Japanese consumer electronics major Panasonic recently forayed into the world of artificial intelligence (AI) with its virtual assistant, Arbo. The AI-powered virtual buddy, available on Panasonic’s two new smartphones—Eluga Ray Max and Eluga Ray X—takes care of daily tasks and activities such as calls and messages that need to be framed and sent out on a regular basis. It also keeps a detailed list of all the apps functioning on the smartphone, gathers detailed information on their habits and informs the user about them. “AI has been dubbed as the technology which, in future, will shape the product interface and the way we interact with our smartphones,” Manish Sharma, president & CEO, Panasonic India & South Asia, tells Sudhir Chowdhary in an interview. Excerpts:
What are the biggest trends you see right now in the Indian smartphone industry?
In the last 3-4 years, smartphone manufacturers have focused extensively on the hardware shaping the physical attributes. Whether it was precision with respect to camera, screen quality or resolution—hardware was the deal-breaker for your next smartphone.
However, since last year we have been noticing a bit of threshold as far as what hardware can bring to a smartphone. Today, software comprising of applications and user-interface (UI) has become the deciding factor to upgrade yourself to the next level of technology. The evolution of technology software has opened endless opportunities. Customers will continue to look for technology which will shape the product interface and the way we interact with our smartphones.
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How has India journey been for Panasonic?
The journey has been exceptionally well. But, the biggest milestone that stands out is Panasonic’s re-entry in India in 2008. It was a time when the company decided to allocate resources for the Indian market. Today, we have 15 manufacturing units across India offering a range of solutions. We have come a long way and have grown eight to nine times of what we were at that point of time. Aligned to our businesses, that is, B2B, B2C and smartphones, we have set a target of Rs 10,000 crore for FY16-17. We aim to double our achievements in the next three years and grow at a CAGR of 30-35%.
What are some of the challenges you are facing towards realisation of this growth today?
I am extremely optimistic about the market and don’t see any major challenges. In fact, on the contrary, I see tremendous opportunities in the consumer market. Recent government policies and initiatives such as ease of doing business, Digital India or Make in India encourage the local manufacturing and will further improve conditions for a brand like us.
There are numerous mobile phone brands in the market. What is the technology differentiator that Panasonic brings to the table?
We have a clear focus and do not want to compete in a commodity space or the niche space. So our idea is to be in between these two when it comes to smartphones and, therefore, the price point for our smartphones is Rs 8,000–16,000, which is an important bracket in this market. And, as far as the product is concerned, the fundamental idea is to move from product proposal to solution proposal. This might be the first step in that direction because we are bringing some amount of intelligence in our phones. At present, through UI, a consumer communicates with mobile phones but we are trying to turn the tables with smartphones communicating with users proactively. We believe our in-house developed artificial intelligence (AI)-based virtual assistant—Arbo will be a differentiator.
There will also be a change in our market strategy as we align ourselves with popular online channels similar to our recent partnership announcement with Flipkart that focused on introducing Ray Max and Ray X. Our online sales contribute only 30% as we are still focusing on offline channel development.
Do you think Chinese mobile phone brands have taken over the Indian market?
Taken over will not be a correct term when I talk about Chinese brands. I would rather consider this to be a healthy competition. The positive aspect is now manufacturers are bringing good products into the country.
Competition here is severe and it is important to differentiate ourselves. We are a 99 year-old company and that’s the kind of credibility we have earned for ourselves by way of creating customer satisfaction and product innovation. We have something to prove and something to take it to the next level as far as consumer experience is concerned.
What kind of growth are you targeting this year for smartphones?
The growth in smartphones for us will be 45-50% in the next fiscal. We have a 2.5% market share and were affected by demonetisation. However, we have come out of it and aim to grow our market share to 4%. Additionally, we export our smartphones in South Asia—Sri Lanka, Nepal and Bangladesh—and will soon start exporting to Myanmar, Saudi Arabia and Africa.
India is the headquarters for smartphone business globally and, as mentioned earlier, is one of the key drivers for growth too. Last year (FY15-16) Panasonic smartphones had a turnover of Rs 1,400 crore with close to 2 million units of smartphone sold in the country. Our target sales for Panasonic India business is Rs 10,000 crore and smartphones have a major role to play here.