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									    Strategic Management


          Report on


Indian Mobile Handset Industry
                                         MOBILE HANDSET INDUSTRY

Table of Contents
Introduction and Historical background of industry.............................................................................2
 World Market........................................................................................................................................2
 Historical Background of Mobile Industry ............................................................................................2

 Indian Mobile Market ...........................................................................................................................3
 Market Players ......................................................................................................................................3
 Latest updates from handset industry .................................................................................................4
 Future Estimates ...................................................................................................................................4
Analysis of Mobile industry using Porter’s Five Forces Model ............................................................5
 Supplier power......................................................................................................................................5
 Buyer Power..........................................................................................................................................6
 New Entrants ........................................................................................................................................8
 Substitute............................................................................................................................................10
 Rivalry .................................................................................................................................................12

Life cycle Analysis of Mobile Industry ............................................................................................14

Conclusion ............................................................................................................................................16

References............................................................................................................................................17




                                                                   Page 1 of 17
                          MOBILE HANDSET INDUSTRY

   INTRODUCTION AND HISTORICAL BACKGROUND OF
                   INDUSTRY
World Mobile Market

        Global Mobile handsets market has seen an exponential growth since its first
commercial launch in 1983. There were 12 million global mobile phone subscribers in 1990
and by the end of 2010; the number of mobile phone subscribers reached 5.2 billion.
However, the growth had slowed a bit between 2006 and 2009 on the account of economic
slowdown and lack of strong telecommunication infrastructure in emerging countries.
Smartphone are fast becoming a viable alternative to feature phones, PDAs and laptops,
offering phone features such as voice and SMS coupled with mobile internet applications,
multimedia functionality, high speed data processing capabilities, and inbuilt GPS
capabilities. The smart phone market is currently witnessing high growth due to a host of
factors, including lower product cost, improved handset design and functionalities, the
expansion of global mobile email and browsing services, the emergence of 3G and 4G
network technologies, the rising competition among mobile carriers, and the standardization
and upgrades of operating systems. This report will identify the key players in each
application market; focusing on their growth strategies and other developments such as
geographic expansion and the development of patented technologies. Finland-based Nokia
held the maximum share of the global smart phones device market in 2010, followed by the
U.S.-based companies “Research in Motion” and “Apple”. Nokia and Symbian command
almost double the nearest competitor’s market shares in the devices and OS segments
respectively. The emerging companies in these two segments are Samsung (in device
manufacturing) and Google’s android (in the OS market).1


Historical background of Mobile Industry

       The first mobile telephone call made from a car occurred in St. Louis, Missouri, USA
on June 17, 1946, using the Bell System's Mobile Telephone Service, but the system was
impractical from what is considered a portable handset today. The equipment weighed
80 pounds (36 kg), and the AT&T service, basically a massive party line, cost $30 USD
per month (equal to $337.33 today) plus $.30 to $.40 per local call, equal to $3.37 to $4.5
today.

        Martin Cooper, a Motorola researcher and executive is considered to be the inventor
of the first practical mobile phone for handheld use in a non-vehicle setting, after a long race
against Bell Labs for the first portable mobile phone.

       The first commercially automated cellular network (the 1G generation) was launched
in Japan by NTT in 1979, initially in the metropolitan area of Tokyo. The first 1G network
launched in the USA was Chicago-based Ameritech in 1983 using the Motorola
DynaTAC mobile phone.

       The first "modern" network technology on digital 2G (second generation) cellular
technology was launched by Radiolinja (now part of Elisa Group) in 1991 in Finland on
the GSM standard, which also marked the introduction of competition in mobile telecoms
when Radiolinja challenged incumbent Telecom Finland (now part of TeliaSonera) who ran a
1G NMT network.

                                          Page 2 of 17
                         MOBILE HANDSET INDUSTRY

      In 2001, the first commercial launch of 3G (Third Generation) was again in Japan
by NTT DoCoMo on the WCDMA standard.

Indian Mobile Market

   The first mobile phone was launched in India during 1990s
   And the first mobile phone company was Nokia.
   First Mobile service provider was Modi Groups in 1995 and started in Kolkata,
    somewhere it was signed that mobile service provider was launched in 1994

        India has come in a close second in the sale of mobile phones in the year 2006. China
has led the race of mobile sales being the highest in the world. In India however the GSM
phones rule over the CDMA handsets. Leading the categories are Nokia, Samsung, Sony
Erickson while Reliance takes a large size share in the corporate segment. The Indian mobile
phones market had total revenue of $6.1 billion in 2009, representing a compound annual
growth rate (CAGR) of 23.1% for the period spanning 2005-2009. In comparison, the
Chinese market increased with a CAGR of 16.4%, and the Japanese market declined with a
CARC of -2.1%, over the same period, to reach respective values of $23.1 billion and $13.2
billion in 2009. Market consumption volumes increased with a CAGR of 29.8% between
2005 and 2009, to reach a total of 117 million units in 2009. (Source – Data monitor)

       Cellular phone penetration in India stood at 45 percent in 2009, and the market is
entering into a second phase of growth, with replacement sales increasing from 45 percent in
2009 to 50 percent of total sales in 2010. Moves to high-speed 3G networks is bringing in
more challenges in terms of innovation and keeping up with fast changing consumer demand.
Shortening product life cycle times and declining sales of voice-centric devices will bring
changes to the market during the next five years.2


Market Players

        Recently till 2009, Indian mobile market was dominated by large global players like
Nokia, Samsung, LG and Sony Ericsson. According to latest data available, in the financial
year 2009 – 10, the market share of Nokia in India stood at 52.2% versus 64% in the last
financial year. Samsung share stood at 17.4% versus 10% last year while LG stood third with
5.9% market share. Fall in share of Nokia was mainly due to the entry of many Indian
handset makers whose combined market share was just lurking between 3 to 4% in the
previous financial year has grown up to 14%.Micromax mobiles topped the chart (of Indian
makers) with 4.1% share followed by Spice (3.9%) and Karbonn mobiles (3%). Recent
entrants such as Lava mobile, Lemon mobiles and Max mobile too are hovering around that
1% market share. Success of the new players is mainly attributing to the low price and
introduction of dual sim phones whose demand increases as a result of the fall in call rates.3

       However, the Dual sim craze might not last longer as consolidation is expected in the
Indian market when maintaining 2-3 Sim cards would prove to be heavy. And not to forget
the 3G entrance to India last year so people would certainly look for 3G handsets.
Entry of New Handset Vendors

       The growth of mobile handset market can be gauged from the fact that 27 new
handset vendors entered India just in 1 quarter. India also witnessed the launch of high-end

                                         Page 3 of 17
                        MOBILE HANDSET INDUSTRY

phones as well as entry level phones and Indian mobile users bought nearly 700,000 high-
end/smart phones in the April-June quarter (2009).


Latest updates from the handset industry

- Recently, Mindtree announced the acquisition ($6mn all cash deal) of Kyocera’s captive
unit in Bangalore, where it would design and build ready-to-brand 3G handsets for telecom
service providers and original equipment manufacturers (OEMs).
- Hong-Kong stock exchange-listed China Wireless Technologies’ Indian subsidiary, Cool
pad Communications has announced partnership with Reliance for its dual sim phone, i.e.
GSM and CDMA and is setting up its mobile handsets in the Indian market.
Cool pad is targeting Rs. 800 crore revenue in the next five years from the Indian market.


Future Estimates

         The market's volume is expected to rise to 206.7 million units by the end of 2014,
representing a CAGR of 12.1% for the 2009-2014 periods. The performance of the market is
forecast to decelerate, with an anticipated CAGR of 16.3% for the five year period 2009-
2014, which is expected to drive the market to a value of $12.9 billion by the end of 2014.
Comparatively, the Chinese and Japanese markets will grow with CAGRs of 17.2% and 7.3%
respectively, over the same period, to reach respective values of $50.9 billion and $18.8
billion in 2014. (Source – Data monitor)




                                       Page 4 of 17
                         MOBILE HANDSET INDUSTRY

 ANALYSIS OF MOBILE INDUSTRY USING PORTERS FIVE
                 FORCES MODEL

1.     SUPPLIER POWER:

       Suppliers within the mobile phones market are those entities providing technology,
equipment and parts for mobile telephone manufacture. This includes highly specialized
software and electronic components. Other suppliers are those providing advertising and
marketing services. Manufacturers are much larger companies than suppliers and therefore
they have the ability to influence supply contracts. For example, Nokia carry out assessments
on their suppliers to make sure they meet standards. However this is partly because market
players are so heavily reliant on the quality and efficiency of the software and products
provided. Moreover, some of the software, such as integrated circuits, can be specific to the
company, which again increases dependence upon suppliers. Ethics is important in the supply
chain too and manufacturers have to be careful who they choose to provide their supplies.
Currently there are ethical issues concerning the usage of tantalum purchased from the
Congo, as it is believed to help fund civil war in the region. Suppliers provide services to a
wide range of industries, particularly in the electronics field, and therefore revenues
generated from supply to mobile phones are not highly important to them. The same can be
said for marketing and advertising companies that provide services to the mobile market.
There has been an increase in raw material prices such as steel in recent years, which could
adversely affect manufacturers’ margins. The trend for smart phones has strengthened
supplier power as operating systems such as Windows, RIM, Android, Apple and Symbian is
now an essential component for Smartphone manufacturers. As entry barriers fall in markets
throughout the world it is likely that profitability is likely to flow away from handset
manufacturers to manufacturers of key performance enhancing components and modules
(both hardware and software). Overall supplier power is moderate.
Factors:

                                    Strength Attractiveness
                                             Low                            High
           Parameters                        1        2     3         4     5
           Differentiated input     Medium
           Forward Integration      Low
           Importance            of Very
           quality/cost             high
           No substitute inputs     Medium
           oligopoly threat         Low
           Player dispensability    High
           Player independence      Medium
           Supplier size            Medium
           Switching costs          Medium




                                         Page 5 of 17
                                MOBILE HANDSET INDUSTRY

     1. Differentiated Input – Since basic type of input (keypad, screen) required for handset
         manufacturing is more or less same so they don’t create much of the differentiated input.
         However for high end premium mobile phones, material and technology required is of very
         different type for different manufacturer. Companies could switch suppliers for non critical
         components but are closely tied to them for critical components and sub-systems. Thus
         strength of this parameter is medium and attractiveness of industry is given 4 points.
     2. Forward Integration – Suppliers do not pose any credible threat of forward integration even
         though they are outsourced. Thus strength is low and rating is 4 points.
     3. Importance of quality/cost – Due to increased competition in the industry, quality is
         becoming a necessity for any player to survive. Indian people are becoming more quality
         conscious day by day and they want good quality phone at low cost. Thus strength of this
         factor is high and it can decrease the attractiveness of the industry hence rating given is 2
         points.
     4. No Substitute inputs – Due to availability of large number of substitute supplier for non
         critical components, the strength of this factor is low and attractiveness rating is 5.
     5. Supplier Size - Manufacturers are much larger companies than suppliers and therefore they
         have the ability to influence supply contracts. For example, Nokia carry out assessments on
         their suppliers to make sure they meet standards. . However this is partly because market
         players are so heavily reliant on the quality and efficiency of the software and products
         provided. Moreover, some of the software, such as integrated circuits, can be specific to the
         company, which again increases dependence upon suppliers. Thus the strength of this
         medium and rating given is 3.
      6. Switching Costs – Since requirement of high quality supplies and huge volume requirement,
         it is very tough for any manufacturer to switch its suppliers easily. Also due to requirement of
          specific technology for particular handset, switching costs are very high. Thus the strength is
                                   medium and attractiveness rating given is 2.

                                Drivers of supplier power
                                          Differentiated
                                              input
                                             6
                                             5                  Forward
                   switching costs
                                             4                 integration
                                             3
                                             2                       Importance of
                supplier size                1
                                                                      quality/cost   Series 1
                                             0

                     player                                        No substitute
                 independence                                         input
                             player
                                                           oligoply threat
                          dispesability



2.       BUYER POWER:

          Buyers in the market fall into two categories. Firstly, independent retail outlets and big store
retailers, purchase handsets to sell on to end-users. Mobile network operators constitute the other
section of buyers in the market, although some of these operators are vertically integrated and have
their own retail outlets. There are a small number of large mobile network operators, giving them
some negotiation muscle when bidding for contracts with market players. However it is necessary for
all buyers to stock the latest innovative products if they want to meet end-user demand and this
diminishes their strength in the supply chain. Both: network operators and retailers are occasionally
able to win exclusive deals with manufacturers. Overall buyer power is moderate.



                                                   Page 6 of 17
                               MOBILE HANDSET INDUSTRY



Factors:
                                                  Attractiveness
                                      Strength Low                                 High
           Parameters                             1         2      3       4       5
           Backward Integration       Low
           Buyer Independence         Medium
           Buyer size                 High
           Financial Muscle           High
           Low cost switching         High
           Oligopsony Threat          Less
           Price Sensitivity          Medium
           Product Dispensability     Medium
           Tendency to switch         High
           Undifferentiated Product   Medium


   1. Buyer Size – Since there are so many small and different buyers, they are source of
      attractiveness for new players. Thus the strength is high and rating given is 5.
   2. Low cost switching – Switching cost is very low for buyers as there are so many different
      handsets available at different prices. Thus the buyers have power to switch easily. Hence the
      strength of this factor is high and it decreases the attractiveness to some extent. However due
      to brand loyalty they might not switch easily which result in rating of 2.
   3. Price sensitivity – Since India is growing at an average rate of 8% since last decade, income
      level has gone significantly. Lifestyle of people has changed to a great extent. Status is one of
      the desirable factors in the handset. But still much of Indian population lives in rural and
      semi-urban population, people are somewhat price sensitive. Thus the strength of this factor is
      medium and rating given is 3.
   4. Tendency to switch – Since the switching cost is not so high, people tend to switch mobile
      phone if they are unsatisfied with the current phone or if some other phone with better feature
      is launched. Thus the strength of this factor is high and rating given is 2 as buyer has some
      power.
   5. Undifferentiated product – Majority of mobile phone provide all the basic facilities like
      calling, texting, alarm, calendar, camera, radio etc. Thus point of differentiation lies mainly in
      price and other special feature like GPS, Music player quality, WiFi etc. Thus if we look
      across different segments, we can see many differentiated product and also some phone are
      highly differentiated. Thus the strength of this factor is medium and rating given it 3.
   6. Financial Muscle – Since the wholesale buyers and distributors are in good financial
      position, mobile manufacturer need not worry much about the business with them. Hence the
      strength of this factor is medium and rating given is 5.
   7. Background Integration – Since it requires very high investments and high expertise, small
      retailers and distributor cannot background integrate easily. Also as of now we have not seen
      any backward integration. Thus the strength is low and rating given is 4.




                                             Page 7 of 17
                           MOBILE HANDSET INDUSTRY

                              Drivers of buyer power
                                       Backward
                                      integration
                                        6
                      price             4                   Buyer
                    sensitivity                         independence
                                        2
                                                                         Series 1
                                        0
                Oligopsony
                                                            Buyer size
                   threat

                          Low cost                  Financial
                          switching                  muscle



3.     NEW ENTRANTS:

        The overall threat to mobile handset industry due to new entrants is moderate. The
reason for moderate risk is due to the fact that companies in electronic equipment
manufacturing can easily venture into mobile industry owing to similar technology. Examples
are success of Blackberry, HTC and other smart phones. All of the established mobile phone
manufacturers are now following suit by launching their own smart phones, which suggests
that this section of the market is likely to see significant growth over the next few years,
luring newcomers with revenue perspective.

Problems:

1. For entirely new entrants, the scenario is difficult because they have to compete in
   technology with already established big players like Nokia, Samsung, and Motorola etc.
   They will require huge capital outlay not only in production facilities but also in research
   and development.
2. There are stringent laws relating to science-based regulation and the adoption of emission
   guidance by the International Commission on Non-Ionizing Radiation. Furthermore
   mobile manufacture is closely monitored with studies being conducted on the possible
   side effects of electromagnetic fields produced by mobile phones.
3. Though buyers may have good disposable income and youngsters may have fad to change
   their handsets very frequently but they rely on established players who in recent times are
   coming up with new, fancy and cost effective models catering to the needs of the
   consumers. So new entrant will find it difficult to establish itself and compete at the same
   level of innovation by creating not only a share of market but also share of mind.


Statistics:
        In Indian handset industry, the number of new entrants has almost doubled to 68 and
market share which they now hold is around 45 percent. New entrants include Indian
manufacturers like micromax, spice,Karbonn, Chinese player Bird, Taiwan-based DBTel and
Taiwan-based BenQ etc.




                                             Page 8 of 17
                          MOBILE HANDSET INDUSTRY


Brand                                            Percent share
Nokia                                            52
Sony Ericsson                                    8
Samsung                                          6
Other(legal)                                     7
Gray                                             27



Factors:
                                                      Attractiveness
                                   Strength           Low                            High
                                                      1         2      3       4     5
 Market Growth                     High
 cost switching                    Low
 Fixed Cost                        Low
 Regulation                        Low
 Access      to     channel   of
 Distributions                     Moderate
 Other Brands                      Strong
 Product                           Undifferentiated
 Access to material                Easy
 Scaling                           Unimportant

1.     Market growth: The mobile handset market is growing at a very fast pace. “India’s
mobile handset market touched 100.9 million units in the year ended June 2009, recording a
growth of 6.7% from 94.6 million units in the previous year ended June 2008, according to
IDC India.”




        Figure: India Quarterly Mobile Handsets Market (Source:IDCindia)
2.      Low cost switching: Since there are huge number of mobile handset providers with
similar features and similar price range, it poses threat with new entrants as market share of
existing players might come down.

                                          Page 9 of 17
                           MOBILE HANDSET INDUSTRY

3.      Little Regulation: Very few regulations like “International Commission on Non-
Ionizing Radiation” check that harmful radiations and environmental norms are followed by
the manufacturers thus making their entries easy.
4.      Undifferentiated product: Since products offered by this large gamut of providers
differ very less in terms of features, style, price and durability, they make entry of new
players fancy and attractive.
5.      Weak Brands: If we look at the mobile handset industry, brands are very strong.
Nokia, Samsung, LG, Motorola etc command respect because of their quality, affordable
prices, availability and variety thereby making new entrants think twice before entering this
arena.
6.      Low Fixed costs: Though fixed costs are low in setting up of the industry but
continuous investment in R&D and other marketing related expenses make it difficult for
entrants to invest freely or venture into mobile handset industry.
7.      Distribution Accessible: it is quite attractive because number of mobile dealers in
India had grown manifolds. Opening of stores like ‘Mobile store’, ‘Nokia priority centre’ and
other stores owned by RPG and Virgin makes it attractive for entrants because they do not
need to setup their own distribution centres.


                   Factors Influencing entry of new players
                                                Market Growth
                                                   5
                                Scaling            4                 Switching Cost
                                                   3
                                                   2
                         Supplier                  1                           Fixed Cost
                                                                                            Series 1
                                                   0


           UndifferentiatedProduc...                                      Regulation

                                                                Distribution
                                       Brands
                                                                  channel




 4.    SUBSTITUTE:

        Threat from substitutes is very low because potential substitutes are landlines, e-mail,
 networking sites, messengers (skype, gtalk, yahoo messenger) etc. But it can be said that
 threat from such substitutes is quite low. Landline, once dominant player is in declining
 stage. E-mails and networking sites can never be perfect substitutes for mobile phones.
 Many mobiles now provide their users with the internet, TV, GPS and mp3 functions. With
 these features in offering and complete mobility at affordable prices, any significant threat
 from the substitutes is ruled out.




                                            Page 10 of 17
                              MOBILE HANDSET INDUSTRY

Statistics:

        Telephone Subscribers (Wireless and Landline): 787.28 million (Dec 2010)
        Land Lines: 35.09 million (Dec 2010)
        Cell phones: 752.19 million (Dec 2010
        Annual Cell phone Addition: 227.04 million (Dec 2009 - 2010)
        Monthly Cell phone Addition: 22.62 million (Dec 2010)

    It can be clearly seen that number of cell phone users is far above than that of land line
users. Also looking at the number of monthly cell phone addition, it is quite close to the
number of land line users. It can be conveniently concluded that there is no serious threat
from landline which is close substitute of mobile users.



Factors:

                                          Strength         Attractiveness
                                                           Low                                 High
                                                           1        2       3              4   5
         Availability     of      close
         substitutes                      low
         Switching Cost                   low
         Beneficial alternative           not enough
1.      Availability of close substitutes: This poses a very low threat because advantages
offered by mobile phones include voice services at affordable rates, complete mobility and
value added services. This list not being exhaustive clearly surpasses any other substitute.
2.      Switching Cost: As far as switching costs are concerned, they are low but lack of
potential substitute dismisses the threat that could have cropped because of low switching
cost.
3.      Beneficial alternative: There may be services offered on internet which cannot be
availed on mobile phones but it can never replace mobile phones. Recently i-pad and palm
computers have come up but they are very costly and at the same time not convenient to
carry. Landlines on other hand do not offer any other service apart from voice calling which
is not what generation look out for.

                             Factors influencing the threat of
                                        substitutes
                                                Close
                                             alternative
                                               4

                                               2
                                                                                Series 1
                                               0

                           Beneficial                          Switching
                           alternative                           cost



5.       RIVALRY:
                                               Page 11 of 17
                          MOBILE HANDSET INDUSTRY

       This market is mostly dominated by a few large well known companies such as LG,
Samsung, Nokia and Motorola, which intensifies competition. Also present in the market,
however, is a second tier of small manufacturers with phones that are targeted towards niche
markets or produced for specific regions. Market penetration is high and in such conditions
well established mobile phone firms, such as Motorola, have responded by creating growth
opportunities through a high generation of replacement handset sales.

Statistics:
Based on IDC India, Nokia's market share dropped significantly to 36 percent in the second
quarter, from 56.8 percent in the same quarter last year and further drop to 31.5 percent in the
third quarter, reflecting the growing share of Chinese and Indian vendors of low-end mobile
phones.


            Sour     Date        Nok    SAMSU          LG        ZT        App       RI    Othe
            ce                   ia     NG                       E         le        M     rs
            IDC      Q4/20       30.8   20.1%          7.6       4.2       4.0             33.2
                     10          %                     %         %         %               %
            Gartn    Q3/20       28.2   17.2%          6.6                 3.2       2.9   33.0
            er       10          %                     %                   %         %     %


Factors:
                                                 Attractiveness
                                 Strength        Low                                       High
                                                 1           2         3         4         5
            No              of
            Competitors          High
            Industry Growth      High
            Fixed Cost           Low
            Differentiation      Low
            Switching Cost       Low
            Competitor Size      Important
            Storage cost         low
            Exit Barrier         High
            Expansion            Easy

1.      Number of Competitors: penetrated by large number of brands, still it poses little
threat because each has their own production facilities, distribution centers and clientele base
which it needs to retain by investing regularly in R&D which till now companies have been
able to do so. With growing market if competitors are close competitors, they still have lot of
untapped potential in terms of rural market.
2.      Industry growth: Mobile handset industry is growing very fast with giving lot of
opportunities to not only existing players but also new entrants and thus this is an area of high
opportunity and threat at the same time.



                                             Page 12 of 17
                            MOBILE HANDSET INDUSTRY




India Mobiles Phones Market value forecast(Source: Data Monitor)
3.       Fixed cost: the fixed cost involved in this industry is not very high but still it is high
on attractive parameter because this is an advantage to all the players who have to spend high
on R&D and marketing and building efficient supply chain.
4.       Differentiation: Apart from physical touch and few advantages here and there, most of
the features offered by handset providers are almost similar. It makes very necessary for
companies to invest a lot of time, money and resources in it to make their products stand out
from other players offerings.
5.       Switching Cost: it is costing very less to customers to change their handsets. Also
offerings of different players with similar features fall almost in similar price range. Thus it
makes difficult for companies to retain customers who are not loyal by constantly offering
new products.
6.       Competitor size: very important factor as established players who are very big in size
are able to price their quality products at low price.
7.       Exit Barrier: with lot of investment made in set up, R&D and marketing, lot of things
are at stake and it becomes difficult for companies to exit from the industry so easily.


                                   Drivers of degree of rivalry
                                             No. of
                                           competitors
                                             6
                                             5               industry
                          expansion
                                             4                growth
                                             3
                                             2
                    exit barrier             1                    fixed cost
                                             0                                    Series 1


                     storage cost                               differentiation

                              competitor
                                                         switching cost
                                 size




                                             Page 13 of 17
                            MOBILE HANDSET INDUSTRY

         LIFE CYCLE ANALYSIS OF MOBILE INDUSTRY

Mobile handset industry can be classified to be one in growth stage.




                       Some of the general characteristics of growth stage are:
   1.   Rapid climb in sales.
   2.   Early adopters like the product and additional consumers start buying it.
   3.   New competitors enter, attracted by the opportunities.
   4.   Sales rise much faster than promotional expenditures, causing a welcome decline in
        the promotion-sales ratio.
Now some of the strategies adopted by firms to sustain rapid market growth are:
   1.   It improves product quality and adds new product features and improved styling.
   2.   It adds new models and flanker products.
   3.   It enters new market segments.
   4.   It increases its distribution coverage and enters new distribution channels.
   5.   It shifts from product-awareness advertising to product-preference advertising.
   6.   It lowers prices to attract the next layer of price-sensitive buyers.
The mobile handset industry in India is in growth stage which can be attributed to the reasons
below mentioned:
   1. Growth story of Mobile industry in India can be summarized in following manner,
      a. Market volume: The Indian mobile phones market grew by 27.7% in 2009 to
         reach a volume of 117 million units.
      a. Market volume forecast: In 2014, the Indian mobile phones market is forecast to
         have a volume of 206.7 million units, an increase of 76.7% since 2009.




                                                                                  India   mobile
        phones market value forecast: $ million, 2009–1
         India mobile phones market volume forecast (source:datamonitor)

                                            Page 14 of 17
                         MOBILE HANDSET INDUSTRY


      The Indian mobile phone market has experienced rapid, double-digit growth in recent
      years and although deceleration is expected towards 2014, further double-digit growth
      is forecast.
   2. Another characteristic of mature industry is entering of new competitors attracted by
        opportunities. As have been shown in previous point market forecast for mobile
        industry is very bright and in recent past many new players have emerged. Some of
        the emerging Indian player are Maxmobile, Karbonn, spice etc.
        India mobile phones market segmentation by value is,
Category                                        % share
China                                           43.7
Japan                                           25
India                                           11.5
South Korea                                     9.0
Rest of Asia-Pacific                            10.7

      (Source: Datamonitor)
   3. Some of the emerging opportunities which will be leveraged and bring huge revenues
      to the firm are,
      a. An area of potential growth is mobile banking (m-banking). There are more than
          600 million users of mobile phones in India but only 40 percent of them have
          bank accounts and less than 10 percent of those use even net banking. But this is
          an area of huge potential and will bring revolution not only in banking but also
          mobile industry.
      b. Smartphone sales in the country accounted for 5.2% of total handset sales in the
          first quarter of 2010. Gartner projects a growth of 18% in Smartphone sales by
          2014. Also these smart phones or business phones have huge potential where
          executives and working professionals want to keep themselves online and best
          way to do so is through mobile. Blackberry, Nokia, and HTC are important
          players in this sector.
      c. 3G is another big revolution bound to happen in India with its emergence 3G
          enabled devices will be in huge demand. This will improve video quality and
          internet speed. As per reports by Gartner 3G subscribers will grow manifolds
          within next 3 years.
      d. Lower tariff plans and value added services also contribute a lot in replacing not
          only landline but also forcing each member in a family to own a mobile phone for
          self. 24 hours connectivity is thing of the present and with mobiles penetrating in
          middle class households like anything, this market will grow as rural sector ia still
          largely untouched which has huge untapped potential.
      e. Mobile applications form yet another important promising sector. More than 1,000
          developers in India create mobile apps such as games, social networking apps, and
          utility apps. However, these apps are not India-specific and cater to a global
          audience. With 3G and improved connectivity, India’s consumers will be able to
          take advantage of the home grown mobile apps.

   4. The strategies adopted by firms in growth phase have been mentioned above and on
      close observation it can be seen that similar strategies are being adopted by players in
      the mobile industry,


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                         MOBILE HANDSET INDUSTRY

       a. Recently it has been observed that all players, big or small are introducing
          products with features as innovative as they can to attract customers who want
          product differentiation. Example is mobile phone for elders with enlarged keys so
          that they do not have any problem visually locating keys. Another example is of
          dual sim phones.
       b. Not only new features are being added but also companies are coming up with
          new models as fast as they can. These phones range from slider to flap to classic
          phones offering variety at reasonable price range.
       c. Also it is observed that the advertisements of mobile phones earlier used to be
          more of introducing their products. Recently trends have changed. Advertisements
          now focus more on features that are being offered by the companies to lure the
          customers.
       d. If prices of the products are talked about, then clearly there is a kind of price war
          in this industry. Phones have come down in the buying range with amazing
          features and looks. Blackberry phones are now available in the range of
          Rs. 10000-12000. Prices have been brought down drastically so that products can
          be made available to different segment of people who were till now never
          touched.


Conclusion:
With a large percentage of its population being young, India is expected to top the world's
youth mobile market by 2011. For the techno savvy youth, a phone should combine cool
looks with utility. Considering the various factors driving the growth of the mobile market in
India, the young, dynamic, and developing mobile market will offer great opportunities and
challenges for local as well as international players. The recent enormous growth of the
industry has attracted many players. Currently, there are 88 companies in India which are
manufacturing mobile handsets. Some of the main companies are Airfone, Beetel, Maxx,
Lava, Olive, Acer, CAPLIGHT, Airnet, etc. This is supporting the increased teledensity in
India. International studies have proven that with every 1 percent increase of teledensity,
there is an increase of 3 percent in the GDP of that country. Thus, this booming mobile
industry is now playing an active part to make India a strong economy of the world.




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                          MOBILE HANDSET INDUSTRY

References:
(n.d.). Retrieved march 2, 2011, from http://www.gartner.com/it/page.jsp?id=1412313

handset market-gsm and cdma handset dual sim phones. (n.d.). Retrieved March 5, 2011, from
http://articles.economictimes.indiatimes.com/2010-06-22/news/27580838_1_handset-market-gsm-
and-cdma-handset-dual-sim-phones

Report: Global phone and smart phone Market. (n.d.). Retrieved February 27, 2011, from
http://www.the-infoshop.com/report/mama170754-mobile-ph-smartph.html




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