Together, as a group of startups they have taken on Nokia-one of the world’s best known brands, and relatively speaking, they have come out on top. Now, home-bred mobile handset manufacturers say they are ready to adapt to the next phase of growth in the Indian market.
With a view to increasing brand value, introducing differentiation and ultimately creating some intellectual property, India-based mobile handset makers, like Spice Mobility, Karbonn, Micromax and Lava among others are set to increase the average selling price of their product range by an average of 30 per cent.
According to the International Data Corporation (IDC), the top five vendors, including Karbonn, Micromax, Lava, Spice and MAXX, account for a share of 19 per cent of the overall handset shipments in India.
“The strategy now will be largely applications-driven, because the buying pattern is now changing where people are no longer looking to spend on hardware but on the devices available. Access to internet and social networking is the most important thing even on budget phones,” said Spice Mobility CEO, Kunal Ahooja.
According to Ahooja, Spice Mobility will increase the average selling price (ASP) from the current Rs 2,000 to Rs 3,000 with the introduction of more feature rich phones both in the smartphone and feature phones categories.
The story is replicated in the strategy being undertaken by Lava Mobiles, which is planning an increased adoption of the Android platform, from the current Chinese MTK platforms even if this means driving up the costs of the range.
“Right now, it is difficult, if not impossible to differentiate between products. We will shift to a computing platform because it is imperative for us that consumers be able to differentiate between products”, said S N Rai, MD Lava Mobiles.
For example, Lava Mobiles has recently introduced the S12-an Android-2 based handset. Lava will also develop applications to suit the local Indian flavour. The company also said that the adoption of the Android-4 platform is also a possibility.
“The problem with the cheaper MTK platforms is that they are not sustainable in the long run from the bottomline perspective. Given the introduction of the new Android phones, the ASPs will go up to Rs 4,500 from the current Rs 2,500,” Rai explained.
While against the norm, in a market characterised by reducing prices, the move can be viewed as part of the larger stabilisation of the Rs 33,000 crore Indian telecom market. According to data put out by an Evalueserve report, last year, sales of expensive handsets over the next five years are likely to decline.
Also, ASP was slated to hover around $68 (around Rs 3,060) by 2015. Given that ASP for most domestic handset ranges was well below that line, the spike makes sense. Also the report stated that about 70 per cent (4.8 billion) of all active handsets globally would cost under $100 (around Rs 4,500) by 2015.
“Feature rich phones will dominate the market. Most companies will now focus on phones in the budget range (Rs 5,000-Rs 8,000). Smartphones will take up 30 per cent of the overall handset pie by 2015 from the current 3 per cent,” said a researcher at IDC.
Interestingly enough, Nokia, which according to IDC data continues to dominate market share with a 33 per cent pie, has recently announced its intent to ramp up offerings in the sub Rs 6000 category as well.
“There is a paradigm shift in mobile phone usage. This is now increasingly getting dominated by multimedia and applications driven functions. The idea therefore is to introduce more feature rich phones even in the feature phone segment and more phones in the higher ranges as well,” said Sashin Devsare, director, Karbonn Mobiles.
Karbonn Mobiles, will also increase ASP from the current Rs 2,500 to Rs 3,500, said Devsare.