In March this year, Swedish telecom equipment-maker Ericsson sued Indian handset vendor Micromax for infringement of patent wireless rights. While the dispute is now being sorted out in a court, it brought to light something that has been a talking point, of late, globally. The issue of intellectual property rights (IPR) and the role of Indian vendors in investing in technology.

“Whether Ericsson’s lawsuit will open a new patent war in India is yet to be seen. But, it does bring to light the fact Indian handsets need to work harder on owning technology,” Katyayan Gupta, Analyst at Forrester Research told eWorld .

Fiercely Protective

Tech majors such as Ericsson are fiercely protective of their patents. Global players such as Apple, Samsung, HTC and Nokia have consistently fought patent infringements in various parts of the world, sometimes even amongst each other.

“I don’t think most home-grown handset makers are still bothered about the seriousness of IPRs or patents,” an official of an Indian mobile company said on conditions of anonymity.

According to Gupta technology or equipment majors despite being protective of their IPRs have been otherwise ignoring patent infringements here. The reason being: small value of home-grown vendors and their previous appetite that was restricted to feature phones or low-value smartphones (between Rs 8,000 and Rs 10,000).

However, starting from 2012, these companies have entered the smartphone race as well. Though technology ownership was not their forte; rising demand for smartphones compelled them to introduce many new models that use patented wireless technologies.

Rising Awareness

Tarun Pathak, telecom analyst with CMR, points out that most home-grown players use patented technologies such as GSM, EDGE or 3G – the basic features in a smartphone.

These companies are now moving into the mid to high-end segments (price range of Rs 14,000 – Rs 20,000) and as such they need better technologies. For that, they either need to own the technology or have the patents in place.

“Awareness levels are rising only now. Handset makers are now looking into IPR-related issues,” he adds.

And, quite rightly so! Another home-grown vendor Lava has applied for two patents in India. “Our patents pertain to software related with audio and typing (in-built keyboards). It will take sometime for these patents to be cleared,” S N Rai, co-founder and director, Lava Mobiles, said.

Research and Development

The need for focussing on R&D cannot be ignored any more. As Rai points out, it is essential for the Indian vendors to own technology and carry out research.

This includes working not just on hardware part of the handset that has to do with how the device looks, what size the screen should be or even the placement of the camera(s). Research work should move into the realm of developing software or technology related specifically to the handset(s).

Accordingly, Micromax, Lava, Intex and most of the other vendors have their own design studios. While the handsets are manufactured in China, the so-called research and development is being carried out in India.

Sudhir Kumar, AGM-Mobile Division, Intex, points out that since its inception in 2004, the R&D wing of Intex had been setting global standards for its products.

“All the products of Intex are manufactured along the global quality standards. The R&D wing focuses on hardcore technology development. The first aspect is standardising products in line with international norms,” he maintains.

The second aspect, according to Kumar, is to ensure that import substitution and development of in-house technology with similar standards of any major international brand. “The in-house R&D boasts of state of the art test equipments, fully-fledged applications lab and software design support,” he added.

But the markets are not convinced yet. A market source points out that despite all the attempts, “research and development” by Indian vendors are restricted to “gauging the demand for a particular model in the handset and replicating other key features from a high-end smartphones.”

“Today an Indian vendor will research not to develop a localised text messaging app but will rather see if a larger screen phone of say 5.5 inches with in-built voice messaging is feasible or in demand or not,” the source adds.

However, Forrester’s Gupta maintains that it is not imperative for Indian vendors to have research facilities like Apple or Samsung does at this point of time. Nor keep aside such huge budgetary provisions.

“Indian vendors operate on low cost. For them keeping the handset within a price and having a certain number of features is more important. If they were to compete with Apple and come out with an on-par product, do you think it will be feasible? They do not have the R&D budgets or the control over an ecosystem like Apple does,” he pointed out.

According to Gupta, apart from innovation, the need for Indian vendors is to focus on after sales services. “I would prefer that they sell a solution (handset and after sales services put together) instead of just the phone,” he said.

Localisation

Meanwhile, the other talking point is localisation. Most handsets sold by these companies are made in China.

According to Ajjay Agarwal, CMD, Maxx Mobiles not more that 10-12 per cent of the mobile components – that include the casing, handset chargers, and batteries are currently produced in India.

This apart, all other mobile phone parts that include chip sets, processors are imported. At the most Indian vendors can explore possibilities of having assembling units here in the country.

“None of the important elements of a mobile phone are manufactured in India. We do not have those facilities,” he said adding: “In short Indian handsets are actually not at all Indian. They are all made in China.”

Lava’s Rai too adds that some small components (chargers, batteries, cases) might be made in India but when it comes to the handset, China dominates. “In terms of localisation, China has the cost advantage. We (in India) are yet to make headway,” he added.

abhishek.l@thehindu.co.in

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