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7/29/2019 Mobile phones India

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MOBILE PHONES IN INDIA

Euromonitor International

September 2011


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M O B I L E P H O N E S I N I N D I A P a s s p o r t I

E u r o m o n i t o r I n t e r n a t i o n a l

LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1

Trends ......................................................... ................................................................. ................ 1Competitive Landscape ..................................................... ........................................................... 2Prospects ..................................................................................................................... ................ 2Category Data ........................................................ ................................................................. ..... 3

Table 1 Sales of Mobile Phones: Volume 2005-2010 ............................... ................ 3Table 2 Sales of Mobile Phones: Value 2005-2010 .................................................. 3Table 3 Sales of Mobile Phones: % Volume Growth 2005-2010 ............................... 3Table 4 Sales of Mobile Phones: % Value Growth 2005-2010 .................................. 3Table 5 Mobile Phones Company Shares 2006-2010 ............................................... 4Table 6 Mobile Phones Brand Shares 2007-2010..................................... ................ 4Table 7 Sales of Mobile Phones by Distribution Format 2005-2010 .......................... 5Table 8 Forecast Sales of Mobile Phones: Volume 2010-2015................................. 5

Table 9 Forecast Sales of Mobile Phones: Value 2010-2015............................... ..... 5Table 10 Forecast Sales of Mobile Phones: % Volume Growth 2010-2015 ................ 6Table 11 Forecast Sales of Mobile Phones: % Value Growth 2010-2015 ................... 6Table 12 Sales of Smartphones by Operating System 2008-2010.............................. 6Table 13 Sales of Mobile Phones by Type of Contract 2005-2010 ............................. 6


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M O B I L E P H O N E S I N I N D I A P a s s p o r t 1


MOBILE PHONES IN INDIA

HEADLINESMobile phones grows by 12% in 2010 to reach sales of Rs500 billion

Low-priced phones driving the growth by attracting masses

Smartphones the fastest-growing volume category, with 40% growth in 2010

The average unit price in 2010 was around Rs3,300, with minimal price movement from 2009

Nokia India Pvt Ltd leads mobile phones with a 51% retail volume share in 2010

Mobile phones is expected to register a 4% constant value and 0.2% volume CAGR in the

forecast period

TRENDS

Many domestic Indian companies as well as multinational players have come up with mobile

phones that cost as little as Rs1,000 per unit. In fact, in 2010, Vodafone introduced a mobilephone for just Rs700. These mobile phones help reach out to the masses and rural consumers,

where the penetration rate for mobile phones is still only around 30%.

The volume growth rate in 2010 was 13%, which was significantly lower than the review

period CAGR of 31%. This is because, in 2006, there was a significant drop in call rates from

mobile phones from Rs3 per minute to Rs1 per minute throughout India. As a result, there was

very sharp growth in 2006 and 2007, which significantly pushed up the CAGR in the review

period.

Smartphones was the fastest-growing category with 40% volume sales growth because such

products are becoming extremely popular among professionals and youngsters as they offer

internet connectivity, e-mail facility etc and help professionals and youngsters to remain

connected to their work and their friends when on the move. The introduction of low-priced

smartphones also reduced the price difference between feature phones and smart phones, thus

making smart phones even more attractive.

The average unit price in 2010 was around Rs3,300, with the average unit prices holding

steady because manufacturers sought to attract rural and lower-income customers.

Since the most popular smartphone Nokia with 74% volume share, the most popular

operating system is also Symbian, followed by Android. The most popular apps are gaming

apps, social networking like Facebook and YouTube, and news and navigation apps.

While the majority of handsets, ie over 65%, are sold as handsets only, a few handsets,

especially for the CDMA technology, are also sold as pay as you go. Subscription contracts

were introduced with the launch of CDMA phones in 2002, but they did not work out well as the

mobile phones used to break down too often and people had to change their numbers to get a

new phone. So the subscription contract sales are negligible in India.

The most important influences on consumers purchasing decisions in feature phones are

looks, style, colour and battery backup. Cellular reception is a problem in some parts of the

country, but it is not a major problem. Electricity access is a major problem for Indians,

especially in the rural areas. Hence, they are looking for mobile phones with really long battery

backup as they sometimes have to remain without electricity for days on end.

The 3G network has not been fully implemented in India. In fact, most service providers only

introduced 3G in 2011. It will take a few more years to fully implement 3G in India. The 4G

network has not even been heard of in India and the government has no immediate plans to

introduce the 4G network in the near future.


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The most important retail channels for mobile phones are specialist retailers specialising in

selling mobile phones only. These may be company owned like Nokia Priority Dealers, Spice

Hotspot or Sony Ericsson franchises or independent retailers specialising in mobile phones only.

In small towns, usual independent electronics specialist retailers contribute maximum to the

mobile phone sales. A few mobile phones are also sold through PCOs and music shops.Department stores and hypermarkets are also expanding their range of mobile phones offered.

COMPETITIVE LANDSCAPE

In feature phones Nokia is the leader with a 50% retail volume share and in smartphones

Nokia has a 74% share. Nokia India leads sales because people find its phones sturdy and

reliable and also because Nokia India offers a very wide variety of phones in all price ranges

and in various styles. Nokia leads the sales in smartphones because it enjoys the first-mover

advantage.

In feature phones, Nokias share decreased by five percentage points. Nokias share has

been steadily declining because other manufacturers have introduced much more stylish and

good-looking models whereas Nokia has not carried out many changes to the styling and looksof its phones. In fact, youngsters today find Nokia phones extremely boring in their appearance

when compared to the mobile phones of other manufacturers, which come in attractive colours

and styles. Also, Nokia took too long to add features like multi-sim to its phones, while other

manufacturers had successfully launched them a long time back.

In smartphones, other manufacturers are eating into Nokias share as they are introducing

more stylish looking models at cheaper prices and with more features such as the iPhone.

Hence, Nokia lost six percentage points in share.

Domestic players like Micromax Informatics, Karbonn Mobiles and Spice Mobility Ltd are

emerging as good competitors to multinational players like Nokia, Samsung, LG and Sony

Ericsson. In fact, these domestic companies had more sales share than Sony Ericsson in 2010.

This is because these domestic companies provide phones with all the desired features and

long battery backup at considerably lower prices. In fact, some models from Micromax and

Karbonn Mobiles have battery backup of 30 days, and this long battery backup was the primary

reason for the success of these domestic brands as they made these models specially for rural

customers.

The most significant new launch of 2010 was the Vodafone150 phone, which is priced at just

Rs700. This is the first time any manufacturer has launched a mobile phone below the Rs1,000

mark. This phone is specially designed to attract the lower-income masses and rural customers.

PROSPECTS

Volume sales of mobile phones are expected to see volume sales stagnate at -0.2% CAGR in

the forecast period, which is significantly lower than the review period CAGR of 31%. This is

because while there was a major drop in call rates in the review period, there is no such change

expected in the forecast period. Also, the mobile penetration rate in India is already over 60%

and even people below the poverty line own a mobile phone, so the room for expansion will be

less in the forecast period than in the review period.

The price, battery backup and looks will be the most important factors for consideration when

purchasing a feature phone. However, urban youths will also look for memory capacity to store

songs as well as camera resolution.

The price and apps supported will be the main deciding factors for smartphones.

Tablets with cellular functionality like the Samsung Galaxy Tab are likely to provide strong

competition to the sales of smartphones in the forecast period, but, in 2010, there was a major


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difference between the prices of tablets and smartphones, making tablets unattractive to most.

However, many mobile phone manufacturers like Micromax Informatics and Olive Telecom are

planning to introduce low-priced tablets, which could intensify the competition.

Microsoft is introducing Windows Phones and has also entered a strategic partnership with

Nokia India, so the outlook for Windows for Mobile Phones is quite bright and it may providestrong competition to Blackberry OS.

The average unit prices in 2015 will be 20% higher lower than the 2010 average unit price

because of the growing preference for the more expensive smartphones, as compared to the

basic, entry level feature phones.

Vodafone 150 is expected to be very popular among lower-income groups and may force

other manufacturers to come up with similar low-priced phones.

CATEGORY DATA

Table 1 Sales of Mobile Phones: Volume 2005-2010

'000 units2005 2006 2007 2008 2009 2010

Feature Phones 38,380.8 69,008.7 104,617.2 115,602.0 128,780.7 143,976.8Smartphones 231.7 697.0 1,808.7 3,212.3 4,535.8 6,350.1Mobile Phones 38,612.5 69,705.7 106,426.0 118,814.4 133,316.5 150,326.9

Source: Euromonitor International from official statistics, trade associations, trade press, company research,store checks, trade interviews, trade sources

Table 2 Sales of Mobile Phones: Value 2005-2010

Rs million2005 2006 2007 2008 2009 2010

Feature Phones 149,591.5 248,321.9 345,167.5 346,893.3 373,604.1 410,964.5Smartphones 5,500.0 15,908.0 40,244.0 60,293.0 70,722.3 88,402.9Mobile Phones 155,091.5 264,229.9 385,411.5 407,186.3 444,326.5 499,367.5


Table 3 Sales of Mobile Phones: % Volume Growth 2005-2010

% volume growth2009/10 2005-10 CAGR 2005/10 Total

Feature Phones 11.8 30.3 275.1Smartphones 40.0 93.9 2,640.4Mobile Phones 12.8 31.2 289.3


Table 4 Sales of Mobile Phones: % Value Growth 2005-2010

% current value growth2009/10 2005-10 CAGR 2005/10 Total


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Feature Phones 10.0 22.4 174.7Smartphones 25.0 74.3 1,507.3Mobile Phones 12.4 26.3 222.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research,

store checks, trade interviews, trade sources

Table 5 Mobile Phones Company Shares 2006-2010

% retail volumeCompany 2006 2007 2008 2009 2010

Nokia India Pvt Ltd 70.2 68.3 65.5 55.8 51.0Samsung India 7.9 8.9 9.8 16.5 17.4

Electronics LtdLG Electronics India 5.9 5.3 4.4 5.7 5.9

Pvt LtdMicromax Informatics - - - 4.0 5.7Karbonn Mobiles - - - 2.9 4.8Spice Mobility Ltd - - - 2.9 3.8Sony Ericsson Mobile 5.5 8.2 5.8 2.9 1.9

Communications ABZTE Corp - - 5.4 1.8 1.9Huawei Technologies Co 0.7 0.7 1.3 1.4 1.5

LtdKyocera Wireless India 0.7 0.7 0.6 0.6 0.7Pantech & Curitel 0.6 0.6 0.6 0.6 0.6

Communications IncResearch in Motion Ltd 0.1 0.1 0.2 0.3 0.4High Tech Computer Corp 0.0 0.1 0.1 0.2 0.3Motorola India Pvt Ltd 6.9 4.6 3.4 1.0 0.1Others 1.4 2.6 2.9 3.4 3.9

Total 100.0 100.0 100.0 100.0 100.0


Table 6 Mobile Phones Brand Shares 2007-2010

% retail volumeBrand Company 2007 2008 2009 2010

Nokia Nokia India Pvt Ltd 68.3 65.5 55.8 51.0Samsung Samsung India 8.9 9.8 16.5 17.4

Electronics LtdLG LG Electronics India 5.3 4.4 5.7 5.9

Pvt LtdMicromax Micromax Informatics - - 4.0 5.7Karbonn Karbonn Mobiles - - 2.9 4.8Spice Spice Mobility Ltd - - 2.9 3.8Sony Ericsson Sony Ericsson Mobile 8.2 5.8 2.9 1.9

Communications ABZTE ZTE Corp - 5.4 1.8 1.9Huawei Huawei Technologies Co Ltd 0.7 1.3 1.4 1.5Kyocera Kyocera Wireless India 0.7 0.6 0.6 0.7Pantech Pantech & Curitel 0.6 0.6 0.6 0.6

Communications IncBlackberry Research in Motion Ltd 0.1 0.2 0.3 0.4


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HTC High Tech Computer Corp 0.1 0.1 0.2 0.3Motorola Motorola India Pvt Ltd 4.6 3.4 1.0 0.1Others 2.6 2.9 3.4 3.9Total 100.0 100.0 100.0 100.0

Source: Euromonitor International from official statistics, trade associations, trade press, company research,

store checks, trade interviews, trade sources

Table 7 Sales of Mobile Phones by Distribution Format 2005-2010

% retail volume2005 2006 2007 2008 2009 2010

Store-Based Retailing 100.0 99.9 99.8 98.5 98.3 98.0- Grocery Retailers - - - 0.8 1.0 2.0- - Discounters - - - - - -- - Hypermarkets - - - 0.8 1.0 2.0- - Supermarkets - - - - - -- Non-Grocery Retailers 100.0 99.9 99.8 97.8 97.3 95.0- - Electronics and 100.0 99.9 99.8 97.8 96.3 93.0

Appliance SpecialistRetailers

- - Mixed Retailers - - - - 1.0 2.0- Other store-based - - - - - 1.0

retailingNon-Store Retailing - 0.1 0.2 1.5 1.7 2.0- Direct Selling - - - - - -- Homeshopping - - - - - -- Internet Retailing - 0.1 0.2 1.5 1.7 2.0Total 100.0 100.0 100.0 100.0 100.0 100.0


Table 8 Forecast Sales of Mobile Phones: Volume 2010-2015

'000 units2010 2011 2012 2013 2014 2015


Source: Euromonitor International from trade associations, trade press, company research, trade interviews,trade sources

Table 9 Forecast Sales of Mobile Phones: Value 2010-2015

Rs million2010 2011 2012 2013 2014 2015




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Table 10 Forecast Sales of Mobile Phones: % Volume Growth 2010-2015

% volume growth2014/15 2010-15 CAGR 2010/15 Total

Feature Phones -8.0 -3.9 -17.9Smartphones 29.0 37.3 387.4Mobile Phones -2.2 -0.2 -0.8


Table 11 Forecast Sales of Mobile Phones: % Value Growth 2010-2015

% constant value growth2010-15 CAGR 2010/15 TOTAL

Feature Phones -8.1 -34.6Smartphones 29.8 268.0Mobile Phones 3.5 19.0


Table 12 Sales of Smartphones by Operating System 2008-2010

% retail volume2008 2009 2010

Windows 10.0 3.0 3.5iOS 0.2 0.3 0.5

Android 0.0 7.5 9.5Symbian 82.1 81.0 76.0BlackBerry OS 7.5 7.9 8.3Other 0.2 0.3 2.2Total 100.0 100.0 100.0


Table 13 Sales of Mobile Phones by Type of Contract 2005-2010

% retail volume2005 2006 2007 2008 2009 2010

Monthly Subscription 5.8 5.4 5.0 4.5 4.0 4.0Pay as You Go 9.0 9.0 9.0 8.0 8.0 8.0Phone Only 85.2 85.6 86.0 87.5 88.0 88.0Total 100.0 100.0 100.0 100.0 100.0 100.0


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