After a tough year, Indian handset brands are looking to up the ante in a highly competitive market

Till a few days ago, 22-year old Akash was ecstatic about showing off his fancy new Apple iPhone, which cost him close to Rs 50,000, with voice recognition and all the works!

But his exclusivity and the joy it gave him was short-lived. A couple of days later, one of his friends showed him a Micromax “A50 superfone” which had a similar speech recognition feature at one-tenth the iPhone's price.

Push mail, messenger chat, speech recognition are no longer restricted just to the Blackberry, Apple , Samsung and Nokia. These features have become a part of the Indian handset vendors' repertoire to woo the budget buyer.

Indignant MNCs term this “aping”; but experts feel that replicating popular features from global smartphone-makers can be a good marketing strategy, especially, in view of heightened competition.

“Indian handset vendors are now developing phones with new applications for social media, cricket and Bollywood. Offerings for other industries such as healthcare, banking, retail, education are also coming in,” says Hemant Joshi, Partner, Deloitte Haskins & Sells.

Tough run

The focus on feature-rich smartphones has been a forced one on the local handset firms. Back in 2008-09, Indian handset makers unleashed the price-war demon on the more popular brands. With dual-SIM phones and low-cost feature phones, companies like Mircromax, Lava and Karbonn had captured nearly 30 per cent of the market.

But soon deep-pocketed MNCs recovered, rolled up their sleeves and took back the market. Price cuts, low-cost dual-SIM handsets, innovative features such as ‘Touch and Type' brought Nokia and Samsung back on top in the battle for value and volume (mass market segment).

“Due to intense competition, margins have reduced to 2-3 per cent for manufacturers in feature phones. Price war is not an option. Consolidation might happen in the crowded Indian OEM market,” Joshi told eWorld.

Voice & Data's June 2012 telecom industry survey claims that revenues in the country's mobile handset market dropped by nearly 5 per cent to Rs 31,215 crore in 2011-12 (Rs 33,031 crore in 2010-11).

The drop was primarily in feature-phone sales and lower average selling values. According to the survey, barring Karbonn and Lava, none of the Indian handset players could face intense competition. Their main stay - feature phones - saw a negative growth.

Make or break

Clearly, Indian handset vendors realise that they have to move up the value chain if they want to survive. Upping the ante, some handset makers are readying for the second round of the battle.

Micromax, for instance, is banking on the artificial intelligence speech handset assistant (called AISHA) application that translates speech into words. This is the equivalent of Apple's Siri but the Micromax's version is supposed to have accent neutral voice recognition. It can accept commands, read out and note messages and help inquire about missed calls. (Siri requires a specific accent, unofficially, at least, and often people from different countries cannot give voice commands on iPhone 4S.)

Karbonn Mobiles, having recently forayed into the smartphone segment, has developed its own instant messenger and push mail service that is similar to BlackBerry. It also has its own App Store (market place for downloading applications) and is likely to introduce ‘Touch and Type' offerings soon.

“This year, we will be focusing on the OS (operating system) vendors along with an active engagement plan with mobile chipset makers to develop technology for our consumers,” Shashin Devsare, Executive Director, Karbonn Mobiles, said.

Lava too forayed into the smartphone segment by tying up with chip-maker Intel and launched the Xolo phone priced at around Rs 22,000.

Intex, with 15 handset models, has differentiated products that include offerings designed for the visually impaired, project phone and 3D handsets.

Marketing

Handset makers, in order to improve brand visibility have been spending a lumpsum that include sponsoring cricket matches. Hence, there has really been an upswing in marketing costs.

Intex, for example, during IPL-V tied up with cricketers from Rajasthan Royals to launch its Android-based tablet, i-Tab. The company admits that in the last few years, investment in marketing and communication has gone up more than 100 per cent.

Karbonn's Devsare confirmed to a 30 per cent increase in marketing spends – to Rs 195 crore – for current fiscal over the Rs 150 crore it spend in 2010-11.

Additional Freebies

To make their products more attractive vendors are not averse to freebies either. Intex, for example, offered free 3G data card with its i-Tab. Karbonn too bundles data cards with its tablet PCs.

“We will soon be offering a 4GB memory card with one of Intex touch-enabled phones at no extra cost. Our warranty starts from the day the phone is activated as against other vendors who start it from the day of purchase,” Intex's Sanjay Kumar, GM – Mobile Business, said.

abhishek.l@thehindu.co.in

(This article was published on July 26, 2012)
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