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FY 2002—03 was an eventful one for the Indian mobile handset market for
many reasons. First, stirred by a series of tariff cuts by service providers,
the GSM mobile subscriber base grew by about 97 percent over the previous year.
As a result, the handset market also grew in the same proportion. Second, as the
government significantly cut down the duty on mobile handsets, not only did the
price of handsets come down, the gray market also lost some of its sheen,
especially in case of entry- and mid-level phones. Third, leading phone
manufacturers introduced a slew of new models, including GPRS and color phones.
Market Size
According to Cellular Operators Association of India (COAI), there was an
addition of 6,256,823 subscribers during the April 2002—March 2003 period. It
may be assumed that this net addition to the cellular subscriber base was the
market size of /vnd/media/post_attachments/08e18e11fb56613c73a10872036f4fc9d1ee6e5962efc70fd6bb67c2eb07716d.gif)
cellular handsets in the country because additions through
upgrades was neutralized by the reentry of old phones in the market. However,
the Indian market is not a simple, black-and-white case. This is because of the
predominance of the gray market and a significant presence of the second-hand
and refurbished phones. Even though the gray market lost some of its sheen last
year because of the duty cuts as well as consumer education efforts by mobile
phone vendors, it still remained significant. The gray market accounted for 71
percent of the market, or 3.56 million phones.
The
industry estimate for recycled handsets is 16 percent of the total units sold,
or about 1.26 million units.
Upgrades are happening, but at a pace slower than expected by vendors. The
upgrade cycle usually ranges from 16 to 19 months (lower in the metros and other
big cities).
| Total Market Size | ||||
| Volume Terms (in million units) | Value Terms (in Rs Crore) | |||
| Legal Market | 1.44 | 727 | ||
| Gray Market | 3.56 | 1,068.00 | ||
| Total | 5.00 | 1,795.00 | ||
| ||||
Taking all these factors into account, VOICE&DATA estimates that in 2002—03,
the GSM handsets market in India (including gray and excluding recycled phones)
was roughly 5 million in unit terms, and around Rs 1,795 crore in value terms.
Of these, an estimated 1.44 million phones or around Rs 727 crore worth of
phones were sold through authorized channels.
The gray market had a turnover of Rs 1,068 crore, a whopping amount by all
accounts.
| Top Three Vendors Held 74 percent of the Legal Market Share | |||||
| Vendors | 2002—03 Sales (in Rs crore) | PercentageMarket Share | Number of Handsets Sold | Percentage Market Share | |
| Nokia | 330 | 45.00 | 660,000.00 | 46 | |
| Samsung | 151.00 | 21.00 | 216,000.00 | 15 | |
| Motorola | 60 | 8.00 | 120,000.00 | 8 | |
| Others* | 186.00 | 26 | 444,000.00 | 31 | |
| Total | 727 | 100.00 | 1,440,000.00 | 100 | |
| *Include Alcatel, Sony Ericsson, Siemens, National Panasonic, Philips, Mitsubishi, and Sagem | |||||
| V&D Estimates | CyberMedia | ||||
At the same time, even though entry-level handsets were
available for as low as Rs 4,000 in the legal market, Indian users seemed
comfortable with the Rs 5,000—6,000 price range, according to market sources.
Cost was an important consideration in most of the purchase decisions. However,
users also looked for ease-of-use, handset design, and the brand.
Overall, the Indian consumer largely remained content with
basic features like voice and SMS. However, even as operators got active on the
value-added service front, especially in metros, after the launch of GPRS, a
section of users began appreciating advanced features like color displays,
multimedia messaging and Java-based applications.