Mobile handset giants squeezed by Indian brands

At last count, well over 150 mobile handset brands were available at retail outlets across the country. Domestic brands provide attractive features like Qwerty keypads, MP3 players, long battery back-up, dual or triple SIM card slots, add-on memory card slots, elegant looks, style and finish at competitive prices, thus posing a huge threat to the established brands.

As is the case worldwide, Finnish handset maker Nokia is losing its stranglehold over the Indian market as well, according to the latest CyberMedia Research (CMR) statistics. Despite retaining the No 1 position in the country, Nokia currently had a market share of 30.3% at the end of calendar year 2010, down from 46.3% at the end of 2009 and 56.2% at the end of 2008, respectively. South Korea?s Samsung retained the No 2 position with a market share of 12.2% at the end of 2010. What is astonishing is the growing presence of emerging homegrown brands. Together, they have gobbled a 24% share of the 160-million (units) handset market at the end of 2010. They sure have come a long way from the less than 1% share they had in March 2008.

And it is a lucrative business that they are fighting for. India is the world?s fastest-growing mobile phone market, and its consumers are expected to buy 210 million units this calendar year, with smartphones expected to post a dramatic growth, according to CyberMedia Research.

What makes this scuffle all the more interesting is the confidence these homegrown companies are radiating while taking on the global multinationals. Their strategy to beat the competition is astoundingly notable. According to Naveen Mishra, lead telecom analyst, CMR, ?These companies offer feature-rich mobile handsets at very lucrative prices to the Indian customers. They have been able to differentiate themselves from MNC competitors through innovation and design, use of advanced technologies and in-depth understanding of rapidly changing consumer preferences in India, which have enabled them to develop several new product categories that address unique customer needs.?

A key ingredient to success in this highly competitive game has been to innovate and that too, faster than their established MNC competitors. Homegrown brands were among the first to adopt the Android operating system (OS). Technology has also been an important factor for these brands to develop themselves. And, of course, a strong India focus. For instance, an in-built mosquito repellent, long-life batteries, dual SIM card reader, fake currency reader?they have it all. The sweetener is the price, a very important factor in a cost-conscious market such as India. With prices starting from Rs 3,000 for a smartphone and features like longer battery life, dual and triple SIMs, colour display, FM radio, etc, they have targeted the semi-urban and rural population effectively.

Fly India CEO Prem Kumar says, ?India is a heterogeneous country where the consumer preference in the north is vastly different than the feature/value preference consumers have in the west or south. Our core strategy is to appreciate this differentiation and then provide products catering to the wants. Fly is respected in the market for our dual SIM phones with clear user benefit/value-driven offerings. Our speed to market mapped to shorter product life cycle management, as compared to the likes of Nokia, Samsung, etc, is an asset.?

The market dynamics have changed in the recent past; the consumer is becoming more value-conscious. ?If you provide a feature-rich, stylish phone to the Indian consumer with a pleasant price tag, they are ready to try, explore and experiment. Consumers today have a plethora of offerings in each segment and, therefore, are willing to experience new brands,? Kumar says, adding: ?The shorter product time to market has helped us to keep pace with latest technology. The advancement of technology and features are been appreciated by consumers. The kind of time big brands take in ideating a design is the time smaller brands take to bring a new phone to the market. These phones bring the latest technology with a price which is a pleasant surprise because of which our consumers are able to change their handset every six months.?

Homegrown brands have also signed up many Bollywood stars as their brand ambassadors as well as invested heavily in cricket, especially the Indian Premier League (Micromax). This is what sells in India, and they feel that they could differentiate themselves by this move. Zen India managing director Deepesh Gupta says, ?We have roped in iconic Bollywood actor Amitabh Bachchan as our brand ambassador for tier 2 and tier 3 cities. The motive behind this is to create a deep impact on the minds of our target audience as the Indian film actor is a quintessential mix of charisma and style with a mass appeal.?

At present, Zen Mobile has about 20 running models in the market, which are spread across feature and price segments. ?We sold around 3 million handsets in this financial year and will be targeting to build this to 5 million handsets keeping in mind our international ventures as well. We currently have a market share of about 2.5% and are aiming to double that by next financial year end,? says Gupta.

Zen Mobile plans to expand its distribution network to 1,000 dealers from the present 700. ?We have a retail base of about 25,000 retailers and we are aiming to build on this. The company has already covered 70% of the country and plans to cover all districts in the next three to four months. Zen Mobile is adding more than 2.5 lakh customers every month,? Gupta adds.

According to Spice Hotspot CEO Sanjeev Mahajan, the growth of Indian handset brands is on account of four key reasons. First, they recognised the customer?s need for a dual SIM category and created a first-mover advantage there. Second, homegrown brands have achieved faster turnarounds in launching handsets. A Nokia at its peak could not bring out more than one ?hero? product a month, whereas the Indian players are able to launch handsets at a much faster rate. Third, the ability of local brands to tap into the tier 2 and tier 3 markets, which is where the real subscriber growth was happening. Fourth, homegrown companies? success in launching feature-rich phones at disruptive price points.

?India is a market where the real critical mass lies at the bottom of the pyramid. The Indian handset players recognised that. The result is that the share of the Indian handset vendors has grown from less than 5% to approximately 25% over the last 30 months. What adds to the heady growth story is the fact that these brands have invested in marketing and have taken on the MNC brands through advertising and by building up share of voice,? says Mahajan.

SN Rai, co-founder and director,

Lava International, reveals that the company?s main thrust strategy revolves around three verticals simultaneously?sales, after-sales service and R&D. ?We are not in the business of just driving sales but also believe in customer satisfaction through after-sales services. Today in India, after-sales services are mostly outsourced to a third party but Lava has established its own service centres.?

Rai says that the company?s strategy is to offer power-packed, functionality-rich handsets suitable for every pocket. ?After carving a strong foothold in feature phones, we are getting into 3G, Android and tablets. Multimedia features, social networking, all such features power-packed in mobile handsets are a rule of thumb. And going through the current market scenario, we strongly believe that in future, handsets will

become an infotainment gadget. Catering to such a scenario, after making an entry into the business phone segment recently, we are all set to add tablets, Android & 3G smartphones in our portfolio.?

There is no doubt that Indian handset buyers are increasingly more feature-conscious, applications-aware and value-conscious, rather than being plain ?brand loyal? in the traditional sense of the term. And much to the discomfort of the established players, the introduction of handset models with innovative features by homegrown players has definitely changed the mindset of the Indian consumer.

India is a market where the real critical mass lies at the bottom of the pyramid. The Indian handset players recognised that and their market share has grown from less than 5% to approximately 25% over the last 30 months

Sanjeev Mahajan, CEO, Spice Hotspot

We have roped in Amitabh Bachchan as our brand ambassador for tier 2 & tier 3 cities. The motive behind this is to create a deep impact on the minds of our target audience as the film actor is a quintessential mix of charisma and style with a mass appeal

Deepesh Gupta, MD, Zen Mobile

We strongly believe that in future, handsets will become an infotainment gadget. After making an entry into the business phone segment, we are all set to add tablets, Android & 3G smartphones in our portfolio

SN Rai, co-founder and director,

Lava International

If you provide a feature-rich, stylish phone to the Indian consumer with a pleasant price tag, they are ready to try, explore and experiment. The shorter product time to market has helped us to keep pace with latest technology

Prem Kumar, CEO, Fly India