Segment Analysis: Feature Phones

The feature phones market in India was estimated to be worth
around Rs 55-60 crore in 1999-00. In terms of numbers, this meant that around
2.5 lakh sets were sold at an average price of Rs 2,000. This includes
established companies as well as the gray market operators.

The market for these phones can broadly be divided into three
categories. The retail consumers who include the home and SOHO segments,
institutional buyers, and finally the EPABX manufacturers. Of these, the retail
consumers contributed around 70 percent. What was encouraging for the buyers in
the home segment was the fact that they now had feature phones that cost as low
as Rs 600. This made them attractive with features like memory, speaker and
hands-free dialing in addition to the usual functions like flash, redial, pause,
and mute found commonly in all the basic phones.

Caller Line Identification (CLI) facility was also introduced
in a big way in many feature phones. Even though not many phones with an
in-built CLI were available in the market, those attached with a CLI device
became popular.

As more and more models became available at prices hitherto
unknown, the gray market began to lose its predominance. Many players
effectively countered the low-price advantage of the gray market. Moreover, the
lure of an effective after-sales service too prevented buyers from thronging the
gray markets.

Price

There was a decline in the prices of the feature phones of
various categories. At the lower end, many of these phones could be bought at
the price of a basic phone. Phones in this category cost anything between
Rs 600 and Rs 1,500. Phones with features like voicemail, answering machine,
number and date display, call transfer and CLI could be bought at a price
starting at Rs 3,500. Phones with more advanced features like two-line with
three-way conference facility cost between Rs 4,500 and Rs 5,000. Last year,
ISDN-compatible digital feature phone was available at a price of Rs 6,000 while
there was sharp decline in the prices of high-end digital phones.

Drivers

Among the market drivers were factors like the penetration of
Internet and ISDN network across the country. ISDN was particularly significant
in creating demand for ISDN-compatible digital feature phones. ISDN phones are
expected to get a further boost in the coming months because of DoT initiatives
like waiving of basic charges for an ISDN line and its decision to expand the
ISDN network in new towns and cities. Decline in the prices certainly sustained
the growth of the market. In many cases prices came down by 50 percent.

Many buyers bought these phones because either they felt the
need for another phone in their homes or simply because they made an impressive
lifestyle statement. This is not only true of the metros but also of many small
towns and many parts of the rural heartland. This was something that the leading
brands like Tata Telecom tried their best to exploit.

Players

The Highlights
  • Largest segment: Home and SOHO
  • Largest player: Tata Telecom
  • Cheapest feature phones: Orpat
  • Promise of the future: National Panasonic

Tata Telecom remained the undisputed leader with a market
share close to 50 percent. BPL and Siemens had a market share of around 20
percent each. The rest of the market was shared by names like National
Panasonic, Sony, and Orpat. Ascom and Wanland are the leading vendors of ISDN
features phones in India.

National Panasonic, whose phones had been selling like hot cakes in the gray
market, started selling its products through its authorized network in late
1999. This had a superb effect on the gray market as phones that used to command
more than 100 percent premium began selling at less than 25 percent premium.
Besides, strong after sales service networks were created by the companies.

Market Share (%)
Tata Telecom 50
BPL 20
Siemens 20
Others 10
Others include National panasonic, Sony, Orpat, etc.
V&D Estimates

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