Indian mobile device market – (Price, Profit) Erosion, Overheated Competition and Future


India being the home of second largest subscriber base attracted all international mobile device vendors. At the same time more than 130 domestic companies also frayed into the segment to capture market share. Post liberalization in 2001 – 2004, there was burst of new domestic companies entering into market place and started challenging international players. In 2008-2009, the domestic companies started to capture market share from international brands like Nokia, Motorola, Sony (fka. SonyEricsson). With the evolution of Android OS and adoption of Chinese contract manufactures, the domestic player moved up in the ladder and replaced many top international brands from Top 5. The market leader Nokia, Motorola, Sony Ericsson & Blackberry product disruption in the market place also offered competitors to increase their market share through low cost model targeting rural subscriber and tier 3 customer bases in rural sector. According to Gartner, the unit market size of mobile device would grow to 251 Million with a growth of around 15% YoY2. It pop ups a query about the competitive state of domestic mobile device companies. The recurrence of Nokia in early 2012 and release of Asha series, industry dynamics of budget Smartphone and feature phones has changed. The focussed entry of Huawei, ZTE, Acer, HTC and Sony has increased competitive environment. In order to maintain the market share and match with the International players, the domestic mobile companies are playing on the price point, preloaded content and trying to match with international player on the Smartphone front.

With the negative growth rate on net subscriber addition and lower refreshment sales, both the international and domestic players are witnessing lower to negative revenue growth with market share erosion. The new entrants like Huawei, ZTE are grabbing market share from competitors and are moving to Top 10.

Moving forward, it is expected that many domestic companies would be forced to shut down their operations as volume vs. price is the key indicator instead of price vs. performance. The Smartphone segment will be dominated by leading international players and top five domestic companies as the target segment purchasing decision factors would be Brand, Build, Features, Durability and Price. With the deployment of data network, more than 120 million paid data userbase, data centric product offer would encourage subscribers to opt for entry to medium level Smartphone at an affordable price points. It is expected that by end of FY 14; Smartphone share in Indian mobile device market would cross 25%. The leading International players such as Nokia, Samsung would cement their leadership across feature and Smartphone segment whereas Apple, Samsung, Nokia and Sony would be fighting with their differentiated design & feature rich products for high worth subscribers (2% of total subscriber base). The domestic players would be fighting for maintaining their market share. The launch of BB10 platform, and new device would attract Enterprise subscriber base. International players are launching their content portal and integrating portal widget to enable consumer base access content whereas domestic players are bundling content with device to attract consumers. It would be interesting to see, how few domestic player successful entries into Tablet market is going to impact international players.

In conclusion, the domestic mobile device players are redefining their strategy to bypass International player. Currently its survival story for small player whereas growth story for market leaders. The price point neutralization by International players changed the device market place dynamic

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Visionary Leader with 22 years of multi-functional experience - combine astute tactical, strategic, business, technology and industry skills in ICT domain at domestic and international level (Wired/Wireless/ networks /platforms/ connected device) .... More

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