mobile phones

Music player, FM radio, camera with flashlight, video recording, internet and email access, GPS… These are some of the standard features donning the mobile handsets available in the Indian market now and extensively used by an average Indian, who had been using the device for communication purposes only till a decade back since the mobile phone service was launched in the country in the late 90s. But now, the new features of the mobile handsets are now becoming more pervasive and turning the phone into a Swiss Knife of communications. An IT intelligence firm, IDC India, has just concluded a study on the Indian mobile handset market that goes beyond the number of units sold.

For example FM radio (up from 35% in 2007 to 67% in 2009), music players, (up from 20% in 2007 to 37% in 2009), Bluetooth (up from 8% in 2007 to 17% in 2009), and embedded GPS (up from 0% in 2007 to 1% in 2008 to 2% in 2009). For a graphic representation please see http://www.idcindia.com/analyst_viewpoint/index.asp

Look at this case.
Shuchi, a US-based NRI, visited India after seven years. Expecting things to be as they were seven years back, she bought a feature-rich handset from a leading global brand and put it in her handbag for safe-keeping, whenever she stepped out of the house. A week later the handbag had been left in the suitcase. “People here seem to go out of the house with only their mobile phones and car keys,” she said. And the handsets she saw here, made her feel she had over-spent on her ‘branded’ phone!

Today, it has become a Swiss Knife for though it might not have a corkscrew or a nail cutter but a mobile is a phone, a data handler and a one-stop gadget for all entertainment and communication needs.

As handset makers strive to innovate the device into a perfect one, sales of handsets are breaching new barriers in India.  The first 3 months (January-March 2010) of the year handsets sales stood at a record breaking 36.35 million, according to the IDC India. This was a growth of 39.5% year-on-year (Q1 2010 over Q1 2009) in terms of unit shipments.

Naveen Mishra, Lead Telecoms Analyst, IDC India, says, “Over the last few years the mobile phone has morphed to become no less than the ‘Swiss Knife’ of personal communication devices. How many people do we know who have stopped wearing a wrist watch or a stop watch or carrying a FM radio player or a calculator or a flashlight…the list is seemingly endless. Today mobile phones are available with up to 32 GB internal memory and a 12-megapixel camera.”
Almost every day a new mobile handset model is launched with innovations. Some features address basic user concerns in an emerging market like India – lack of access to 24×7 power supply to recharge batteries (30-day recharge cycle phones, solar powered handsets), operating in noisy, dusty and/or humid conditions (high decibel speakers, dust-proof lamination, water-proof outer casing), living in areas with high incidence of power outages (LED flashlight) etc.

 “What we see today is a mobile handsets market witnessing many innovations and enhancements in looks, features, network access-capability (3G-enabled phones etc.), and applications-capability (phones pre-loaded with e-book readers etc.),” says Mishra.

Then there are features address more aspirational needs such as a digital camera with flashlight (to use in impromptu social situations such as office parties, friends’ birthdays or a beautiful sunset), a primary memory card slot to store favourite music tracks/audio downloads, and an A2DP-enabled headset to be able to experience high quality wireless music/audio replays while at the same time seamlessly receive calls.

Still other features on advanced application-enabled devices address the need, especially amongst Gen Y, to be in continual touch with friends and peer groups via social networking sites (touch screen and social networking applications-enabled phones). Devices that are WiFi-enabled, ‘push mail’ enabled or with an on-board GPS application find buyers amongst senior business executives who want to stay in touch while travelling or on vacation.

Even the price sensitive Indian mobile user no longer looks at a mobile phone as a big ticket purchase, but more an impulse purchase associated with many of the fast moving consumer goods. This builds up the appetite of today’s mobile phone buyer who looks at acquiring a mobile phone loaded with a host of features and innovations at affordable price points.

Indian Vendors – Making it affordable
As with the Swiss Knife, new players are changing the dynamics of the market. Today all major handset vendors and some leading software vendors have launched or on the verge of launching their  application stores. However, it’s the Indian handset manufacturers who are gaining market share with snazzy-looking phones at extremely competitive prices.

The leading Indian brands – Maxx, Micromax, Karbonn, Spice etc. – are giving tough competition to established brands both in terms of features as well as price In addition to cannibalizing market share of MNC majors. They have gained market share as segmentation of the users based on use and price point is blurring.

The traditional classification of a business users, student and young executive segment among heavy consumers doesn’t hold in the strictest sense. When a marginal farmer uses a mobile to find out the prices of commodities in the neighbouring mandi, or a small town plumber sees a mobile phone as an aid to getting more customers, or a student using a phone to clarify doubts from her teacher the  segments begin to overlap.

Within the ‘affordability plank’ mantra the segments are beginning to blur as well. The first time mobile service user typically starts with a lower cost option and doesn’t care much about the brand. And the rate of growth of mobile users is faster at the bottom of the price-sensitive market.

The growth in number of ‘Indian’ brand has been rapid and dramatic—IDC studies of the mobile market show that from just 5 Indian brands in the January-March 2008 quarter commanding just 0.9% of the 100 million handsets market the number of Indian brands shot up to 28 in the October-December 2009 quarter swelling up their market share to 17.5%.

While the mobile handsets market is getting more crowded and fragmented at the lower- and mid-market segments with the rise of ‘copycat’ models often available for as little as one-tenth of the average sales value (ASV) of a smart phone, new vendors have been able to carve a niche for themselves by pioneering feature-rich (dual SIM card, full QWERTY keyboard) and application-rich (IM enabled) mobile handsets at attractive price points.
The new players have demonstrated that with a ground to the ear it is possible to sway and win a consumer with attractive prince points and new feature rich offerings.

To create visibility in the market most of the Indian brands are investing in growing their distribution reach and brand awareness. Use of celebrities as brand ambassadors in high decibel advertising and association with high visibility events is known to enhance awareness.

As the market grows and matures we can be sure that feature rich phones at lower price points will arm the user with more at his fingertips, just like the Swiss Knife.

Check out these stories also:

1. Reliance Webstore and Coolpad launches India’s cheapest touchscreen CDMA phone
2. Fly Mobile launches Fly Harmony DS 102 music phone
3. Electronic brand, Oscar forays into mobile handset market
4. IBM to invest $100 million in mobile communication research
5. Samsung introduces the world’s first solar-powered mobile phone

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