Handset : Leaders in the Making

The Indian
handset market is the new battleground with about thirty handset players
battling it out in the estimated Rs 20,000 crore cellphone market. A number of
new handset makers like Micromax, Fly Mobile, Universal, Movil Mobile, Karbonn
Mobile, etc, have joined the fray, especially in the lower and mid market
segments. However, this crowded segment is dominated by few international brands
like Nokia, Samsung, LG, Sony Ericsson, and RIM. In this scenario, it would be
extremely difficult for new entrants to grab a share of the pie.

But new regional handset players seem very optimistic
about their growth prospects. They have aggressive expansion and growth plans,
coupled with marketing and brand building initiatives lined up for the coming
year. New players are also expected to join the fray. However, it remains to be
seen how many of these will survive in the long run.

Ready to Compete

The competition is undoubtedly high, but with ground breaking mobile
solutions and technologies, these new handset players are completely primed to
bring about a paradigm shift in the perception of personal mobile devices. They
have also introduced entry level handsets for price sensitive Indian consumers,
but other major players too are joining this low-cost handsets bandwagon, making
it tougher for new players.

"The Indian mobile market is expanding rapidly with the
entry of new brands. With a lot of firsts to our credit, like thirty days
battery back-up mobile phones, dual SIM/dual standby mobile phones, network
changing capability using gravitational force mobile phones, Aspirational Qwerty
mobile phones and many more, we have become one of the preferred choice of
customers. We are also tying up with major telecom operators to further increase
our penetration in the Indian market," says Vikas Jain, business director,
Micromax.

Today, the consumer trend is clearly towards those devices
which are easy to use and which consumers can directly connect with their
lifestyle and day-to-day use. A paradigm shift in consumer behavior has helped a
lot to establish these new brands.

Talking about the competition, Sashin Devsare, executive
director, Jaina Group says, "It is true that some big brands are already present
in India. We believe that the kind of distribution set up in place and the wide
range of devices with rich multimedia and dual SIM features at competitive
prices and a strong marketing and branding initiatives undertaken, will serve to
be the key drivers for us to gain a significant pie of the market share."

The price of handsets is heading south month after month.
All that one needs to do is work out the right channel strategy, identify right
selling partners and create a formidable support infrastructure such that the
customers get benefited when it comes to sales and service. This essentially
means there's enough room despite the fact that some brands enjoy a lion's share
of the market.

According to Prem Kumar, CEO, India operations, Meridian
Mobile, "The market growth shall accommodate brands other than the more
established names."

Brand Building Initiatives

The new handset vendors are also very conscious about their brands and ready
with their brand building initiatives for 2010. Micromax is planning around Rs
100 crore for the brand building initiatives in the next two to three years.

Similarly, for Movil Mobile it's an ongoing exercise. The
company is going to put 5% of its top line in brand building. On the other side,
Jaina Group has earmarked a budget of Rs 100 crore for the current fiscal.
Channel and consumer promotions have also been launched to provide a 360°
marketing support to further Karbonn brand.

Fly Mobile is currently ramping up its branding, sales and
marketing activities through a series of above-and below-the-line marketing
activities, so as to effectively get across its message to its diverse target
audiences. Fly Mobile is also open to multi brand store approach.

Distribution Strategy

These new companies are fast realizing that to strengthen their position in
the market, strong distribution strategy is required. Movil Mobile is going pan-
India. The low-end will cater to the rural markets whereas the mid and high-end
will be sold in the top 5,000 shops by their promoters.

Kumar of Meridian Mobile says, "As of now we have channel
partners in top 100 cities. Besides the metros, our endeavor is to establish
presence across all important B & C class cities in India."

For Micromax, its distribution strategy is to 'sell deep
to sell more'. "We intend to penetrate more into the rural areas in class-C and
the D cities and also expand further in metros, and class-A and B cities.
Operational tie-ups with large formal retail chains shall enable us get the next
set of customers. We are also betting big on the other technological solutions
like CDMA and 3G solutions. Also, we intend to align with major operational
carriers of India to reach to the next set of customers," says Jain of Micromax.

Karbonn Mobile is currently available through 50,000
outlets across the country and is planning to double this number by the end of
current fiscal. The company is also planning to have around five to ten Karbonn
mobile stores in all major states of the country.

Sales & After

Aftersales service is one area where the established brands score more than the
regional players. However, the new handset players are ready with their after
sales service plans. Karbonn is being supported through an extensive network of
more than 350 services centers spread across the country. Of these, more than
150 are dedicated Karbonn mobile phone service centers and around 200 are being
supported by service partners, Salora & Accel.

Micromax also has a unique product service set-up and
offers a toll free telephone number for complaint registration. Micromax also
provides onsite service in most of the Indian cities. 200 Micromax touch points
which are product support engineers are spread in approximately 150 Indian
cities. The company operates through more than 400 service centers operational
in about 250 cities and is looking at increasing its number to 700 before the
end of this fiscal.

Fly Mobile has 340 plus aftersales service partners in
India that take care of the customers support requirements.

"Movil Mobile has a multi vendor service network. We have
more than one vendor in a single city servicing our phones. We also have a very
strong tele-calling operation to track every phone," says Khanna of Movil
Mobile.

On the Green Bandwagon

The entire telecom industry is talking about going green and the handset
space is no exception. Leading handset makers like Nokia and Samsung are
focusing on green handset segment and now the new regional players are also
following the footsteps.

For Micromax, internal R&D on this subject is on and it is
evaluating how it can make a difference to the environment in particular and
society in general.

Karbonn Mobile is proactively working towards making its
gadget greener and using materials and components that are eco-friendly. On the
other hand, Movil Mobile is coming out with long life batteries which are their
first step towards a green ecosystem for its phones. The company also has an
efficient power management system in its phone, ensuring long life batteries.

Commenting on the same Kumar says, "We are following the
global trends as well. Slimmer phones, smaller parts, slimmer batteries, paper
gift boxes and smaller chargers, etc, are proof enough that we too are going
green in our approach."

Plans for 2010

Karbonn mobile has invested nearly $5 mn in product development and marketing
and sales operation. The company has also earmarked a marketing budget of Rs 100
crore for the current fiscal. On the expansion front, Karbonn has been launched
in India with a distribution network covering around 80% of districts in states
all over India. The launch initiative has also been completed with Bangladesh
already covered and it is all set to cover Sri Lanka and Nepal as well. It also
intends to launch Karbonn brands in the Middle East and Africa in Q4 2010.

In the first phase of 2010, Movil Mobile is planning to
launch 10 new GSM and CDMA handsets and in the second phase it is planning to
introduce fifteen handsets by the end of March 2010. The company further plans
to adopt a direct retail model for the distribution of its mobile phones and
also expecting a sales volume of over 1.5 mn phones by the end of the next
fiscal.

Micromax is eyeing a turnover of Rs 1,500 crore by the end
of this fiscal, and Rs 3,000 crore for the next year. The company is planning to
reach out to its customers through 70,000 operational stores in the coming year
and also looking forward to open its exclusive outlets.

Challenges Ahead

As these new players are expanding very rapidly in the Indian market, they
are also facing a number of challenges. Some of the issues are acceptability of
the high-end designer phones with upcoming EVDO and 3G technologies. Besides,
changing government policies throw a new challenge every day. Varying state
taxes are also a big issue for these regional players.

But the first and foremost challenge for the new players
would be to establish their brand in India and fulfill whatever they have
committed. These companies do realize the fact that they are new entrants in the
market, which already has some well entrenched brands. So, the biggest challenge
is to stand out of the clutter in terms of superior offerings, enhanced
services, and a wider reach.

Arpita Prem

arpitap@cybermedia.co.in