Vivo-Oppo merger: #2 Smart­phone brand in fu­ture

In Gu­jarat and Tamil Nadu, the merged en­tity, ViPo would be­come #1 and in Ma­ha­rash­tra and Punjab, it would have mar­ket share above the re­spec­tive ad­justed #1 player in th­ese states.

PCQuest - - CONTENTS - Au­thored by Faisal Ka­woosa, Head - New Ini­tia­tives

In a re­cent view­point we had sug­gested few mean­ing­ful merg­ers and ac­qui­si­tions for the hand­set in­dus­try in­clud­ing the merger of Vivo and Oppo as one strong en­tity. The rea­sons to ad­vo­cate this were very sim­ple but im­por­tant as both brands have more or less same tar­get group, prod­uct port­fo­lio and strengths like pres­ence in off­line mar­ket and backed by the same BBK Group.

To fur­ther strengthen the propo­si­tion, Mo­bi­lytiks has com­pelling rea­son for the BBK man­age­ment con­sid­er­ing the merger of Vivo and Oppo. The ad­justed av­er­age of #1 brand in Smart­phones across the states of In­dia is 22.7%. Vivo and Oppo have never crossed 10% mar­ket share at any point of time. In some states, though, ei­ther of the two, Vivo or Oppo, has seen mar­ket share in the range of 10-12% in any quar­ter. How­ever, if the brands are merged, the ad­justed av­er­age mar­ket share would just shoot up to 18.4%. This would not only make the merged en­tity #2 across most of the states in In­dia, but also re­sult in a very strong #2 in the in­dus­try. That would open up a third en­tity in the mar­ket as the pri­mary com­pe­ti­tion is be­tween Sam­sung and Xiaomi across the states in In­dia.

In Gu­jarat and Tamil Nadu, the merged en­tity, ViPo would be­come #1 and in Ma­ha­rash­tra, Punjab and Gu­jarat, it would have mar­ket share above the re­spec­tive ad­justed #1 player in th­ese states.

The merger rec­om­men­da­tion is not just be­cause the data is sug­gest­ing that. Of course, de­ci­sions of the present time are data driven; but, it is al­most strate­gi­cally in­evitable for the two brands to sub­sume in one strong en­tity. That would give them all the req­ui­site re­sources at de­sired lev­els to com­pete the ris­ing com­pe­ti­tion and fo­cus in the off­line space which could dis­rupt and dis­place them from the strong mar­ket stand­ings they en­joy at the mo­ment.

There are other brands also due for in­or­ganic growth strate­gies. How­ever, Vivo- Oppo makes the perfect case that would also en­cour­age oth­ers in the in­dus­try to take bold strate­gic steps to res­ur­rect. As the mar­ket op­por­tu­nity squeezes in the Rs 10-20,000 price seg­ment, due to pri­mary fo­cus on en­try level Smart­phones, room for ma­noeu­vra­bil­ity for brands like Vivo and Oppo is con­tract­ing and they need to emerge with strengths and not just ‘steroids’ that may charge them mo­men­tar­ily.

Thus kick­start­ing the era of M&As in In­dian Hand­set in­dus­try.

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