Telecom operator RCom’s decision to sell iPhones (both 5C and 5S variants) under a two-year bundled contract is being viewed with cautious optimism by Indian handset vendors.

Initial brouhaha might see iPhone sales shoot up. But popularity of the bundling model — where phone costs are subsidised through data and call charges — and its adoption by deep-pocket telcos might see mid-segment Indian players bear the brunt in the long run.

Most Indian vendors do not compete with Apple’s iPhone. But the Rs 12,000-18,000 range brackets is a sweet spot for them. Major MNCs still compete in the Rs 20,000-plus price segment.

According to Sudhir Kumar, DGM, Mobile Business, Intex Mobiles, for at least two years, Indian vendors are unlikely to be impacted. But in the long run, if MNCs and telcos adopt bundling in a big way, the high-end devices might come at a subsidised price. Thereby Indian players will lose their cost competitiveness.

“If major mobile-makers start exploring such bundling offers, it might work to the disadvantage of Indian vendors, who mainly compete on cost front. Let’s see how bundling offers shape up,” Kumar told Business Line.

Easy Model

Lava’s Co-founder and Director, SN Rai, held similar views. “Bundling is one of the easiest models for sale of handsets. But honouring contractual obligations is an issue,” he said.

The company, however, would not hesitate to throw its hat in the ring in case bundling offers see increased off-take, Raj said.

“This RCom’s offer will shake-up the market, but it may not impact (non-iPhone) smartphone segment at all. It will definitely see market shares of iPhone go up,” Sandip Biswas, CEO, Lacewood Consulting, said.

The offer might be beneficial for those who were exploring to opt for competing brands like HTC or Samsung.

“The affordable or low to mid-market segment will hardly be impacted,” Biswas added.

Challenging Market

Interestingly, analysts are not ready to give thumbs up to the offer. Indian market presents a variety of challenge – that range from enforcement of laws to hesitancy to opt for contractual obligations.

According to Kunal Bajaj, an independent telecom consultant, the bundling offer is no game-changer. Alternative payment options are also available at similar cost through equated monthly instalment (EMI) schemes on credit cards.

Similarly, Faisal Kawoosa, lead telecom analyst at Cyber Media Research, claims that the challenge lies in RCom’s positioning. “Anyone opting for RCom’s offer, will also be able to buy an iPhone without it or through credit card EMIs. It really makes no value-add,” he said.

(This article was published on November 1, 2013)
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