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A Vibrant Market: Upbeat mood amongst handset vendors

February 15, 2018

The Indian mobile handset market witnessed strong growth over the past year to overtake the US as the second largest smartphone market in the world, next only to China. The surge in demand for smartphones, especially at the entry-level, was triggered by expansionary marketing strategies focused on semi-urban and rural areas. Improved device specifications across all price segments further bolstered sales. Moreover, there was a resurgence in the feature-phone segment with the launch of 4G-enabled feature phones and the availability of affordable data plans. Going forward, the industry remains positive about continued growth, riding on the government’s Make in India and Digital India initiatives, as well as the operators’ push on affordable tariffs. Handset vendors talk about the industry’s performance during 2017, the key growth drivers, the domestic manufacturing ecosystem and the expectations from 2018... (from left to right- David Chang, Global Sales Director, Gionee India; Deepak Kabu, CEO, Ziox Mobiles; Nidhi Markanday, Director, Intex Technologies; Pankaj Rana, Business Head, Mobility Division, Panasonic India; Rahul Sharma, Co-founder, Micromax Informatics; Will Yang, Brand Director, OPPO India)


How did the mobile handset segment perform in 2017? What were some of the key trends witnessed by the industry?

David Chang

With multiple launches and technological advancements, it seems there is no stopping the Indian mobile handset industry in terms of technology, designs and models. New technologies and less bezel were the key trends in 2017, followed by dual-selfie cameras and fingerprint sensors. The year revolutionised the smartphone segment, with the introduction of increased offerings and a greater variety in smartphones, with prices ranging from Rs 8,000 to Rs 25,000.

Deepak Kabu

We launched a series of smartphones as well as feature phones in 2017. Some of the key trends that we saw this year were the launch of Wi-Fi in a feature phone with 8 GB internal memory and a dual-selfie camera smartphone. The year also gave us a stronger foothold in terms of sales in Tier II and Tier III markets.

Nidhi Markanday

The year 2017 was the year of the feature phone, as we saw its resurgence in a big way. In fact, we launched several feature phones, including our maiden 4G feature phone. We also adopted a bundling strategy by partnering with Vodafone India and Bharti Airtel. The other major trends that emerged in 2017 were a shift in consumer preferences for higher MP cameras, dual cameras, higher RAM and ROM for better performance and storage capacity. We saw a growing preference for bigger screens in mobile phones and a shift to bezel-less screens, popularly termed as “infinity display”. The smartphone segment is constantly witnessing innovation in features. In 2017, the industry witnessed an overall market growth of 10-15 per cent, while the online market grew by 45-50 per cent. The smartphone segment saw models priced in the range of Rs 8,000–Rs 15,000 driving the market with over 40 per cent share in total sales, owing to a high conversion rate by consumers to the higher price segments due to the availability of zero (effective) per cent finance schemes.

Pankaj Rana

The past year was revolutionary in terms of the technology that was brought to consumers on their smartphones. Technologies such as artificial intelligence (AI), internet of things (IoT) and the holistic user interface (UI) became the key differentiators for consumers to choose a handset. In keeping up with this trend, Panasonic India launched its own AI assistant, Arbo. In 2017, India overtook the US to become the world’s second largest smartphone market, behind China.

Rahul Sharma

It has been an action-packed year. Not only did smartphone numbers grow, feature phones made a grand comeback as well. The year saw 4G becoming a reality in the country, so much so that people have 4G feature phones as well. Today, consumers are spoilt for choice and there is a strong shift in demand from just the hardware specifications to how much data is bundled with a smartphone. Both ends of the pyramid are driving growth and, for the first time, several models have been introduced in both categories (sub-$100 and above $500).

Will Yang

The handset segment saw several positive changes in 2017. Be it the penetration of smartphones in the country or the addition of 4G, we saw many new trends emerging. In terms of product features, a key trend was the introduction of smartphones with dual-selfie cameras. OPPO launched a smartphone with a regular selfie camera and a wide-angle camera to meet group selfie needs.

How has been the uptake of 4G-enabled smartphones during the year? What are the factors driving their demand?

Deepak Kabu

Affordable handsets and 4G proliferation have helped India overtake the US to become the world’s second-largest smartphone market. After a slight wobble in the second quarter of 2017, India’s smartphone market recovered quickly with shipments growing 23 per cent year on year in the third quarter, to reach over 40 million units. It is estimated that the country’s smartphone market will grow at a compound annual growth rate of 23 per cent through 2018 and account for 30 per cent of the global growth during this period. The major factor fuelling this growth will be the concept of making India a digital country. Also, smartphone availability and affordability, online content and the changing user behaviour will give the much-needed boost to the market.

Pankaj Rana

The Indian 4G smartphone segment saw tremendous growth in 2017. India overtook the US to become the world’s second-largest 4G handset market, with more than 95 per cent of the smartphones shipped in the last quarter being 4G enabled. Explosive growth in data usage, further driven by attractive offers from operators, has catapulted the demand for 4G phones in Tier II and Tier III cities. Also, initiatives like Digital India have helped increase demand. We have also shifted our focus from 2G/3G mobile devices to 4G devices and planned an entire range of entry-level 4G handsets.

Rahul Sharma

The factor driving the demand for 4G phones was mainly low tariff plans that increased mobile data consumption. We have been quick and nimble in reacting to consumer demand and have presented them with options that are not only compelling but are also able to bring in a change in habit. In the beginning of 2017, we introduced multiple phones under the Bharat series, which are dedicated to the millions of consumers waiting to adopt a smartphone, and even upgrade to a mid-level smartphone. The range comprised power-packed phones that helped bring millions of consumers into the mainstream and adopt a smartphone and experience the internet for the first time, thus helping the country move towards the Digital India dream.

Will Yang

Currently, most people in rural areas are using 3G owing to affordable data charges. In urban areas, there has been an increasing shift from 3G to 4G because of unlimited data plans offered by network operators. In 2017, OPPO concentrated on launching devices in the 4G segment. Three factors driving 4G demand are the overall development of the telecom industry, wider acceptance and penetration of smartphones, and higher disposable incomes owing to the development of the Indian economy. We see India as a vibrant 4G smartphone market, which is gaining constant traction. It is one of the fastest growing regions for us.

What is your view regarding the handset manufacturing ecosystem in India? What are the opportunities under the Make in India initiative?

David Chang

The support extended by the government and the investor-friendly policies adopted by various states are making India an attractive destination for establishing manufacturing units. The Make in India campaign, for instance, has opened the doors for companies to build in India. India is one of the most important markets on Gionee’s global map and we have been seeing an exponential growth, which is only expected to increase as we progress in our manufacturing plans in India. Starting last year, all Gionee devices sold in India are being manufactured in the country. At present, we are in negotiations with the government to have a fully operational manufacturing plant in Noida.

Deepak Kabu

The Make in India initiative will help all Indian brands like us to achieve a good market share, first on our home ground and then worldwide. The government’s effort to help Indian start-ups is also encouraging. We hope that duties are cut by 2-3 per cent for local vendors and hiked for imports so that an apparent difference is created.

Nidhi Markanday

The recent phased manufacturing programme (PMP) notification is an enabling one to give a clear roadmap to local manufacturers. It can be seen as a commitment by the government to develop India into a competitive manufacturing hub for mobile phones. Phase I of the PMP kicked off in 2015 and has encouraged local mobile assembly, programming, testing and packaging. In Phase II, the policy has encouraged local vendors in moving up the value chain by localising mobile accessories such as chargers, earphones, data cables and mobile batteries. The next step is to bring about development in areas such as mobile design that would drive the ecosystem for fabrication and print circuit board design. Intex took up indigenous manufacturing of mobiles with a components manufacturing unit set-up in Noida, producing batteries, chargers and other mobile accessories.

Pankaj Rana

The government’s recent decision to increase the basic customs duty on smartphones being imported into the country will encourage local manufacturing, paving the way for the fulfilment of the the Make in India vision. In fact, smartphone manufacturing has been one of the leading contributors to this vision. Between 2015 and March 2017, mobile manufacturing units generated 38,300 jobs in the country.

Rahul Sharma

India has the potential to become a global hub for manufacturing and the government has taken steps to strengthen the same. There is a growing confidence to share the best of Made in India with the rest of the world and Micromax is a frontrunner in the communications sector. With three operational manufacturing facilities and the aim to make all phones in India in the near future, we believe that the Make in India initiative will create business and human resource opportunities. However, good infrastructure and logistics facilities are needed to boost the sector. The government has already reformed some of its policies to meet the sector’s demands, such as setting up electronic clusters, creating an innovation fund, providing tax holidays, and setting up chip fabrication and assembling units.

Will Yang

The huge demand for smartphones in the domestic market, the availability of skilled workers and the overall development of the economy are paving the way for various international brands to set up a base in India. OPPO has recently been given the clearance to set up a mobile manufacturing unit in Greater Noida.

What are the issues and challenges faced by handset manufacturers in India? How can these be addressed?

Deepak Kabu

The growing market share of Chinese players, coupled with fierce competition, has adversely affected domestic mobile manufacturers’ businesses. The fact that the market share of Chinese mobile phone manufacturers was at around 51 per cent in the first quarter of 2017 speaks volumes. In addition, the industry is currently facing a slowdown in revenue growth and a huge pressure on profit margins.

Pankaj Rana

The industry can benefit from the presence of skilled labour and engineers and a better network of local component makers. If India is to truly emerge as the world’s foremost manufacturing capital under its Make in India campaign, Skill India will also have to become a raging success.

Rahul Sharma

The biggest challenge is to bring down the prices of smartphones. We worked with telecom players to introduce compelling products and bring 4G-enabled smartphones to the sub-Rs 5,000 price point. Secondly, the price of data is perceived as a recurring expense post the purchase of a smartphone and it is imperative to deliver greater value to consumers. Our partnerships with BSNL, Vodafone and Airtel have been a step in that direction. Micromax Bharat 1, the 4G feature phone, launched in partnership with BSNL to provide high-speed data in rural areas has seen a successful initiative.

What are your expectations from 2018?

David Chang

In 2018, the key growth driver will be providing the most utility within the Rs 8,000-Rs 25,000 price segment. It is also important to focus on battery and camera quality. Smartphones will be the key focus area for a series of technological developments in 2018. These developments will range from augmented reality and in-flight connectivity to high broadband speeds.

Deepak Kabu

The emphasis will be on increasing our distribution strength. We already have over 800-plus distributors on board across Tier I, Tier II and Tier III cities. Further, we will focus on tapping customers in semi-urban and rural areas by offering them handsets packed with features at the right price.

Pankaj Rana

Smartphones are becoming the sole gadget of reliance for several individuals and will soon become a major propagator of IoT. Applications and UI have become the deciding factors in upgrading oneself to the next level of technology. In 2018, customers will continue to look for technology that will shape the product interface and the way we interact with our smartphones.

Rahul Sharma

We expect more Made in India phones to enter the market. Further, smartphones that are aesthetic and have best-in-class specifications (be it camera capabilities, the screen, the battery or software capabilities) will be launched. We will also see more consumer-focused partnerships.

Will Yang

Our brand has always focused on growth and innovation. In 2017, we brought in the first AI-based beauty technology feature in a smartphone to India. In 2018, we will continue to leverage AI and come out with groundbreaking technologies, taking a step ahead in making our way to the top.

 
 

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