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Business India Essay

1843 words - 8 pages

Brand India takes a call
Top Indian handset makers changing tack to take on MNCs
Sunny Sen Edition: March 31, 2013
Tags: Indian handset makers | Handet marjet | Micromax

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Indian handset makers get squeezed by global brands

Nidhi Francis, a former journalist who lives in a south Delhi locality, used Samsung mobile phones for years. But when her Samsung Galaxy series smartphone conked off last November, she decided to replace it with a Micromax Canvas 2. The handset was launched the month before and had been selling like hot cakes. Why did she junk smartphones sold by the ...view middle of the document...

Karbonn Mobiles, Lava International, Spice, and Intex Technologies are the other top Indian brands which have adopted new strategies over the past year to better challenge the dominance of Samsung, Nokia and other multinational companies.

What prompted this change? Indian companies began selling devices under their own brand around four years ago. By 2010, the number of local companies had crossed 160 with Micromax leading the pack. Almost all these companies were selling low-cost feature phones imported from China. This initially helped them gain market share. Soon enough, Samsung and Nokia launched a range of smart feature phones at different price points. This hurt Indian companies, and by early 2012 hardly anyone was making money. Eventually, many shut shop - only about 60 Indian companies remain now. At the same time, sales of smartphones were booming. The share of smartphones in total sales nearly tripled in three years. According to advisory and research firm Covergence Catalyst, 20 to 22 million smartphones were sold in India in 2012, more than double sold in the previous year. This is about eight to 10 per cent of the total mobile phone market.

The changing market dynamics forced Indian companies to tweak the way they do business. They still import products from China. But they have also formed technology tie-ups with chip makers, set up design and research teams, and strengthened their distribution network. These efforts have helped the top five Indian brands to increase their share of the total mobile phone industry revenue of Rs 55,000 crore to about 14 per cent from three to four per cent in early 2011, according to industry estimates.

Local brands have also raised their share of the smartphone segment in urban India, from 4.2 per cent in July last year to 12.1 per cent in December, according to market research firm GfK. Analysts say Indian companies have an advantage in the smartphone segment as they can make cheaper products keeping in mind local consumer preferences. "The quality and feature differential [between global and Indian companies] is coming down," says Mohit Rana, Partner of telecom and IT practice at consulting firm A.T. Kearney.

Rahul Sharma, Co-founder, Micromax Informatics
Before launching smartphones, we were a one-trick pony: Rahul Sharma
The perceived threat that local brands pose does not, however, worry the multinational giants. Samsung and Nokia remain market leaders. Samsung's India revenue from mobile phones is four to five times that of Micromax, though the South Korean company's market share in the smartphone segment slipped from 46.4 per cent in July last year to 35.8 per cent in December. Asim Warsi, Vice President, Samsung Mobile, says the Indian market is big enough for several companies.

He also does not agree that Indian companies made smartphones affordable. "We were massifying (sic) smartphones and no one else was up for the cause," he says. Rahul Sharma, one of four co-founders...

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