Get smart with Desi phones

Micromax Mobiles' co-founder Rahul Sharma claimed that Micromax has proved its mettle because it created the ‘McAloo Tikki burger' of mobile phones.

The McAloo Tikki burger was a runaway hit with Indians. The reason, says Sharma, is because McDonald understood the ‘local flavor.' But when it came to mobile handsets, multinationals like Nokia, Samsung, Sony and others were busy flogging products created for a global market. It's not the same now.

Till 3 years back, 60-80% of the Indian mobile market used to be buzzing with just Nokia handsets. But, today, global players seem to be having tough competition from local ‘flavors' or better to say local brands like Micromax, Karbonn, Techberry, Kingtech, MAXX Mobiles and many others. And, it could happen because of increase in the number of mobile users in rural India.

According to the research done by a Delhi based market research firm JuxtConsult; till mid 2011, the number of mobile users in rural India went up by 219 mn as compared to 188 mn urban mobile subscriptions.

And, as a result; these local companies too benefitted by the increasing numbers in rural India. Unlike global brands, these local companies targeted tier-2 and -3 cities as well as villages to expand their market.

MOBILE COS' ‘MAIN' MARKET

Understanding the importance of rural market, Ajjay Agarwal, chairman and MD, MAXX Mobiles says, "India is dominated by tier-2, -3 and smaller cities. Though the metros play an important role, the growth of the mobile phone industry is being propelled by tier-2 and -3 cities around the country."

Even Karbonn Mobiles too started its business from tier-2 and -3 cities. Shashin Devsare, executive director, Karbonn Mobiles says, "Karbonn Mobiles entered into the Indian market in April 2009 and was initially available in tier-2 and -3 cities through distributors and local retailers. After establishing a strong hold in the semi-urban market, the brand went ahead and launched the product range in metro cities."

Arshit Pathak, MD, Kingtech Electronics (India) says, "The consumers in the developed markets are now shifting towards smartphones, whereas in not so developed markets, the challenge is still to connect the unconnected through basic feature phones. This has resulted in a focus and a strategy shift of most of the European and American brands. The developments become more smartphone-focused which resulted in a gap in the development of Indian consumer-specific products. Indian and Chinese brands identified this opportunity and focused on products, which are more relevant to Indian consumers."

And, some of the local companies also claim to be selling more number of handsets than international brands. Avinash Jain, MD, Arise Mobiles says, "Indian brands have grown faster than the international brands in the last 4 years."

Even Pathak too believes that Indian brands connect better with the Indian consumers than international players.
Does it mean that international brands like Nokia and Samsung failed to understand the needs of main Indian market, ie, rural India. Till 3-4 years back, almost 8 out of 10 mobile users in the rural India used to have Nokia handsets.

Reason was its easy keypad function and the pricing. But over the years, Nokia seems to be having changed its focus from rural to the urban market. And, this space is being filled by the local brands.

THE AGE OF SMARTPHONES

Yes, it's the age of smartphones. And, where can be more competition than the country with the maximum growth in the number of mobile users.

Today, India is having around 900 mn active mobile users, and almost every user wants his phone to be equipped with all the latest features. Also, it should be available at the affordable price. And, this is where; international brands seem to face major competition from the local brands.

Till few years back, who would have thought, QWERTY keypad could also be available in the mobile with the price tag of `1,500 or Facebook and Twitter can be used in the mobile of `2,000. And, unlike local brands, international brands like Nokia and Samsung still provide all the features in the mobile with a price tag of more than `4,000. MAXX Mobiles, which has been one of the major beneficiaries from this shift in the market trends, from normal to high-end phones, has seen an enormous growth in its sale over the last 1 year.

Agarwal says, "The era of new-age mobile phones has seen major shifts from bar to QWERTY to touchscreen handsets. Today, we have mobile phones that are sleek, fit into your pockets and a stylish gadget to flaunt." Talking about the competition from international brands, he says, "The competition in the mobile phone market has been intense with the Indian handset players gaining prominence over the last couple of years. The year2011 saw an intensified pricing war which led the MNC brands to not only re-strategize their marketing tactics but also develop products in the low-end segment. Brands like MAXX Mobiles have a diverse portfolio of handsets to suit the requirements of consumers in a ‘value for money' bracket."

But, some of the local brands believe that they are still too far to match the standard of international brands in terms of quality. Arshit Pathak, MD, Kingtech Electronics says, "The competition between indigenous and international brands is growing each day. The Indian brands' competitiveness pushed the international brands to offer a better value proposition to retain customer base; while the Indian brands have no option but to innovate and come up with technology advanced products to acquire customers.

LOCALS' SWELLING BASE

Today, with around 60 mobile handsets companies marketing in India, it's not easy for all companies to grow at a healthy rate. But besides tough competition, these companies are not only making profitable business, but are in a mood of expanding the business base.

According to IDC's India Quarterly Mobile Handsets Tracker, 3Q 2010; Kingtech Electronics' brand G-Five was ranked as the second largest handset brand in India with a marketshare of 10.6%. And, was recently ranked as the third largest mobile phone brand in India (as per Gartner's Report-Marketshare: Mobile Communication Devices by Region and Country, for 3Q11).

Agarwal says, "In 2011, where other Indian and Chinese mobile handset players have witnessed a fall in shipments, MAXX Mobiles shipments rose to 10.1%, as per Q3 CY2011 IDC's India Mobile Phone Tracker Report. MAXX Mobiles also clocked the highest number of new product launches in the year, introducing 52 new models in the year 2011, all in the affordable price range of `1,000 to `7,000. Another Indian brand, Lava seems to have the share of 4.5 to 4.7% shares in the Indian market. SN Rai, co-founder and director, LAVA International says, "We have been a late entrant in the market which has moved on to smartphones and showing a peak growth." He believes that within 2-3 years, the company's growth would go up to 10%. Also, Anil Kaushik, CEO, SICT Mobiles says, "Currently, the company has around 1-2% of marketshare, and believes to continue to spread its wings to newer territories every month."

CHANNEL PARTNERS' TAKE

In a tough domestic market with a vast presence of old brands like Nokia and Samsung, it's very important for local brands to strengthen their relationships among distributors. And, over the last 2-3 years, it's been seen that channel partners have been selling more mobiles of local brands than internationals.

Amit Shah, director, Kalpesh Telecom, Mumbai says, "Today, an average middle-class family is opting for an Indian mobile brand be it Lava, Micromax, iBall at about Rs. 3,000, while a person gets a similar high-end mobile to that of the Samsung's or Motorola's at Rs. 15,000 and above."

Jayesh Doshi, director of NJ Telecom, Mumbai says, "These Indian brands are doing pretty good in the market. He says, "Indian mobile brands are getting good values in the market because these are designed and priced accordingly seeing the price sensitive consumers in our country. It is not only Micromax with a huge marketshare with all its product ranges, but also Lava mobiles provide good services if there is a damage to the products be it under the warranty period or not." Even channel partners in the state like Gujarat and Kerala too have similar comments. JB Nayar, TeleSutra says, "There has been a huge growth in the sales of local brands over the years."

Speaking on the similar line, Sidharth Chopra of MBR Communications says, "Over the last 2-3 years, we have experienced that Indian companies have better understanding of consumers than their international peers. And seeing the good response, almost all the local brands have been cutting their teeth to make their presence across the country than just few cities.

SN Rai, co-founder and director, LAVA International says, "Currently, we have 1,000 distributors and 55,000 retailers. But we would like to expand to 1,400-1,500 and 100,000 respectively. MAXX has strengthened its footprint in the Indian market by developing a wide distribution network. Currently, the company has its presence among 20,000 retailers across India through its strong dealer distribution network supported by approximately 500 after-sales service centers. Jain of Arise Mobiles says, "They have 450 centers pan-India taking care of service issues. And we shall have 1,200 service outlets by April 2013."

G-Five has over 400 distributors and the brand is available at over 40,000 retail outlets. Pathak of Kingtech Electronics says, "We intend to further expand the channel partner base in the country. As we are changing our product profile by shortly introducing 3G handsets and smartphones, we have to acquire new set of consumers and it's important for us to be at the organized retail format. We are also taking the LFR (large format retail) route."

TAKING INDIA TO THE WORLD

Now, after growing strongly in the Indian market, these companies are all set to take their steps toward finding space in the international arena. In the year 2011, while, strengthening its forte in India, MAXX Mobiles also expanded its presence in various emerging markets globally including, UAE, Fiji, Nepal and Bangladesh.

Agarwal says, "Reinforcing our local manufacturing capabilities will be a key focus area for MAXX in 2012, with the set up of two additional plants in the existing premises of Haridwar, one each dedicated to the manufacturing of Lithium-ion battery cells and mobile phones." Companies like Micromax and Karbonn too are leaving no stone unturned to swell their presence across the world.

Now, if we believe to analysts, the major challenge for these local brands starts in 2012. These analysts believe that these companies' real performance will be tested over the next 2-3 years as Indian consumers are very fragile. Moreover, the Indian market is one of the most difficult as well as growing markets in the world.