The year of churn, and clarity – 2018 put a lot of companies in the doldrums

By: | Published: December 18, 2018 12:16 AM

During a recent interaction, Micromax co-founder Vikas Jain told me that the Indian consumer has come a long way in the past year. And he credits Reliance Jio for whetting the appetite of millions of Indian consumers for data.

This gigantic influx of users could have changed Indian mobile landscape for ever.

The year is almost coming to an end. It was a very important year when it comes to mobile technology in India. So many millions went online for the first time in 2018, powered by near-free data rates and feature phones with web access. This gigantic influx of users could have changed Indian mobile landscape for ever.

During a recent interaction, Micromax co-founder Vikas Jain told me that the Indian consumer has come a long way in the past year. And he credits Reliance Jio for whetting the appetite of millions of Indian consumers for data. “Jio has done a tremendous benefit to the sector,” he says, explaining how a set of consumers who were not even connected are now “consuming data in huge amounts”. As someone who has been privy to the mobile sector in India for well over a decade, he says this is unprecedented. It is learnt that the average user could not be downloading well over 6GB of data per month, and this is despite the fact that most of them could actually be doing this on a JioPhone which has just a 2.5-inch screen.

This is the opportunity Micromax is looking at. Jain expect the JioPhone use to start looking for an upgrade soon and this will be for phones with larger screens. Since Jio is no longer offering devices, this surge in demand for affordable android phones is what could drive the revival of brands like Micromax.
“Jio has solved a big problem for this industry. There was no motivation for the feature phone users to upgrade to a better phone. Jio acquired this user and they have been exposed to the experience of data. When this user is consuming that amount of data, they quickly wants to move to the next level,” Jain explains. He expects this demand to be aimed at the 5-inch phone, because the 4-inch does not seem to be exciting enough for the feature phone user as a reason to upgrade. This surge in demand, if it happens, could lead to “big price drops” soon.

However, not everyone is convinced that the this demand will go in the <`5,000 price band. Carl Ngo, Co-Founder and Chief Executive Officer of Vietnamese smartphone maker Mobiistar, recently told a colleague that the <`5,000 segment is declining fast in India as consumers are willing to pay a little more for a better device with improved specifications and features. Ngo said the <`5,000 smartphone segment was in fact shrinking as people were not happy with the lower performance of devices available in this range. “Now, people are spending more money on smartphones in the range of `5,000 and `10,000,” he said.
The chunk of >`5,000 price band is now dominated by Xiaomi which has in 2018 emerged as the clear leader of the smartphone market in India, edging out Samsung and making life really tough for Indian players like Micromax, Intex and Karbonn.

But Jain is optimistic that there will be an opportunity here too when fatigue for the Chinese brand sets in. He does not see a Xiaomi user, for instance, upgrading to a Xiaomi. He wants to capture those users by offering phones with good specs in the <`12,000 range.

However, he thanks Chinese players for giving more clarity on customer preferences in India. “There is more sanity here and you really don’t need to offer 20 devices as the buckets are no longer separated by `500,” he says, adding how the segments are now defined as under `5,000, then till `7,500 and from this to `10,000. This consolidation also helps a lot in managing the entire supply chain for instance, he adds.

Some other clarity also came about in 2018. This was the year in which 4G became standard and there is no one looking at phones without LTE. Similarly, the feature phone, though still a substantial part of the Indian mobile ecosystem, clearly became unviable for the bigger players for the sheer volumes needed to sustain any semblance of profitability. Don’t be surprised if in 2018 some big mobile brands of the past end up belly-up or morph into something else.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition