The Hindu Business Line : Sales of high-end mobiles decline

Mumbai, Dec. 1 Consumers seem to be holding onto their mobile phones a little longer, not upgrading to high-end gizmos as often as they use to, because of the liquidity-crunch-caused strain on their wallets.

Inspite of record additions in new subscribers in the country, the sales of handsets is marginally down by 2-3 per cent in the third quarter of the current fiscal; this could be attributed to the drastic fall in replacement sales of high-end mobile handsets, according to Mr Anshul Gupta, Principal Research Analyst, Gartner.

High-end phones are the ones costing more than Rs 15,000 such as Sony Ericsson-XPERIA X1, Nokia-N96 and Motorola-Q9h. Existing phone owners go for mobiles costing upwards of Rs 15,000 for fashion, style, utilities and new features.

“Earlier, replacement sales used to be around 25 per cent of total sales. At the start of 2008, we had forecast replacement sales to go up to 50 per cent of overall sales. But now the trend has reversed and this percentage is coming down,” said Mr Gupta.

Going for the best

When the economy was booming, existing phones owners would replace their phones every nine-twelve months “to keep up with the joneses” – they would buy the best and go for more expensive phones each time, Mr R. Subramanian, Managing Director, Subhiksha Trading Services Ltd - which owns Subhiksha Mobiles, a retail chain for mobile handsets.

“In an economy like in the recent months, consumers have stopped replacing phones for longer periods — say 18-24 months. And when they replace, they are more price-focused and end up buying the least expensive phone they do not feel ashamed about using,” said Mr Subramanian.

The Chennai-based company expects revenues from phones upwards of Rs 15,000 to account for 10 per cent of Subhiksha Mobiles overall revenues this year as against 15 per cent last year.

Contrary trend

However, Mr Rajiv Agarwal, Chief Executive Officer of the Essar-Group-promoted ‘The MobileStore Ltd’, does not see a slowdown in the sale of high-end handsets. On the contrary, he expects sales to further go up in December as consumers prepare for the festival season.

However, he does agree that people are in a ‘wait and watch mode’ and hence some buying decisions could get postponed.

Chennai-based mobile phones retailer UniverCell generates 80 per cent revenues from cell phones priced below Rs 10,000, while the remaining comes from mobiles priced upwards of Rs 10,000, according to the company’s Vice-President (Marketing), Mr Ramesh Barath. He does not expect this mix to change. “This sector has not been impacted so far,” he said.

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