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Indian phone makers look to penetrate Russia

The market is dominated by Apple, Samsung; some Chinese brands also have presence

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Local smartphone makers Micromax, Karbonn, and have eaten into market shares of multinationals and BlackBerry, though South Korea’s still leads the market. Now the four are eyeing Russia.

But going beyond neighbours Bangladesh, Nepal and Sri Lanka may not be easy. Also, unlike India, the Russian market is dominated by smartphones. According to International Data Corporation (IDC), feature phones (which lack the advanced functionality of smartphones) still dominate the Indian handset market, with 80 per cent share. Smartphones have 50 per cent share in the Russian market.

But the size of the Russian market is 40 million units while India’s is estimated at 240 to 250 million, said IDC.

But the four have an edge: All mainly make Android operating system-based smartphones. said 74 per cent of Russia’s handsets ran on Android, nine per cent on Samsung’s bada, a version of Linux, and 8.6 per cent on Windows Mobile, at the end of the third quarter of 2013.

Simon Baker, program manager (mobile devices), in Moscow, said in a report, “Russia's smartphone market is catching up with more developed countries’. The latter markets have almost reached saturation point.” IDC said in the quarter Samsung had half the handset market, followed by Nokia, fast losing its grip. About 53 per cent of the smartphone market was with Samsung. IDC said Samsung sold “six times as many smartphones in Russia as its nearest rival Apple, not far ahead of Sony, followed by Nokia and HTC.”

It said Samsung led the Indian handset market with 20 per cent share, followed by Nokia (13 per cent), (12 per cent), (12 per cent) and Lava (five per cent), at the end of the first quarter of 2014. It noted in smartphones, Samsung had a 35 per cent share in the period, followed by Micromax (15 per cent), Karbonn (10 per cent), Lava (six per cent) and Nokia (four per cent).

Jaideep Ghosh, partner, KPMG India, said, “Indian brands have shown strong performance in the local market and are looking to penetrate emerging markets like Russia apart from neighbouring ones. This is a logical growth strategy, without losing sight of the Indian market.”

But Mohammad Chowdhury, partner (telecom, media and technology sectors leader), PwC India, said, “The smartphone market in Russia is high-end and dominated by Samsung and Apple. The opportunity for the Indian handset makers would be the replacement segment and the young generation. But these would gain if they could create a mid-segment market.”

But Russia is considered the gateway to Eastern Europe, where the mobile phone business is retail-dominated and not driven by telecom services bundling.

Romania, the Czech Republic, Hungary, Poland, Slovakia and Africa are on the radar.

Micromax, which has entered Russia with a Rs 100-crore marketing spend, is hopeful of good returns by the second year. An analyst at global research firm Gartner said, "Its success in India will help Micromax do well in global markets. But it may take time. It is a fully-grown handset company that understands the end-user demand.” According to sectoral data, handsets that cost 5,000 roubles ($146) make the fastest-growing segment, 33 per cent of the market. But the average price of a smartphone is $300 in Russia, according to a report by a retailer there.

Micromax, Karbonn, Lava and Intex will not only have and Samsung as rivals, but also Chinese brands Texet, Prestigio and Fly who have made a mark in Russia. These are fighting against the Chinese brands in home as well. Some Chinese brands have captured 10 per cent of the smartphone market in India in a few quarters.


EXPANDING THE NETWORK
  • According to International Data Corporation, feature phones (which lack the advanced functionality of smartphones) still dominate the Indian handset market, with 80 per cent share
  • Smartphones have 50 per cent share in the Russian market
  • Russia is considered the gateway to Eastern Europe, where the mobile phone business is retail-dominated and not driven by telecom services bundling
  • Romania, the Czech Republic, Hungary, Poland, Slovakia and Africa are also on the radar
  • Micromax, which has entered Russia with a Rs 100-crore marketing spend, is hopeful of good returns by the second year

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