Our focus is on sub-Rs 4k smartphones: Spice Mobility CEO

By Manishika Miglani

Budget smartphones are creating a lot of buzz in the market these days with consumers increasingly looking for cheapest handsets coupled with latest technology.

Domestic handset maker Spice Mobiles also holds big plans for the entry-level smartphones, with an array of sub-Rs 4,000 smartphones in the pipeline to be launched in the near future. It also aims to grab 15-20% market share in this segment.

In an interview with Voice&Data, Prashant Bindal, CEO, Spice Mobility, talked about the avenues opened up by government's 'Make in India' initiative and why the domestic handset makers still have an upper hand over the global brands.

Voice&Data: Brief us about your number of manufacturing plants and your expansion plans.

Prashant Bindal: Spice Mobiles has opened a local manufacturing unit at Noida in Uttar Pradesh. The production will begin by assembling feature phones and then later will be extended to smartphones as well. The local unit will enable us to launch a wider range of products with a shorter turnaround time and additionally reduce the manufacturing costs by 5-6% through savings on import duty.

As a company, we invest significantly in market research and with a local unit we can translate relevant consumer insights into product features and cater to consumer demands in a very short time.

In line with our company’s vision to create affordable and high technology mobile products for a larger audience, we will now be able to do the same economically. Through the facility, the company aims to introduce a wide range of mobile internet devices at affordable costs.

We are concentrating our efforts to introduce an array of smartphones under Rs 4,000 to cater to the huge Indian market especially the first time smartphone buyers. We are enhancing our distribution and service strength across India to reach out to a larger audience. In the coming year, we plan to partner with more international technology partners to offer the best technology to our customers.

Voice&Data: What kind of policies you expect from the government to boost the manufacturing eco-system in India?

Prashant Bindal: The government should focus on improving the overall investment sentiment in the country through various measures such as improving infrastructure facilities by creating mobile manufacturing hubs with comprehensive manufacturing ecosystems.

Additionally, the government can introduce attractive taxation structures such as GST and support small and medium sized businesses with low interest capital lending and incentivizing local manufacturing through tax subsidies.

On an overall telecom-mobile ecosystem level, the government needs to also support telecom companies in their efforts to enhance broadband connectivity in the country, which requires significant investment to increase tower and allied infrastructure penetration in the country. Thus, the government can support them through a consistent policy regimen, supplemented by availability of easy financing options, taxation policies and subsidies.

Voice&Data: Do you think that the recent move to increase the service tax and import duty on mobiles will pave way for a stronger ‘Make in India’ initiative? Please elaborate.

Prashant Bindal: The telecom industry is emerging as one of the biggest consumer sectors in India and is growing rapidly year-on-year. The recent hike in the import duty on mobile devices will directly affect consumers as mobile phones will become more expensive and overall consumer sentiment will be negatively impacted.

This price increase will in turn affect the overall demand in the sector and may influence various mobile players to consider local manufacturing options.

The industry will benefit significantly as it will open up new opportunities for domestic and international players in the country. With savings on import duty costs, handsets will become cheaper over the long run through local manufacturing and consumers will also have access to a wider range of products available in every price segment.

The ‘Make in India’ campaign has been a significant move in this regard and it will empower the sector by attracting investment bids from national and international players. By creating a mobile manufacturing hub in the country, the government can make the sector even more attractive for new and existing players to enhance investments.

Voice&Data: What is your go-to-market strategy for being competitive in comparison to the international mobile brands?

Prashant Bindal: We witnessed the entry of several multinational and homegrown companies in the last few years, making the Indian mobile handset market quite competitive, thus offering Indian customers a lot of options in smartphones ranging from budget to premium. IDC forecasts that the Indian smartphone market will more than double by 2018, with annual smartphone sales growing at an average growth rate of around 40% in the next five years.

The international brands have presence concentrated in the premium segment of the market and the entry to mid premium segment is currently dominated by domestic players like us. This segment offers a wider market potential due to the huge untapped volume it offers, with 71% of the Indian market still dominated by feature phone users.

This presents a significant market opportunity with feature phone users migrating to smartphones, starting with low priced, sub Rs 4,000 smartphones. With smaller players offering customers the latest technology at better prices, we will see a potential erosion of the dominance of the bigger players in the market.

We plan to focus on this entry segment of smartphones and target Tier II and III markets with an aim to capture a 15-20% share in this segment through a new portfolio of smartphones with market leading technical features priced attractively for urban and semi-urban customers.

Voice&Data: The domestic handset players are mainly preferred for their budget series of smartphones. Do you foresee any major transition to the premium segment in terms of consumer behavior?

Prashant Bindal: Domestic players like Spice Mobiles have been present in the market for almost a decade now and enjoy good brand equity amongst users. With a well-developed service and distribution network, we reach a wide segment of mobile users with a product portfolio that offers innovative technology products in every price bracket.

We have witnessed that customers are loyal to their mobile brands and prefer to graduate to higher technology products with brands they have been using in the past.

Even though premium buyers are attracted towards international brands, they represent a very small section of the overall mobile phone user base.

A large section of mobile phone users are economy or value buyers, preferring to buy high technology products at economical prices. With our wide range of affordable mobile phones, we believe that we are optimally positioned to cater to this large segment of customers who are first time smartphone buyers.

Indian customers are value-conscious buyers and make intensive comparisons before making a choice on the handset brand, with key evaluation features being technical specifications, brand image, service support and price. The brand pull of bigger players is no longer the key decision making factor for these young customers.

Voice&Data: How do you plan to consolidate the ‘Digital India’ move?

Prashant Bindal: We are strongly in favor of the ‘Digital India’ campaign as it will enhance the reach of healthcare and education to millions of Indians remotely through technology, thus significantly improving their quality of life. The large scale roll out of 4G and 3G will help in making the Digital India vision a reality through high speed and reliable mobile networks.

The rise in the number of users of newer and faster networks will lead to a significant change in the way people communicate. We plan to participate in this campaign by launching a wide range of affordable smartphones for 3G and 4G users, catering to a wider section of the population.