Low cost handsets are good for the emerging economies. It not
only helps in bridging the digital divide but also helps in economic growth of
the country. For ULCH and LCH to succeed one has to look at profitable models
for all players-chip manufacturers, handset vendors, and operators. These were
some of the deliberations at the Next Generation Low Cost Handsets (LCH) Asia
2007 was held in New Delhi from 4-5 September 2007. The event brought together
leading operators, handset and contract manufacturers, technology and content
providers, and application developers to address commercial and technical
strategies to harnessing entry level, ultra low cost handsets (ULCH), and low
cost 3G solutions to penetrate emerging markets. It also assessed challenges
faced by operators and provides solutions to them to maintain profitability and
ARPU maximization in highly competitive emerging markets.
Key Discussions |
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Discussions and Presentations
The first day of the event was dedicated to discussions and presentations on
the market opportunities and business strategies for emerging markets. India's
potential as major market for low cost handset was also explored in these
discussions. During the course of discussion an important fact-low cost
handsets (below $50) made up around 50% of the total handset market in 2006 in
India-was shared with the delegates. Other points that were discussed include
mobile phones have permeated into smaller towns, cities, and villages thus
expanding the opportunity for adoption and use of additional services. As there
is a great opportunity for mobile VAS industry to grow, mobile technologies can
provide forms of interactive services to end users (non literates in the rural
market) whom the PC could never reach and rural people could benefit from
mobile-enabled services in areas such as education, healthcare, finance,
governance, and infotainment. Rural areas, which lack means of dissemination of
information, will adopt such services if they are available at affordable
prices.
The crux that came out of first day's discussion was the
market is expanding and therefore one needs to understand the demands of new and
future consumers. New consumer expectations are heterogeneous and are dictated
by their attitude to technology, style, brand, and price.
Major Points
Evolution of handsets and wireless services, innovative emerging market
services/total cost of ownership, and affordable connectivity in emerging
markets were the major points on which the discussion on the second day was
centered. The fact that telecom remains largely an urban and suburban growth
story was also discussed. Despite the realization that a 1% increase in telecom
penetration results in a 3% increase in GDP growth, rural areas continue to
remain under-penetrated in most south Asian countries.
The role of local manufacturing was also discussed as it is the
key to cost cutting, since high volume supply can be supported only with local
manufacturing and all major handset vendors have established local manufacturing
in Asia. The importance of China, SE Asia, and India as the key players in
guiding manufacturing strategy of vendors was also highlighted.
Other issues that were discussed revolved around infrastructure
for manufacturing, distribution, tax free movement of parts, components and
complete phones are the basic requirements to provide phones at low cost.
Sandeep Budki
sandeepb@cybermedia.co.in