"We Should not Overestimate the Indian Market"

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The Indian cellphone market is very fluid as even

a single scheme can upset the market dynamics. With a marketshare of 30 percent, Ericsson

is planning to consolidate its position in India. COLOR="#016077">Alan Nicklos, size="1" COLOR="#000000">general manager, marketing, Ericsson Mobile Telephones Division

for Asia-Pacific was recently in India to chalk out Ericsson’s plans for the

cellphone market. In an exclusive interview with COLOR="#016077">Pravin Prashant, COLOR="#000000">Alan Nicklos unveils the India strategy for Ericsson.

What are your plans for Asia-Pacific market? SIZE="2" COLOR="#000000">

From the Asia-Pacific perspective, one of

the most important things that we want to achieve is to have uniformity in marketing

information that goes out through different media and in different advertising campaigns. SIZE="2">

With the world becoming a small place, we

would like customers to understand what we are trying to convey. We are also making sure

that we have a better understanding of the market by investing heavily in market research

locally, regionally, and globally. This will help in launching new products and campaigns

for a particular market.

More specifically, what are your plans for the Indian

market?

Last year, we were the market leaders in

India with 30 percent marketshare and we want to repeat that performance in the ensuing

year. I am happy with the market development, positioning, and product range in India. SIZE="2">

In Asia-Pacific, we have a market share of

38 percent and globally we have achieved just under 13 percent. We were number one in

digital mobile phones last year and I think we are going to continue with that. Even in

1998-99 and beyond that, we want to be in the top three slots. SIZE="2" COLOR="#016077">

What are the projections for the cellphone market? SIZE="2" COLOR="#000000">

India presently has a cellphone population

of one million. In 1997, 550,000 phones were sold and in 1998, 750,000 phones will be sold

as the market is growing at a rate of about 30 to 40 percent. COLOR="#016077">

Are your products doing well in the Indian market? SIZE="2" COLOR="#000000">

I think we are lucky because our product

models 788, 688, and 628 have done fairly well in the Indian market. In some markets in

India, there is more demand for low-end products like the 628 series but in other markets

it tends to balance with the other products.

The market segmentation in India is more

towards the low-end version. It is estimated that 80-85 percent of the market is in the

low-end so the volume would appear more for a product like GA 628. SIZE="2" COLOR="#016077">

What are your plans for launching new models? SIZE="2" COLOR="#000000">

We have a couple of new products which we

would be launching throughout the year. Our next plan would be to launch dual mode phones.

At which stage of product life-cycle is the Indian

cellular market?

The Indian cellular market is in the very

early part of the first stage. But what we have achieved in two-and-a-half years is much

more than what any country would have achieved. I think, we should not overestimate the

Indian market. But before we go to the second stage, it will take a year-and-a-half. SIZE="2" COLOR="#016077">

What is your distribution model for cellphones in India? SIZE="2" COLOR="#000000">

Most cellphones in India are sold only

through service providers as the market is in its initial stages where the emphasis is

more on promoting the services rather than products. But in most countries in the

Asia-Pacific, we sell through channels as well as service providers and both of them work

independently. When the Indian market moves towards the maturity stage there would be a

shift in the trend.

What is the ratio of cellphones being sold in the package

scheme to the general scheme?

Until now, most handsets that were sold

were bought from the bundled scheme.

What is the number of cellphones bought from the grey

market?

In India around 45 percent of the

cellphones are bought from the grey market.

What is your expected duty structure on cellphones? SIZE="2" COLOR="#000000">

The total duty of handsets should come

down from 30 percent to 20-23 percent which would make the market more competitive. SIZE="2" COLOR="#016077">

How would new technologies like IMT 2000 and satellite

phones affect cellphone market?

The way the cellular industry is going, we

are actually moving closer to a new technology called Universal Mobile Telephone Systems

(UMTS). UMTS is a standard that helps in carrying high-speed data. SIZE="2">

In future, one will have applications

based on satellite and GSM technology. Satellite technology is fine but one has to be in

line-of-sight to make a phone call, i.e., you have to become stationary which is not the

case while using a cellphone. As they start merging the technologies and have dualmode and

trimode handsets, it will provide greater



opportunities.

The current mobile phone is all voice,

while data is still a very small percentage. Antennas are big. I do not think the end

consumer will accept any inconvenience to what he uses today. COLOR="#016077">

What is the impact of the James Bond advertising campaign? SIZE="2" COLOR="#000000">

The market research that we conducted for

the US market in December for a eight-week period for the James Bond advertising says that

the awareness level increased from 30 percent to 70 percent. But can we maintain the

awareness level for next four to five months?

What we have wanted users to perceive has

been achieved. The Bond brain and the Ericsson brain went well together. SIZE="2" COLOR="#016077">

What is the spending on advertising? SIZE="2" COLOR="#000000">

I think,

we spend 8 percent of our turnover on advertising. With the new CEO coming, we are

planning to increase it as his vision is to give more focus on marketing. So, in future

marketing expenditure will be taken over from R&D which contributes about 10-15

percent.