Mobile Phones in India
Mobile Phones Market India
Headlines
·
In 2007, retail sales of handsets
grew by 39.6% in volume terms, and 27.0% in value terms, over their 2006
levels.
·
The service provider Reliance
has begun to advertise its private label Reliance Classic actively, and it has
become a significant player.
·
Sales of handsets increased by
25.2 million units over their 2006 level in 2007.
·
The average unit price in 2007
was Rs 2,808, down by Rs 281 from 2006.
·
Nokia is the dominant player in
the Indian retail market for handsets, with a 53.6% share in 2006.
·
Volume sales are forecast to
reach 304.3 million by 2012, at a CAGR of 28.0% during 2007–2012.
Trends
·
Personal ownership of mobile
phones in India is increasing dramatically.
Household penetration has grown from 8.0% in 2005 to an estimated 19.5%
in 2007, although this remains low by international standards, indicating
significant potential for future growth from first-time users. At the same time, the replacement cycle has
become shorter. About 65% of mobile phone
users change their handset every two years, so the size of the replacement
market for phones was about 35 million units in 2007. Industry estimates point to an estimated 15%
of users who now report changing their handsets every six months.
·
The handset has now become a
status symbol in India, and style and design are also playing influential roles
in consumers’ decision-making.
Feature-rich phones, with mp3, radio and camera functions, are taken for
granted and the upper-end user is looking for something more. LG Shine and Motorola phones have been widely
accepted on grounds of style.
·
Sales of smart phones are also
growing at an above-average rate. They
have eaten into the traditional PDA market, which is now on the decline, as
business users prefer a voice-enabled digital device.
·
The strong growth in advanced
mobile phones has slowed down growth in the sales of other products, such as
portable mp3 players, digital cameras and radios, in the mass market. Instead of buying 3 mp digital cameras,
consumers will opt to upgrade their phones to camera phones.
·
3G handsets are now being sold
in India, although 3G networks are not prevalent in the GSM networks. CDMA networks like Reliance and Tata Indicom
have moved to CDMA 2000, which is a 3G system.
This led to growth in the market for these phones during 2006–2007.
·
With a strong replacement
market, the handset-only segment is very significant in India. As handset prices fall, and competition
between service providers grows, bundled product + service offers are now being
seen more frequently in the advertising media.
·
The average unit price fell by
just over 50% between 2004 and 2007, when it stood below Rs 3,000. While consumers are upgrading their phones,
there is also a strong in decline in the prices of like-for-like phones. Colour phones have become the default
minimum.
·
In 2007, an estimated 100,000
outlets were selling mobile phones in India, and the vast majority were
independents, although there has been strong growth in sales of mobile phones,
accessories and recharge cards through chain stores since 2006. In 1998, 75% of
retail sales of handsets were made through telecoms operators’ outlets, but
their share had fallen to 42% by 2007, as mobile phone specialists outlets
spread across the country, ranging from small, hole-in-the-wall outlets to
larger, customer-friendly stores. The
large chains of stores are Subhiksha Mobile, with 500 stores, The MobileStore,
with close to 250 and , as well as the Future Group’s ConvergeM outlets, which
are like shops-in-shops within its big hypermarkets.
Competitive Landscape
·
Nokia dominates the Indian
market in mobile phones with a 53.6% volume share in 2006. With a manufacturing base within the country,
and reliable, trouble-free phones, the brand has a high level of awareness,
familiarity and loyalty in the country.
·
All the leading brands –
including Nokia, LG, Motorola and Sony Ericsson – are actively promoting their
products in the mass media, and are advertising either their top-of-the-line
aspirational models or their low-cost, mass market handsets.
·
mp3 is a highly advertised
feature, along with ringtones and wallpapers.
Nokia has associated itself with music events such as rock concerts,
carrying special promotional ringtones or phone-in/SMS contests.
·
Vodafone, the British telecoms
company, entered the Indian market in 2007, by buying a majority stake in
Hutchison Essar. The network service has
already been switched from Hutchison to Vodafone, and a massive rebranding
exercise has been under way, nationwide, since September 2007. The company’s marketing efforts include
bundled phone+service offers and low-cost handsets under the Vodafone label.
Prospects
·
It is anticipated that more
than 1 billion handsets will be sold in India during the forecast period,
driven by strong replacement sales, together with growth into new areas fuelled
by growth in telecoms services.
·
The expected growth has
attracted 30 players who have reportedly bid
300 applications for an additional 23 zones in order to operate mobile
networks.
·
The Indian government is
expected to hold an auction for the 3G spectrum by 2008. Once this is released, growth of 3G handsets
will be higher, as service providers advertise and promote the benefits of a 3G
network.
·
Private labels are likely to
lead to a reduction in retail prices, as phone manufacturers offer cheap
handsets to service providers. While
Reliance is already established in this private label segment, Tata Indicom and
Vodafone also entered the fray in 2007..trend towards labelling phones with the
names of service providers will also lead to a growth in the sales of bundled
phones, as opposed to the phone only handsets that currently dominate the
market. Price reductions will make
mobile phones affordable to a greater number of Indians, and boost the market
for first-time users.
·
At the other end, consumers
seeking to replace their existing handsets with more recent models equipped
with high-end features are looking for more features and better
connectivity. The government’s release
of extra spectrum will improve the quality of service, and also allow for the
provision of more data-driven services.
GSM operators will also offer 3G platforms, which will increase the
demand for 3G handsets during the forecast period. Demand for feature-rich handsets will be
greater, as will the demand for games and Internet capability.
·
Manufacturers will use their
high-end phones to drive sales towards their brands, while at the same time
making OE deals with private labels for the mass market. Co-branding of products is also a
possibility, especially for strong brands like Nokia, Motorola, Sony and LG.
·
More manufacturers will set up
manufacturing units in the country, to cater to the large demand quickly and
cheaply.
Sector Data
'000 units
2002 2003 2004 2005 2006 2007
Mobile phones 4,087.4 15,956.2 18,882.0 35,140.4 63,408.1 88,608.7
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
% volume growth
2006/07 2002-07 CAGR 2002/07 TOTAL
Mobile phones 39.7 85.0 2,067.8
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
Rs million
2002 2003 2004 2005 2006 2007
Mobile phones 20,602.0 80,886.0 107,958.2 113,870.8 195,860.4 248,820.5
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
% current value growth
2006/07 2002-07 CAGR 2002/07 TOTAL
Mobile phones 27.0 64.6 1,107.8
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
% units
2002 2003 2004 2005 2006 2007
1G 0.0 - - - - -
2G 90.0 48.0 35.0 22.0 12.0 5.0
3G 0.0 1.0 2.0 4.0 8.0 20.0
4G 0.0 - - - - -
Other 10.0 51.0 63.0 74.0 80.0 75.0
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
% retail volume
Company 2002 2003 2004 2005 2006
Nokia India Pvt Ltd 26.9 31.0 53.1 56.2 53.6
LG Electronics India Ltd 23.5 33.3 14.3 17.2 11.2
Motorola India Pvt Ltd - 2.4 4.3 5.0 10.8
Samsung India 26.5 13.2 10.2 7.1 5.9
Electronics Ltd
Sony Ericsson Mobile - - 3.2 4.3 5.6
Communications AB
Kyocera Wireless India - 0.7 1.1 0.7 0.7
Huawei Technologies Co - - - 0.7 0.7
Ltd
Pantech & Curitel - - 0.7 0.6 0.6
Communications Inc
Others 23.1 19.4 13.1 8.2 10.9
Total 100.0 100.0 100.0 100.0 100.0
Source: Trade
associations, trade press, company research, trade interviews, Euromonitor
International estimates
% retail volume
Brand Company 2003 2004 2005 2006
Nokia Nokia
India Pvt Ltd 31.0 53.1 56.2 53.6
LG LG
Electronics India Ltd 33.3 14.3 17.2 11.2
Motorola Motorola
India Pvt Ltd 2.4 4.3 5.0 10.8
Samsung Samsung
India 13.2 10.2 7.1 5.9
Electronics
Ltd
Sony Ericsson Sony Ericsson Mobile - 3.2 4.3 5.6
Communications
AB
Kyocera Kyocera
Wireless India 0.7 1.1 0.7 0.7
Huawei Huawei
Technologies Co Ltd - - 0.7 0.7
Pantech Pantech
& Curitel - 0.7 0.6 0.6
Communications
Inc
Others 19.4 13.1 8.2 10.9
Total 100.0 100.0 100.0 100.0
Source: Trade
associations, trade press, company research, trade interviews, Euromonitor
International estimates
% retail volume
2002 2003 2004 2005 2006 2007
Store-based retailing 100.0 100.0 100.0 100.0 99.9 100.0
Supermarkets 0.0 0.0 0.0 0.0 0.0 0.0
Hypermarkets 0.0 0.0 0.0 0.0 0.0 0.0
Discounters 0.0 0.0 0.0 0.0 0.0 0.0
Non-grocery retailers 46.0 46.0 49.0 55.0 55.0 58.0
Mixed retailers 0.0 0.0 0.0 0.0 0.0 0.0
Durable goods retailers 46.0 46.0 49.0 55.0 55.0 58.0
Other store-based 54.0 54.0 51.0 45.0 44.9 42.0
retailing
Non-store retailing 0.0 0.0 0.0 0.0 0.1 0.0
Home shopping 0.0 0.0 0.0 0.0 0.0 0.0
Internet retailing 0.0 0.0 0.0 0.0 0.1 0.0
Direct selling 0.0 0.0 0.0 0.0 0.0 0.0
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Official
statistics, trade associations, trade press, company research, store checks,
trade interviews, Euromonitor International estimates
'000 units
2007 2008 2009 2010 2011 2012
Mobile phones 88,608.7 116,077.4 149,739.9 190,918.3 242,084.5 304,300.2
Source: Official
statistics, trade associations, trade press, company research, trade
interviews, Euromonitor International estimates
% volume growth
2011/12 2007-12 CAGR 2007/12 TOTAL
Mobile phones 25.7 28.0 243.4
Source: Official
statistics, trade associations, trade press, company research, trade
interviews, Euromonitor International estimates
Rs million
2007 2008 2009 2010 2011 2012
Mobile phones 248,820.5 325,954.8 420,481.7 536,114.1 679,792.7 854,499.5
Source: Official
statistics, trade associations, trade press, company research, trade
interviews, Euromonitor International estimates
% constant value growth
2007-12
CAGR 2007/12
TOTAL
Mobile phones 28.0 243.4
Source: Official
statistics, trade associations, trade press, company research, trade
interviews, Euromonitor International estimates
