Indian Tiger Roars

VoicenData Bureau
New Update

The Chinese nightmare continues to haunt the big international handset

manufacturers in the country. With an increasing number of new brands being

launched in this segment, Chinese handsets have effectively found another way to

eat into the marketshare of the branded handset manufacturers in the country.


Check this out: Telemart, the official distributor of Samsung mobile division

has launched two brands-Zen and Xcite. Big C is planning to launch a brand of

its own, just like UTL, Univercell and Sangeetha Mobile.

The year gone by saw the entry of various distributors and smaller players

directly entering the handset market by launching their own branded handsets

that have the potential of emerging as strong regional players in the handset


“The regional players generally enjoy the trust and confidence of the local

people, and will not have any problem in pushing their own brands. And if the

same features are available for half the price, why will the consumer not lap it

up” says an industry source. This is the main lure behind the increasing

popularity of the Chinese handsets in the Indian market.


End consumers, even in metros, feel that the branded handsets are over priced

and do not offer value for money. This is especially true for the youth segment

in the metros that wants to boast of the latest features and gizmos. “If they

purchase a branded handset, it becomes redundant within six months since the

company would have launched a new version of the same handset. It is here that

Chinese handsets score since they are cheap, consumer can purchase new ones even

if they become redundant,” says an industry source.

War for Upcountry Market

Most of the new brands, which are being launched are in the tier-2 and

tier-3 cities and are in the price range of Rs 2,000 to Rs 7,000, and claim to

offer the latest and hi-end features. It also goes without saying that most of

them would be sourced from China.


“People are looking for value-for-money products and this is where brands

like us can make an impact. Moreover, regional players enjoy tremendous trust,

so it won't be difficult to make inroads in this market,” says D Sathish Babu of

Univercell. Hyderabad-based Univercell is one of the country's largest mobile

retailer and has an array of stores in Tamil Nadu, Karnataka, Andhra Pradesh,

Kerala and Pondicherry.

The trend is especially significant in the current economic slowdown where

the end consumer is looking for value-for-money products instead of splurging on

brands. Multinational brand will clearly be a second player in the Indian market

this year.

Apart from that there is clearly a scope for new players in the Indian

handset market. India is the second largest market for mobile subscribers after

China. From the estimated one billion mobile phone consumers globally, India is

expected to contribute 250 mn. The market size for GSM and CDMA mobile phones in

India is 110 to 110 mn in 2008 and is likely to grow to 150 mn by 2010, with 50%

coming from the replacement market. Around 75% of the Indian handset market is

dominated by the big branded handset manufacturers like Nokia, Sony Ericsson,

Samsung and others. This is likely to change with the entry of numerous small

players who have the advantage of being trusted by the population of the region

since most of them are present in some form or the other in the region.


“The mobile phone segment catered to by the Indian brands of mobile phones is

growing significantly and we estimate this segment of phones to be selling more

than a million units in a month and growing every month,” says Sudhir Hasija,

managing director, United Telelinks.

The fact that so many local players are launching new handsets brands

reflects an inherent weakness in the business model of the big and multinational

handset players like Nokia, Samsung and Sony Ericsson. There are clearly gaps in

addressing the market in the tier-2 and tier-3 cities.

Most of the handsets launched by the small regional players are in the price

range of Rs 2,000 to Rs 5,000 and are obviously targeted towards low-income

groups. Since they are being launched by the distributors, who have a strong

presence in that region, it is relatively easy for them to convince the end user

to purchase them. Another reason for the plethora of brands being launched in

the market is that the national consumer is now ready to accept Indian brands.


“Smaller brands are creating waves in the upcountry market mainly because the

Indian consumer is ready to accept the Indian brand. there is also a clear trend

towards, `value-for-money' proposition. Tier 2 and tier 3 cities are not very

brand conscious and the distributors have strong presence in the local market

and it is easy for them to push these brands,” says Subhash Chandra of Sangeetha


Bangalore-based Sangeetha Mobile is the distributor of MicroMax, one of the

most successful Indian brand in the handset segment. The company has more than

ten brands in the market and is planning to launch two more soon. Micromax is

also planning to go in for expansion.

The other reason is that the retailers are not able to make much money on

branded handsets. “There are a number of overhead costs in modern trade and it

results in more opex cost. In the back end the margins are very limited and it

is not a viable option. And the margins are good in the case of lesser-known

brands,” adds Chandra.


Industry sources believe that this market will continue to boom and will

continue to eat into the marketshare of the big branded handsets. Collectively,

these brands have the potential to rake in a considerable marketshare, thus

putting the handset major on a back foot.

“The current boom in the `Indian Brand' mobile phones is a logical

progression in the evolution of the Indian telecon consumer. There is a growing

demand for mobile phones with all the bells and whistles, but at an affordable

price. The smart Indian consumer will not compromise on product quality or after

sales service. Brands which ensure these hygiene factors would tend to do well

in the current scenario,” says Hasija of UTL, which launched Karbonn in pilot

markets in January this year.

The main reason why consumers go for a branded product is to ensure the after

sales service. This issue is effectively sorted out when a distributor himself

is offering the product. For instance, Karbonn has tied up with two after sales

service provider and will be having its own company owned and franchised service

centers. The same is true for Hyderabad-based Univercell, which has also tied up

with after-sales service provider.


However, it is not going to be all rosy for the Indian brands. It is easy to

launch a brand but difficult to sustain it over a longer period of time. “The

main challenge is to sustain it for a long time. It is not difficult to launch

but we need to push the brand and motivate our sales team. We are targeting 10%

of our sales in the first quarter to come from our own brand,” says Satish Babu

of Univercell.

Rural is going to be the focus of all the handset brands, so this segment of

the market is going to see a lot of action with both the handset majors and

small Indian brands fighting for their share of the pie.

Gagandeep Kaur