Semiconductor : Chipping Away at the Divide

Almost half of the new subscribers for several cellular service providers

came from the rural segment in the last financial year. The operators' ability

to bring down the entry barriers for masses made this crucial difference. The

mobile umbrella is fast opening wider, covering more and more rural geographies,

which is slowly growing as demanding as the mainstream urban market. The

manufacturers endeavors are focused to get multimedia applications on low-cost

chips to the handset.

India's telecommunication sector is witnessing an unprecedented growth with

falling tariffs and rising incomes, which is bringing mobile phones withinreach

of the millions of new customers every month. Mobile industry players are eyeing

rural India as their new area of opportunity. The RNCOS report on "Emerging

Rural Mobile Market in India" notes that the Indian mobile market will be driven

by an increased focus on the rural market, aggressive promotions, and handset

bundle offers. As per the findings of the study, mobile subscribers in rural

India accounted for just 20% of the Indian mobile subscriber base. However, it

is forecast to grow at a CAGR of more than 47% during 2007 to 2010.

The major growth in mobile phone subscribers will be seen in C and B circles

in the short-term. Enormous opportunities are emerging for the low-cost handset

manufacturers along with low tariffs, infrastructure development for mobile

communication. Rural India will account for around 35-38% of the total mobile

handset sales by 2010.The low population density in rural areas has given rise

to the need for more towers of higher altitudes, raising the costs further.

Language is one of the major problems as there are many dialects. Besides these,

the biggest challenge is to control the cost. The success lies in developing

handsets customized to rural needs, but at a controlled price. Low-cost chips

can prove to be a blessing for the rural market.

Expansion Efforts



It is a must to have a thorough know ledge of any market that the players

aspire to conquer. They must be able to identify the needs of the consumer.

There should be ground level surveys in rural India with routine and active

interactions with rural district administrations and rural work groups, to

observe and decode the role played by mobile phones in people's lives. Key

assumptions should be validated with respect to design and usability.

Aravind Pai, director, sales and marketing, ST-NXP Wireless India says his

company depends on user interface and partner networks to perform field trials

to test and validate the products in rural markets. Sasken's general manager,

strategy, Raja Setlur agrees. He refers to one of the observations made by his

team. "The digits of the handset of a typical rural folk are bigger than typical

urban folk. A phone with the usual size of keypad will not work from a usability

standpoint. This then strengthens the trend we are seeing for voice-based

services and resurgence of IVR, voice XML systems as part of operators' service

delivery platform," he says.

"If the handset manufacturer wants to make his handset friendly for such user

groups-an enhanced size of keys or hot keys for specific services or touch

screen method of input become vital for consideration," he adds. The rural

demands are changing, so is the approach of the manufacturers, who intend to tap

the potential of this market.

Qualcomm, which sees cost as a key factor for the rural segment, says it is

enabling its OEM partners to offer affordable and feature-rich devices to Indian

consumers. Especially for the rural segment, mobile handsets need to be

affordable, feature rich and power efficient. Qualcomm has a single chip (QSCTM)

platform that has brought music, camera, browsing and Internet access

capabilities to entry-level handsets. Huawei 2900i has been designed on Qualcomm

(QSC 6020) priced at Rs 2,000. It enables Internet browsing in Indian local

languages like Hindi, Tamil, etc.

Once camera becomes popular, the need for video on handsets for the rural segment will also increase Jithu Niruthambath, director, wireless business development, Texas Instruments	Handset manufacturers have to now offer solutions like color screen, FM, camera, music and browser capabilities in entry-level handsets too. A mobile handset is the true entertainment partner of the rural consumer today Dinesh Prasad, director, sales and business development, Qualcomm India

The company, along with MS Swaminathan Research Foundation (MSSRF), Tata

Teleservices and Astute, has created specific solutions for the farmers and

fisherman community. "Our fisher friend initiative brings vital information to

the fishing community regarding weather conditions, potential fishing zones and

market information to fisherman on their mobile handsets in their local

language," say Dinesh Prasad, director, sales and business development, Qualcomm

India.

Jithu Niruthambath, director, wireless business development, Texas

Instruments India says, "Considering that rural India needs devices to keep them

connected as a community, we are laying a lot of emphasis on providing solutions

that allow them to get information, support m-health, m-education and

m-governance. We are working with OEMs/Design Houses to enable affordable mobile

Internet devices to support these services."

Rural Designs



The rural buyer is gradually becoming choosy about the applications but

still remains very conscious of the price. If more applications can come for

lower prices there can be nothing better. The rural segment wants value for

money, as for most of them a handset is still a luxury. Interestingly, with

exposure to more options, the profile of the rural consumer is undergoing a

gradual change. Rural consumers want to buy good quality handsets at affordable

price. They do not want "low-end handsets" any more.

"With current penetration in India at approximately 27%, expected to go to

45% in the next two years, consumers in India are looking for quality affordable

handsets with a wow factor," says Pai of ST-NXP Wireless. The shape, size,

thickness, color, and finish matter a lot. A consumer's definition of value for

money differs in each consumer segment but is always important. Of ultimate

importance is the performance of the phone vis-à-vis RF sensitivity, talk time,

voice clarity, and ease of use.

"Indian consumers, even in the rural areas, are getting savvy and they are

demanding features beyond voice-SMS at all tiers including entry level. The

important considerations for entry-level handsets from our perspective is

affordability, in-demand features and power efficiency," Prasad of Qualcomm

says.

Since value-for-money has different definitions for different consumers,

Setlur of Sasken believes it is important to first clear ambiguity surrounding

the term 'low-end' handset. Should this imply low cost, low device capability,

low levels of mobile usage know-how in certain markets and therefore a handset

that serves their needs, or the lower economic segment of the country? He

observes that there is some difference in all the possible implications and each

one should be dealt with separately.

"Price does emerge as the single most important factor in the segment that we

are talking of and has a huge bearing on adoption. Consumer trust patterns in

this part of society tend to play a significant role. For instance, should a

shared phone be different from a non-shared phone? A person using a hitherto

shared phone may suddenly stop using it once financial services are started.

Will he or she part with personal financial data?" Setlur says, adding that

vernacular or linguistic support does help last mile penetration in rural India

and therefore that becomes an important design consideration.

On the Platter



Rural India has been drawing attention from all players-manufacturers and

operators. Manufacturers are focusing on rural needs. The companies are striving

hard to strike a balance to develop a diverse portfolio. They are delivering

chips and software for handsets from entry level to mid-end that meet

requirements of the already explored and the new markets.

Sasken claims its application framework (SAF) can bring rich media

capabilities to the so-called "low-end" phones. It enables phones in various

defined price points and accommodate features-camera, color display, livelihood

applications, multi-touch display, proxy/full browser, etc. Some exploratory

areas are around mobile security and trust-based architectures to ensure secure

and safe transactions.

The PNX4900 is a GSM-only chip for voice+SMS phones, PNX4901 is a chip for

GSM/GPRS phone with hardware Java accelerator, Mono Mp3 player and FM radio

support. The PNX 4903 is a chip for GSM/GPRS phone with stereo Mp3 player, FM &

T flash support The PNX4902 is a chip for GSM/GPRS phones with WAP/MMS,

Bluetooth, camera, USB as well as touch-screen support. The PNX4906 supports

Bluetooth stereo A2DP profile along with Mp3 stereo.

"All these chips come with best-in class RF sensitivity and the lowest power

consumption in the industry. A color voice/SMS phone can be build with less than

100 components. All these chips are made with lead-free packaging, along with

built-in 128-bit RSA security, which can help in developing theft-proof phones.

These chipsets support more polyphonic ringtones/Mp3 ringtones and louder

ringtones, as well as speaker-phone designs. We also support our customers with

a mature telecom stack which has been tested in the field in India," says Ton

Van Kampen, vice president, business development, ST-NXP Wireless.

In the case of affordable handsets, Texas Instruments offers LOCOSTO and

ECOSTO solutions to support all the requirements. Texas Instruments' solutions

enable designing and manufacturing of affordable handsets (not necessarily cheap

ones) with rich feature sets. The LOCOSTO family supports basic GSM phones to

GPRS phones with QVGA screen, audio and video players up to 1.3 megapixel

camera. The ECOSTO family supports EDGE functionality with up to 3 megapixel

camera.

For mobile Internet devices (MIDs) Texas Instrument's OMAP provides the right

platform. The most important feature of these devices is high performance

computing with long battery life. TI's OMAP 3 platform supports: laptop-like

performance at handheld power levels in a single chip.

The new integrated superscalar 600 Mhz Cortex-A8 gives four times the

performance compared to the current 300 Mhz ARM9 devices. A variety of Cortex-A8

core combinations are available in the new OMAP35x

Trendy is In



It is a myth that rural consumers are looking only for cheap handsets.

Observations by OEMs show that rural customers consider mobile phones as a

valued possession to show off. They are demanding more multimedia-enabled

handsets now. India's entry-level device segment has evolved significantly over

the years. Form factors, features, capabilities and even access to content are

very critical for these price sensitive users in rural India. Some new rural

trends have been identified in the area of mobile banking.

"We clearly see two key trends in the segment: there is a movement toward

lower-cost handsets, which enable more and more rural first-time users to buy

phones. These handsets are generally bundled with services from the operator.

These markets need very reliable, rugged phones that satisfy user preferences as

well as lower the cost of acquisition for operators. We're seeing color and FM

phones becoming the default in this segment," Pai says. "The other trend is in

the replacement market, where users want more features for the same price or

feature-rich handsets. These features include FM radio, Mp3, larger displays,

USB charging, and content customization," he adds.

The availability of spare parts, like battery and charger, and faster

servicing of products is also becoming increasingly important in rural markets.

As a result, there is a trend toward standardization of interfaces for charging

and connectivity, to simplify the servicing. Qualcomm's Dinesh Prasad views that

handset manufacturers have to now offer solutions like color screen, FM, camera,

music and browser capabilities in entry-level handsets too. A mobile handset is

the true entertainment partner of the rural consumer today, given that other

entertainment options are a constraint due to power deficiency in most parts of

rural India. "We are working with its wireless ecosystem partners toward making

the 3G experience mainstream. Qualcomm believes that 3G will trigger wireless

broadband growth in India, which is critical in bridging the digital divide,"

says Prasad.

Niruthambath of Texas Instruments holds that for the entry-level segments,

radio, music players, color screens, etc, are becoming important requirements.

In the areas where FM radio service is available, FM support has become a must.

There are also phones coming out with AM radio to target radio service across

the country. Similarly there is a trend to support good camera functionality in

the handsets. "Once camera becomes popular, the need for video on handsets for

the rural segment will also increase," he predicts.

Heena Jhingan



heenaj@cybermedia.co.in