Smartphone makers lean on services to woo consumers

Fierce competition in the handset market has led companies to bank on utility services and exclusive content

China’s Leshi Internet Information & Technology, better known as LeEco, is on a high. Within five months of its entry into the Indian smartphone market, LeEco has sold over 400,000 handsets and received 2 million registrations. And barely three months after venturing into  Indian, LeEco commanded a 1.6 per cent share in the January-March 2016 quarter — a feat that was unthinkable even two years ago.

LeEco’s impressive start in India reflects a new trend — value added services offered through smartphones is silently becoming a key determinant for consumer preferences in choosing handsets.

This is true even if in terms of maturity the Indian market is years behind China, a 470 million-unit per annum market where LeEco is a dominant player with its reliance on additional services like exclusive video contents and service offerings.

According to Atul Jain, chief executive officer of LeEco in India, services bundled with hardware now play a major role for smartphone brands in China. The strategy of offering special services such as utility payments and video contents is increasingly becoming vital for the Indian smartphone market as consumers, just like in China, are opting for smart devices which come with additional benefits.

As a strategy, LeEco sells its devices at par with its manufacturing cost in China and generates additional revenue by providing contents and services on its screens. Jain wishes to replicate this in India, too. The issue is no less important for other players in the market.

Samsung, the largest smartphone maker in India, has tied up with video-on-demand provider VuClip for exclusive video contents that it can offer through its smartphones. According to Manu Sharma, vice-president, mobile business, Samsung India Electronics, the company is currently in talks with a few other service providers. The Korean major, which has a market share of 28 per cent in the domestic smartphone space according to a latest report by CyberMedia Research, is a full range player with a series of devices in all price segments. Sharma believes that besides providing value-for-money handsets at all levels, it is important to have additional offerings in today’s world.

In what is the fastest growing major handsets market, fierce competition among some 160 smartphone brands has created a situation where superior hardware is no more a differentiator. And mobile handset manufacturers are now forced to offer value added services to stay competitive, experts say. This is forcing various brands such as Samsung, Micromax and Xiaomi, which were traditionally in the business of making handsets, to rely on additional offerings.

Micromax has been working on developing a smartphone ecosystem. In the last year and a half, the company has tied up with 10 service providers. It offers customers information related to travel, tourism, health and mobile payment services. The initiative was undertaken due to an emerging trend in the market and to stay ahead of the curve, says Rahul Sharma, co-founder, Micromax

“We live in a world where better features and superior hardware like bigger screen size and higher RAM are no more a differentiator. Companies now need to distinguish themselves by what they offer to consumers and the entire experience that users get on those devices,” says Faisal Kawoosa, GM, telecoms and semitronics, CMR.is a full range player with a series of devices in all price segments. Sharma believes that besides providing value-for-money handsets at all levels, it is important to have additional offerings in today’s world.

In what is the fastest growing major handsets market, fierce competition among some 160 smartphone brands has created a situation where superior hardware is no more a differentiator. And mobile handset manufacturers are now forced to offer value added services to stay competitive, experts say. This is forcing various brands such as Samsung, Micromax and Xiaomi, which were traditionally in the business of making handsets, to rely on additional offerings.

Micromax has been working on developing a smartphone ecosystem. In the last year and a half, the Indian handset major has tied up with nearly 10 service providers. It now offers its customers exclusive information related to travel, tourism, health and mobile payment services among others. The initiative was undertaken due to an emerging trend in the market and to stay ahead of the curve, says Rahul Sharma, co-founder of the second largest handset company in India.

“We live in a world where better features and superior hardware like bigger screen size and higher RAM are no more a differentiator. Companies now need to distinguish themselves by what they offer to consumers and the entire experience that users get on those devices,” says Faisal Kawoosa, general manager, telecoms and semitronics, CMR.

According to Tarun Pathak, senior telecom analyst, Counterpoint Research, increasing pressure from the Chinese peers is leading companies in India to work more on content and services. “The focus has shifted to value added services now,” he says.