Globally, Apple and Blackberry are replacing Samsung and Nokia as handset manufacturers generating highest profits. At the same time, the gap between handset makers and telecom service providers is fast disappearing. We look at how these developments will impact the Indian telecom scenario
Thanks to the declining mobile tariffs and availability of low cost handsets in the country, the Indian mobile market has witnessed rapid increase in its subscriber base over the past few years. An average of around 10 mn subscribers were added each month during 2008 with penetration approaching saturation in urban India. So, the mobile operators in the cou
While Nokia dominates the Indian handset market with the largest market share of about 70%, iPhone and Blackberry are yet to make their presence felt amidst the lower and mid-tier handset segment. ?Nokia and Samsung are still the market leaders in India. iPhone and Blackberry have a presence only in the high-end phone market in India which is less than 10%. India is to hit next 500 mn subscribers from rural India. Users in the rural segment have a wide variety of handsets to choose from. It would be interesting to see how the handset market contours change for the established handset vendors in the rural market,? says Arpita Pal Agrawal, Associate Director, PwC.
According to the latest study by RNCOS, the mobile market in rural India has a significant potential with the number of subscribers anticipated to grow at a CAGR of around 32% during 2009 to 2012. The success mantra for rural mobile market in India lies in the operators? service pricing models coupled with the availability of low cost handsets that support affordable access for rural areas. If estimates stand true, sales of mobile handsets in rural India will grow at CAGR of around 17% from 2009 to 2012. Availability of low-cost battery efficient handsets will drive the future sales in this segment.
To cater to this segment, Nokia had earlier announced the launch of Nokia Life Tools, range of agriculture, education and entertainment services sharply addressing the information gaps of target consumers. D Shivakumar, MD, Nokia India, says ?Nokia Life Tools is a result of the entire ecosystem coming together and is ideally placed to usher in an information revolution impacting the daily lives of people. This is the beginning of a historical journey that will take mobility to grassroots and make a positive difference to the lives of people in the areas that are crucial to them.?
The Indian handset growth story is not restricted to the rural areas but also depends on the rapid adoption of smartphones. ?2008-09 saw the launch of a number of high-end smartphones such as Apple?s iPhone 3G, RIM?s Blackberry Storm, Nokia?s 5800 ExpressMusic and others. This indicates the growing maturity of the Indian mobile handsets market and in April-June quarter alone consumers bought approximately 6,80,000 high-end phones or converged devices. Nokia emerged as the leader in this segment with a share of 88% during the quarter ended June 30,? says Naveen Mishra, lead analyst, mobile handsets research, IDC India. ?Shipments of the popular BlackBerry devices from vendor Research in Motion grew 25% in Q2 CY2009 from 27,000 units in Q2 CY2008,? Mishra adds.
According to Gartner, Nokia?s market share globally declined 1.5% y-o-y and faced pressure at the high end from competitors? new smartphones. It should have strong end-of-year volumes as a result of good mid-tier products like the 5530 and 5230, but consumers seeking to upgrade to a high-end device may look elsewhere. For Samsung, the third quarter of 2009 was strong with touchscreen devices, qwerty phones and smartphones driving sales in the mature markets. It also refreshed older products, making steady sales in emerging markets. The introduction of mid-tier products such as Corby will help during the Christmas season. LG showed solid performance across the market with its competitively priced touchscreen and messaging phones like the Cookie and KS360 but most of its sales were of mid-tier phones, in part due to its lack of a smartphone portfolio. Motorola had a difficult third quarter 2009 as the market waited for products that it planned to launch in the fourth quarter. Similarly, Sony Ericsson?s sales deteriorated further in the quarter as strong competition almost halved its market share and the vendor built a slight inventory during the quarter. Apple?s worldwide smartphone share reached 17% as iPhone sales totalled seven million units in the third quarter of 2009 following the continued rollout of the iPhone 3GS in new countries.
The handset vendors have also started using co-branding strategy as initiated by Nokia and Airtel making the thin line between the handset manufacturer and service provider to blur. The way ahead would be bundling the handsets with the service as typically happens in the more mature European and US markets. The rapid adoption of the Apple app store model is also catching customer?s eye. ?I see the smartphone adoption really positive for the Indian handset market. It only indicates that subscribers are getting mature in terms of high-end phone usage. Price points are coming down for these phones. Also 3G will bring in a host of new services and applications for the smartphone users which will drive their value added services usage. The application store model is the way forward to boost up the revenues and increase customer stickiness,? adds Agrawal.
