for a low margin, high volume strategy because of increased competition and also the reduced lifecycle of the product. One cannot afford to fail by adopting a high mix, high volume strategy as losses can be pretty high. The demand for mobiles is increasing every month but, at the same time, competition is also increasing due to the entry of local players. Brands have clearly defined market share and margin segments and adopt strategies that meet their objective. A number of brands with very little product differentiation are in the volume segment of the market. Rural penetration

Manufacturers are reaching upcountry markets with their aggressive growth plans and logistics networks. Moreover, they are executing their promotional campaigns keeping in mind the consumer base in semi-urban and rural areas. They are coming up with product lines, which are apt for consumers in the rural market. These models have big batteries for power deficit upcountry markets, dust free designs for dusty environments, sharp screen resolutions to make viewing possible in bright sunlight and LED torches for the night as well as a complete multimedia experience with FM, large sound output, video playback and large memory capabilities to store and carry music. Pathak informed, For us, this is, 'the market'. We also have a robust distribution set-up. We undertake regular studies to understand the needs of the market and also track emerging trends. We do our basics right. We have the right product line for these consumers. We also have innovative products like a projector phone where a consumer can watch his movies/ videos on a large screen without spending a fortune to buy a LED/LCD TV with a large screen. We offer a 500 day warranty and have over 500 service centers to service our customers. Das informed, The challenge lies in terms of the product reaching rural customers and also providing support facilities. During the last six months, we have succeeded in establishing distributor and service networks at the district level as per our marketing plans. Our strategy is to identify and retain the right distributors, who have reach in the rural markets and give them support on the service front and also ensure that they get their return on investment. Opportunities for vendors India is the second largest telecom market after China. Manufacturers are gearing up to tap this opportunity. Sandeep Kumar Kedia, Director - Mobile handset division, Techcom, said, Our agenda for capturing this vast market is on the parameters of a price-feature value product proposition, aggressive logistical expansion and a sound network along with innovative promotional campaigns.
"Our future offerings, including 3G handsets, will be priced competitively around the Rs. 4,000 to 5,000 mark." Sandeep Kumar Kedia Director- Mobile Handset Division, Techcom

These parameters would help us be at the forefront in this competitive and ever-expanding market and, in time, would help us meet our goal of a greater market share amongst our target consumers. Pathak said, We are in the perfect position to take advantage of the India/ China telecom opportunity. As a brand, we have huge manufacturing, design and R&D capabilities in China. We are the largest exporter of handsets out of China and in India we are the second biggest handset brand, as per IDC. China has build amazing hardware and cost innovation capabilities. India has grown into a IT hub for the world. We are exploring possibilities of integrating both to offer products, which not only grow our business but also help in the overall growth of the industry and the consumer experience. Vendor strategy

Vendors are adopting various market tactics to attract more costumers and capture market share. Sunil Raina, Chief Marketing Officer, LAVA International Ltd., said, As a manufacturer, it is important that we identify the market segment and accordingly provide the features. Every consumer does not want MP3 support, some consumers need some features more than others. If you are able to provide the features that can deliver on the consumer experience and quality, then that would be appreciated by the consumer and you don't need to necessarily bring down the price to be able to cater to the market. Give those set of features that are relevant to a certain segment and are pertinent to them. Giving each and every feature in each and every phone is a waste. Our strategy is to bring in products according to the market demand. Kedia said, Our strategy would be to bring in feature enriched handsets at a competitive price for our consumers. We are focused primarily on this segment and our endeavor is to exploit the vast opportunities that are there. For e.g., our lower end handset, the T-21 is packed with a multi-format video player, long battery life of 30 hours, external memory support of 8 GB amongst other features like FM Radio and a 200 entry phonebook. The other six models are also powered with similar features along with GPRS support, multi-SIM usage and large screen sizes. This range of handsets is available in the market, within the range of Rs. 1,500-Rs. 4,000. Our future offerings, which include 3G enabled handsets, will be priced competitively around the Rs. 4,000 to 5,000 mark as well. Das said, All along, our basic strategy has been to give quality mobiles at affordable prices backed with good service support. Many low-cost manufacturers are unable to offer quality products as they are focusing purely on price. Our prices may be marginally higher when compared to those of our competitors but we are able to sell because of quality and service. Challenge Providing a feature-rich handset at a low cost is the challenge for manufacturers. With the market expanding at a rapid pace, consumers are being spoilt for choice.
"The capability of the chipset has Prem Kumar, Chief Executive Officer (India improved allowing manufacturers to Operations), Fly Mobile, said, It's a bring products to consumers with challenge but the advantage is that the richer features." Prem Kumar technology has been moving quite fast. Chief Executive Officer Therefore, it is possible to give more features (India Operations), Fly Mobile to the consumer at a low price. The capability of the chipset has improved allowing manufacturers to bring products to consumers with richer features.

Technology is changing fast these days. The emerging categories are smartphones, 3G phones and tablets. We are a young nation and the youth is quite tech savvy. They want to enjoy technology but possibly do not have the means to afford the same. We believe that we have a responsibility towards this younger generation of consumers and need to develop a product which meets their aspirations and is affordable. We are launching a series of 3G-enabled feature and smartphones. We are also quite serious about the tablet market. So far, most of the tablets are bought as an add on device by existing PC/notebook users. We are targeting an entirely new set of consumers who will buy tablets as their musthave computing and multimedia device. Such devices will help in the digitization of education. We are excited by this challenge and opportunity, said Pathak.

As far as industry goes, there is the market expansion rate of 15-16 million handsets a month. In times to come, with rapid development, this rate is going to go higher, making the market extremely competitive and yet attractive to exploit for future growth.
manjari.juneja@expressindia.com