Cellular phones are relatively
new to India. Hence, the cellular handset market is clearly driven by the developments in
cellular services. And last year has been a poor one for cellular services. The metros
have seen a decline in subscribers to cellular services. And whatever growth has happened
has been in the circles. This meant good sales of entry-level cellular phones which were
sold at a price comfortable to mass-market consumers. The higher priced models had a very
lean period.
Unit Sales
The total unit-wise market for
cellular handset largely depends upon newly activated cellular subscriptions. The cellular
operators enrolled about 317,511 new subscriptions across India during the fiscal 1998-99.
Roughly three lakh cellular handsets were traded. The total number of legal handset sales
was 142,880, clearly indicating that legal trading accounted for 50 percent. Remaining
sales occurred in the grey market. Giving about 9 percent for the second hand trading, the
total number of actual cellphone sales during last year was approximately 130,021.
Revenues
Revenue-wise, the handset market
was clearly divided into the low-end models and the premium models. Low-end handsets had
an entry-level price tag. These were the operators’ ostensible choice for bundling
with airtime options. The average cost of this type of handsets was Rs 8,000. On the other
end of the spectrum were the premium models, which included Internet/e-mail receivable
phones and were packed with all value-added compatibilities. With a price tag of above Rs
20,000, these were beyond the reach of mass buyers. There were also some models which
bordered around the low-end entry-level models but were branded as "value for
money" models. Some of features available on them were not available in the
entry-level phones.
alt="segment_personal1.gif (14486 bytes)" align="right" hspace="4" vspace="4">
face="Times New Roman" size="2">The entry-level phones dominated the market with a
negligible number of premium handsets being also traded. The total revenue-wise market for
cellular phones adds up to approximately Rs 144 crore.
The Indian market is still in a
nascent stage. The grey market is very dominant and the brands, available legally, are
sometimes illegally available in the many bustling supermarkets of the metros. Often the
challenge for legally traded brands has been to challenge the markeshare of their
counterparts in the grey market rather than their legal competitors. Six well-known brands
are sold legally by vendors through cellular operators and well-known retailers. They are
Alcatel, Ericsson, Motorola, Nokia, Philips, and Siemens.
Trends
- The most significant trend during last fiscal was
the exchanging of cellular handsets from subscribers to subscribers. The second hand
purchase of cellular handsets had risen to a high of about 12 percent by the end of 1999.
Slackening cellular business and an equally dull response from customers led to this
phenomenon. The rise in cellular rentals during the last fiscal meant many of the
non-serious owners ending their subscriptions and selling off their handsets. However,
with cellular airtime tariffs coming down considerably and incoming calls becoming free,
this trend is expected to slow down in the current year. - A much better market is forecasted this year. The
reason is that the subscriber base is likely to be on the growth path once again. A lot of
cost-conscious users are likely to be encouraged by the exemption of tariff on incoming
calls. - Prices remained the most important factor in the
choice of cellular phones. In many cases, bulks of cellphones have been sold through
schemes in which free airtime was bundled along with handsets. - Aesthetics was the next most important factor.
Cellphones that appealed to the trendy crowd, ones that appealed to the successful
executives, cellphones that could be fitted into the tiniest of pockets … they all
had specific targets. But, all of them had to suit the Indian taste. Gizmos were out of
fashion and light, small, and colourful models were the order of the day. - Feature phones are not yet popular. It implies
that cellphones in India will be an essential item rather than the often mistaken status
symbol. However, it will be an exciting new mode of communication that will increasingly
entice newer consumers. The new generation is the most potential target segment.
alt="segment_personal2.gif (9895 bytes)" align="right" hspace="4" vspace="4"> face="Times New Roman" size="3">Pagers
It was a bad year for the paging
industry. The industry saw major churnouts across the country and across all operators.
The installed base of pager saw a decline from 7.5 lakh (V&D estimate) in March 1998
to approximately 6.7 lakh in March 1999. Consequently, there weren’t any significant
developments in the pager market.
- Pager was mistaken as a consumer durable right
from the beginning of paging services. Operators went to the extent of giving it away free
with movie tickets, washing machines, televisions, etc. The result–enormous number of
pagers got churned out. Most of the recipients of the free pagers did not know what to do
with the pagers. - Bundling as such is not a prohibitive practice.
Cellular industry also went for it, as did other electronic goods like television and
washing machines. However, bundling of pagers was one of the biggest marketing slips. One,
since it was the start of a communication services which was different from the plain old
telephone services, people had to be first educated about the real benefits. Two, bundling
it with every other consumer goods washed out any novelty attached to a new gizmo. And
three, paging was not able to focus on specific targets of consumers unlike cellular or
radio trunking. - The ratio of numeric to alpha-numeric pagers was
25:75. However, by the end of last fiscal it was 20:80. - Prices of pagers remained almost constant during
last fiscal. Average price was in the region of Rs 2,200. - It was a very dull market, with no significant
developments. Unlike the cellular phone market that saw newer models being launched in
spite of slowdown in subscriber growth, the pager market did not see newer players, apart
from Groupsense that emerged as a powerful name to reckon with. It forged tie-ups with
Punwire and SM Elecronics for manufacture of its pagers. - There were six main vendors of pagers. They were
Motorola, SM Electronics, Casio, NEC, Philips, and Punwire. Out of these, Motorola was the
clear leader. In a bad year, the competitors were not much in sight. And Casio lost its
partnership with Bharti Telecom for manufacture of pagers, with JV Casio Bharti getting
down to closing its operations. However, it was Groupsense that made an impact on the
market. - Nonetheless, it was the standard models like the
Memo Express that ruled the roost. There were hardly any product innovations, unlike
during the previous year when a number of pagers became compatible for bilingual reception
of messages. - It has been the institutional employees and large
corporates who have been the loyal users of pagers. And it would augur well for the pager
operators to tap this segment. The other vertical segment could be the vast number of
government employees, especially in the security and emergency departments.