HAND­SETS

The Van­ish­ing Act

Voice&Data - - CONTENTS - Gyana Ran­jan Swain

FY12.saw.many.hand­set.com­pa­nies. shut.shop,.the.Big.Five.ruled.the.In­dian. mar­ket..

For the In­dian tele­com in­dus­try, the year 2012 saw a huge slow­down on all as­pects. Be it value of the ru­pee, de­ploy­ment of equip­ments at en­ter­prises, ser­vice providers or even con­sumers—the mar­ket dy­nam­ics wit­nessed a slump. Even the monthly new mo­bile user ad­di­tions came down from an av­er­age of 13 mn to some 4-5 mn per month.

The worst af­fected seg­ment was mo­bile hand­sets. Con­sol­i­da­tion ruled the game of the mo­bile hand­set busi­ness in In­dia. Just a year back there were more than 200 hand­set brands do­ing busi­ness here, ir­re­spec­tive of scale, but in FY12, the num­ber had come down dras­ti­cally and many brands in­clud­ing MNCs, home­grown and grey, sim­ply dis­ap­peared from the busi­ness.

Mar­ket Dy­nam­ics

Keep­ing the fis­cal 2010-11 as the base for com­par­i­son, there were three cat­e­gories of hand­set com­pa­nies op­er­at­ing in the In­dian tele­com space. The MNCs in­clude Nokia, Sony Eric­s­son, Sam­sung, Mo­torola, LG, RIM, HTC, Ap­ple and a cou­ple of Chi­nese play­ers; the In­dian com­pa­nies in­clude names like Mi­cro­max, Maxx, Lava, Kar­bonn, Lemon etc; and then there

are the grey mar­ket play­ers like G’Five, Air­phone etc. The busi­ness of last year im­pacted all the three cat­e­gories. Among the MNCs, once dom­i­nant play­ers like Mo­torola, LG, and Sony Eric­s­son, had hardly made any move. The only brands that did some good busi­ness in that cat­e­gory were Nokia, Sam­sung, and HTC.

Even RIM saw a dras­tic fall in its sales. Among the In­dian hand­set brands, though the trac­tion was poor, com­pa­nies like Mi­cro­max, Kar­bonn and Spice were able to make their pres­ence felt. At least they were avail­able in the shelves of re­tail­ers across the coun­try. The grey hand­set mar­ket sim­ply van­ished from the pic­ture. Even if there were some sales of these brands, they were just clear­ing their old stocks. Over­all, around 30 known brands closed shop or are in the process of do­ing so.

The Trends

What im­pacted the per­for­mance in the hand­set busi­ness most in the last fis­cal was the con­sumer be­hav­ior. The In­dian con­sumers no more re­mained a price con­scious lot. Though they did not like to splurge, they be­came more wise in buy­ing prod­ucts, de­mand­ing more value for the same price.

So the low-cost hand­set busi­ness that was the main driv­ing fac­tor of the In­dian hand­set mar­ket cou­ple of years back suf­fered a lot, and the con­sumers did not search for the ‘cheap­est phone’ in the mar­ket, rather, they searched for ‘what more can I get at this price point’.

Fu­el­ing their ego is the avail­abil­ity of en­try level smart­phones at much af­ford­able price range. So the buy­ers who used to go for en­try level fea­ture phones are ready to stretch their bud­get to an­other cou­ple of thou­sand ru­pees in or­der to get an en­try level smart­phone. And rightly so, they got more value for their money. The avail­abil­ity of en­try level smart­phones run­ning on an­droid plat­form, and mostly from In­dian hand­set com­pa­nies, gave the users the con­fi­dence to go for that.

Hence, the hand­set com­pa­nies low­ered the price of their mid-range phones to the ear­lier price of their en­try level phones. And it hap­pened across brands in­clud­ing RIM, Sam­sung and Nokia. The fea­ture phone seg­ment suf­fered a lot due to this. On the other hand, the buy­ing fre­quency of av­er­age In­di­ans went up last fis­cal. The peo­ple who used to buy or change their phones once in 11 or 12 months ear­lier, now ready to change in ev­ery 6 to 7 months. So there was a de­mand for more sup­ply and the com­pa­nies were forced to bring out new and fresh mod­els to the mar­ket.

Ven­dor Land­scape

The erst­while leader in mo­bile hand­sets, Nokia ap­peared con­fused in the last fis­cal. For the last cou­ple of years it re­mained in­de­ci­sive on what to do for its hand­set busi­ness, not just lo­cally but also glob­ally. Its switch be­tween Sym­bian and Win­dows based mod­els did give the in­dus­try a cold shoul­der.

The buy­ers—those who are not brand loyal to Nokia—could not un­der­stand why the Fin­nish com­pany was not com­ing up with an­droid de­vices when all other big names in the hand­set busi­ness vouch for the Google cre­ated OS.

Be­sides Nokia, there are only two com­pa­nies who do not have pres­ence in an­droid ecosys­tem—Ap­ple and RIM. And cer­tainly Nokia is not Ap­ple or RIM. These two com­pa­nies have their own tar­get cus­tomers and have a dif­fer­ent USP. Nokia caters to ev­ery­one but failed to adopt a plat­form that touches ev­ery­one. In FY12, the Fin­nish com­pany seem­ingly tried to undo some of its fol­lies of FY11.

It launched more num­ber of dual SIM phones, where it had lost mar­ket share to the In­dian com­pa­nies in the fis­cal 2011 due to its non-pres­ence. It made sig­nif­i­cant growth in this seg­ment but lost phe­nom­e­nally in its smart­phone busi­ness. It lost to its other com­peti­tors, Sam­sung and HTC. Its Lu­mia se­ries phones that wit­nessed huge growth glob­ally in the ini­tial phases, could not draw much at­ten­tion in In­dia. Nokia’s rev­enue that was al­most flat in FY11 com­pared to FY10 saw a dip this fis­cal too.

The year 2011 cer­tainly be­longed to the smart­phone mak­ers, and the clear win­ner was the Korean elec­tron­ics be­he­moth, Sam­sung. It top­pled Nokia in the smart­phone busi­ness, both in vol­ume and value terms. Its Star and Galaxy se­ries phones were in­stant hits in the In­dian mar­ket. The en­tire prod­uct port­fo­lio of Sam­sung were sell­ing like hot­cakes.

There are many fac­tors to Sam­sung’s suc­cess in In­dia. Few are or­ganic and some of them are in­or­ganic. The most no­table among its in­or­ganic growth fac-

tors was the lack of choice for con­sumers in smart­phones as well as mid-range mul­ti­me­dia phones.

Be­sides Sam­sung, there were only two or three brands avail­able who have some brand re­call value—RIM, HTC and Ap­ple. LG, Mo­torola, and Sony Eric­s­son were al­most dried up names in the busi­ness.

So users who wanted to go for a new phone and are a lit­tle brand con­scious had no choice but to go for Sam­sung. Be­sides, the com­pany had launched nu­mer­ous prod­ucts rang­ing var­i­ous price points for all kind of cus­tomers. It also brought some ‘firsts’ to the In­dian mar­ket. The most re­mark­able was the launch of the Galaxy Note, a hy­brid prod­uct be­tween smart­phone and a tablet. It saw huge de­mand in the mar­ket. The Galaxy S se­ries phones have been do­ing re­mark­ably well for last two years.

Black­Berry maker, RIM saw a dif­fi­cult time in the last fis­cal, not only in In­dia but also glob­ally. Man­age­ment is­sues, prod­uct fail­ure, and lack of any de­fined USP let the Cana­dian com­pany down. Though the com­pany tried the eas­i­est trick to catch up with the mar­ket and to gain cus­tomer loy­alty, by low­er­ing prices, not many were im­pressed. How­ever con­tin­u­ing the trend of the last fis­cal, its en­try model de­vices saw huge trac­tion in FY12.

An­other Korean com­pany—LG— seemed to be obliv­i­ous to what is hap­pen­ing in the In­dian mar­ket. Once among the top three most pop­u­lar phones in the coun­try, the com­pany had some­how missed the bus and has been los­ing mar­ket share con­sis­tently. In its In­dian busi­ness, the com­pany does not have a clear seg­men­ta­tion for its mo­bile phone busi­ness, though the ar­eas of op­er­a­tions like home ap­pli­ances and elec­tron­ics are a brand to reckon with. The only mod­els that the com­pany saw some sales are in its Op­ti­mus range. The com­pany too did not launch many mod­els dur­ing last fis­cal.

The Tai­wanese hand­set maker HTC, how­ever, is tak­ing long strides in the In­dian mar­ket. It has been grow­ing at more than 100% for the last few years. High qual­ity prod­ucts, less af­ter-sale is­sues and a clear de­mar­ca­tion in smart­phones, make the com­pany a clear choice for most of the smart­phone buy­ers.

The sit­u­a­tion with the In­dian hand­set com­pa­nies were no bet­ter. Most of them have dis­ap­peared from the scene, bar­ring Mi­cro­max, Kar­bonn, Maxx, and Lava. Mi­cro­max’s per­for­mance was al­most flat in FY12, as it tried to re­align its busi­nesses. The av­er­age sell­ing price of most of the In­dian hand­set com­pa­nies went down in­clud­ing that of Mi­cro­max. Kar­bonn phones, how­ever, saw huge de­mands in the B and C cat­e­gory cities. In vol­ume terms, it sold more phones than its near com­peti­tors like Mi­cro­max. Lava phones did not see much growth.

Fu­ture: Back to Square One

The In­dian hand­set mar­ket, once in­un­dated with more than 200 brands, have now come down to 10-15 brands. It is ex­pected to com­plete the con­sol­i­da­tion process in the next fis­cal and the mar­ket will be again catered by by far five or six brands. The ear­lier ‘top five’ com­pa­nies like Nokia, Sam­sung, LG, Mo­torola, and Sony Eric­s­son might not be the next five in com­ing times but the mar­ket would be served by sim­i­lar num­ber of play­ers. The new en­trants to the top five could be HTC, Mi­cro­max, and Sony Eric­s­son, be­sides Nokia and Sam­sung.

gyanas@cy­ber­me­dia.co.in

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