Motorola kicks off price war in handsets

New Delhi, Nov 28 | Updated: Nov 29 2006, 08:07am hrs
The worlds second largest phone maker Motorola on Tuesday launched a new phone priced at about Rs 1,600. The strategic pricing is aimed at enhancing its leadership in the sub-Rs 2,000 handset market where it is already the leader in the Rs 14,400 crore entry level segment of the Rs 24,000 crore handsets industry. It competes with Chinese players like Haier and Bird who sell their products starting Rs 1,200 a handset. Nokia, the largest player in the domestic handsets market, offers its entry level series starting at Rs 2,000. LG and Samsung, the other players in the industry, dont operate in the sub-Rs 2000 range.

The Motorola phone comes bundled with a BSNL or Airtel connection. According to estimates, the entry level (black and white display) phone market constitutes about 60% of Rs 24,000 crore mobile handset sales in India. Nokias 1100 and 1600 series are priced at around Rs 2,000 and Rs 2,500.

LGs entry level phone B 2050 is priced at Rs 2,970 while Samsungs entry phone is priced at Rs 2,899. Both LG and Samsung dont offer black and white display phones.

The Motofone is the second low-cost offering from Motorola. Last year, Motorola launched its C115 and C117 series priced at about Rs 1700. Low cost phones account for almost 35% of Motorola India sales.

Motorola currently enjoys about 20% of the handset market in India after Nokia which has over 75% marketshare. Globally however, Nokia enjoys about 32% share followed by Motorola (17.7%) and Samsung (12.5% ).

In 2007-08, the handset market is estimated to grow 25% to Rs 30,000 crore. Currently, the average price of a mobile handset in India stands at Rs 3,800. Next year, the handset prices are expected to drop by $1 (Rs 46) thereby reducing the sales through grey market to 5%, says Indian Cellular Associations chairman Pankaj Mohindroo.

The government is also upbeat on the low cost mass-market phones. Currently we are experiencing about 6 million subscriber additions per month. With these low cost phones, we expect to achieve about 8 million additions per month in 2007.