Touchy-feely times in mobileland

Written by Surabhi Agarwal | Updated: Aug 29 2008, 04:38am hrs
You could call Apples iPhone a true star. First came the pomp and show at a gala reception and now it is the turn of hot debates. As Apple junkies and design freaks go gaga over its sleek black design, touchscreen operation and faster Internet, there is no dearth of those doling out a long list of what it lacks. To many, it is a perfect curtain raiser for the launch of 3G services in the country.

Over 2 lakh people pre-booked the phone only with Airtel (the phone is being sold exclusively by Airtel and Vodafone in the country). However, its steep price tag and list of missing features are now keeping the interest alive. At the end of it, the real debate is between fan following and feature objectivity, sums up Arpita Pal Agrawal, associate director, telecom group, PricewaterhouseCoopers. And she is not alone. Questions are being raised on the products steep price and lack of features that rivals similarly priced products boast of. Airtel has introduced the iPhone at Rs 31,000 for the 8 GB version and Rs 36,000 for the 16 GB version. In order to lure the price-conscious Indians, Vodafone has slashed the prices by Rs 1,500.

Whether the phone generates mega sales for Apple or not, it has generated euphoria around 3G. Having received the green signal from the department of telecom (DoT), 3G services are to be introduced next year. The iPhone launch has kicked off the process of building a 3G ecosystem that can take off once the 3G services roll out next year, says Sanjit Chatterjee, global marketing head, Flytxt, a UK-headquartered mobile marketing software firm.

With superior mobile Internet experience, the iPhones browser could spur other handset makers to replicate this feature in low-end phones and place the power of mobile Internet at the hands of 300 million mobile users. Our research shows that average data usage from the customers is approx 110 MB/ month. We expect to go up to 250 MB/month from iPhone user, thereby enhancing data usage. We will be having an attractive bolt-on data plan , offering free 500 MB a month, for the first 12 months for all iPhone users, Sanjay Gupta, chief marketing officer, mobile services, Bharti Airtel. Suddenly, you could have these mobile users crossing over to the other side of the digital divide, adds Chatterjee.

Indias mobile boom is fuelled by entry-level phones priced as low as Rs 1,000, which provide volumes to manufacturers but margins are wafer thin. Consider this: Nokia, which controls more than 50% of the Indian market and is the market leader globally with 40% share, witnessed the maximum growth in the Asia Pacific region (36.4%). However, its mobile device average selling price (ASP) in the second quarter 2008 was euro 74, down from euro 90 in the second quarter 2007, and down from euro 79 in the first quarter 2008. According to Nokia, the lower year-on-year and sequential ASP was primarily due to a higher proportion of lower priced products and the negative impact of the weaker US dollar.

It is not difficult to guess that high-end phones are the perfect answer to low ASPs. And all players including Nokia have been increasing its focus on the segment. In the second quarter of 2008, Nokia shipped 10 million Nokia N Series and almost 2 million Nokia E Series devices.

Nokia is not alone. Most handset vendors like Sony Ericsson, Motorola and Samsung have lined up smartphones (with price tag starting at Rs 8,000), which can double up as both entertainment and business devices. Thats not all. In anticipation of the iPhone mania, most of the handset makers have lined up launches of premium category phones for this year, with features to either match what the iPhone has to offer or supersede them. On its part, Nokia has preponed the launch of its N96 by almost a month and shifted the venue to India. Samsung too is bringing its smartphone called Omnia in the next month and a half.

Priced in the sub-Rs 35,000 category, Nokias N96 is not a touchscreen phone, though it has a 5 mega-pixel camera (compared to iPhones 2 mega-pixel). It will also launch a touchscreen phone (on its Series 60 platform) by the year-end.

Asim Warsi, general manager, marketing, Samsung Telecommunications, says, We plan to launch three models in above Rs 25,000 category by the end of the year. Omnia will be one of them. On the pricing, he says it will be delightfully expensive, adding, No apologies for that as it is a phone beyond price as a consideration.

Sony Ericsson too is launching several new models in India in the high-end segment. Some of these include the much anticipated X1i from our new Xperia series; 8.1 mega-pixel - C905 Cybershot and the recently launched W980i in the Walkman range and C902 Cybershot-5 mega-pixel from the Cyber-shot range, informs Sudhin Mathur, general manager, Sony Ericsson India.

As per IDC estimates, between April 2007 and March 2008, 4.33 million converged devices were sold in India. While Nokia leads the market in this category, HTC is the number two followed by Motorola and RIM (Blackberry).

According to industry experts, the acceptance of business phones has been growing over the last few years with the need to remain connected on the move. There has been a growing acceptance of business phones over the last few years. The growth is expected to be exponential in the years to come. According to analysts, India is now the third largest smartphone (enterprise and high-end multimedia devices combined) market in the Asia Pacific region, after Japan and China with over 3.5 million devices shipped over the past one year, says Devinder Kishore, director, marketing, Nokia India.

As these devices do lot more than just voice, service providers too are betting big on the popularity of the segment. Harit Nagpal, chief marketing officer, Vodafone says, The intent behind bringing the iPhone to India was not just the margins on the handset, as they are very little. We aim to up our revenues from the data usage. He adds that though non-data will never form a major component of ARPUs for service providers, however, 3G technology and products like these surely increase the share of it.

Despite the convenience they provide, smartphones are still seen to make up a small percentage of the total mobile market in India. However, analysts expect interesting offerings with lower prices in the future as competition in the space hots up. Though Nagpal says no price cuts are in the fray, analysts are hopeful of a slash soon, given the not-so-warm response iPhone got after the launch. The pricing will drop, maybe by the year-end, perhaps even at the fall festive season, says an analyst.