Market Size and Growth

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Market Size and Growth India is the second largest mobile handset market in the world after China and is poised to become a much larger market. The steady rise in the income levels of India’s growing middle class means that more people can afford mobile service. In addition, more and more people are opting for higher end devices such as smartphones especially as a younger generation increasingly relies on mobile phones for Internet access and data usage. This demand will likely lead to a surge in smartphone sales in India. The smartphone market is also fueled by the recent launch of 3G services, which is expected to provide the bandwidth necessary for widespread adoption. Constantly evolving technology, infrastructure improvements, and increasing demand are the key drivers that will help grow the market. Handset Manufacturers Nokia currently dominates the mobile handset market in India (followed by Samsung and then LG). Nokia had the first mover advantage, and they were also able to leverage their experience in China to consolidate their lead in India. In the early 2000s, Nokia invested in the Indian market by introducing India specific handsets and by introducing software in regional languages. One of the most popular Nokia initiatives is the regional language news service which was launched in partnership with local newspapers. However, this space is getting crowded quickly. In addition to new entrants like RIM and Apple, Nokia is also competing with smaller players who have released copycat versions of Nokia’s models at much lower prices.

When it comes to revenues for the fiscal period 2010-11, Nokia still rules in India. For all the talk about Nokia’s share slipping away, it has held its own. There isn’t a drastic rise in Nokia’s revenues from the year before but there isn’t significant dip either. At best, Nokia’s India growth has hit a plateau. India’s mobile handset as a whole has grown by 15% to Rs. 33171 crores.

Top 10 manufacturers have contributed Rs. 23603 crores or 70% of the total revenues. Nokia has contributed to 39% of the total pie. Other mobile handset makers who are not in the top 10 list have generated a combined revenue of Rs. 10108 crores.

Top 10 mobile handset manufacturers by revenues in 2010-11 :

Manufacturer

Revenues in crores (INR)

Nokia Samsung Micromax RIM LG G’Five Karbonn Spice Maxx Mobiles Sony Ericsson

12,929 5,720 2,289 1,950 1,210 1,326 1,004 920 745 690

Nokia made Rs. 12929 crores in the year 2010-11. It made Rs 12900 crores the year before registering a 0.2% growth. In the ever expanding market, Nokia has held its own. Samsung has occupied a prominent second position with Rs. 5720 crores. India’s homegrown mobile handset manufacturer Micromax generated revenues of Rs. 2289 crores and is placed below Samsung. Research in Motion, LG, G’Five, Karbonn, Spice, Maxx and Sony Ericsson are the other vendors in the top 10 list who have revenues more than 600 crores. There was a talk of G’Five unseating Nokia from its top position. I fail to see how that is possible. G’Five has generated revenues of Rs. 1326 crores in 2010-11. Which means, Nokia is at least 10 times bigger than G’Five in terms of revenues. Of course, G’Five has its mega plan and it isn’t half bad.

G’Five has manufacturing capacity to produce 5 million handsets every month. It has a product portfolio of 300 models and it can launch 2 new models every week. G’Five can go from ideation to delivery in just 45 days. That gives a unique advantage for G’Five over many of its rivals. In 2011, G’Five is selling 2.3 million cell phones every month which translates to Rs. 6720 crores in sales.

By all means G’Five can be the number one manufacturer by 2014. But sales doesn’t mean revenues. As far as revenues go, G’Five is far behind Nokia. G’Five typically concentrates on the low-end of the spectrum and the profit margins are quite low at that price points. Nokia on the other hand is a trusted name from feature phones to smartphones. Nokia’s Achilles heel at the low-end of the market is the Dual SIM phones. A grave blunder by Nokia has fetched great returns for G’Five and Micromax. Nokia is amending this by its recent launch of dual SIM phones for emerging markets. New dual SIM product portfolio should stem some of the bleeding. But that pain will not go away completely. But to say, Nokia is out of the loop and companies like G’Five will oust Nokia from its top seat is outlandish. Next time around we just shouldn’t count the number devices shipped.

If we leave Nokia and Samsung out, the other 8 manufacturers have a combined revenue of Rs. 10134 crores, much less than Nokia’s Rs. 12929 crores. Isn’t that something to ponder on?

Note : G’Five has a revenue of Rs. 1326 crores which puts it above LG at 5th position. ET has put G’Five at sixth position. Either G’Five has revenues less than Rs. 1210 crores, or it should have been in fifth place pushing LG down.

The domestic mobile phone industry has been plagued by concerns over huge revenue losses and the lack of domestic manufacturing. Now the Communications Ministry has begun the process of framing a new policy in this regard, report CNBC-TV18’s Siddarth Zarabi.

SBI at present has a tie—up with two organisations for providing m—banking services in rural areas. Both initiatives were carried out in alliance with the application developers.

Apart from this, the mobile handset market has witnessed high competition due to emergence of domestic handset manufacturers. According to IDC report 20105, the top four domestic handset manufacturers (Micromax, Spice, Karbonn, Lava) commanded a share of 33% while Nokia still leading with 36.3% market share. Multiple SIM handsets represented another growing segment. Dual and triple SIM card slot phones have grown to touch 38.5% of the total Indian mobile handset shipments, from less than one percent in Q2 2009 (April-June, 2009). This can be attributed to several new service providers responding with highly competitive tariff plans to a price-sensitive mobile telephony user market. With the rollout of 3G technology, 3G device sales are expected to account for 16.7% of total sales in 2010, up from 9.2% in 2009. Even though smartphone sales in India made up 5.2%

of total device sales in the first quarter of 2010, this share is expected to increase to 18 percent in 2014.

About 7 out of 10 Indians now own a mobile phone, compared with less than 1 in 10 five years ago

Deloitte predicts that in 2011 the volume of data uploaded or downloaded from portable devices will grow at a much faster rate (25-50 per cent) using mobile broadband networks.

Revenues of the Indian mobile handset market grew by 15 per cent to touch Rs. 33,171 crore in 2010-11 from Rs. 28,897 crore a year back, according to an annual survey by the telecom industry journal Voice&Data.

According to the survey report, Nokia remained the #1 player in handset business in FY2010-11 with revenue of Rs. 12,929 crore showing a growth of 0.2 per cent over Rs. 12,900 crore it did in FY200910. It lost market share in low-end segments to home grown handset makers like Micromax, Karbonn and Spice whereas it's high-end phones faced a tough competition from brands like Samsung, BlackBerry and HTC.

With rough estimates of the number of illegal phones in the 25-million range, operators were initially keen to find a way out of this tangle such that their customer base is not affected

History::

Although mobile phones have taken over our current society, they have been around for several decades in some form or another. Beginning in the late 1940s, the technology that would later be used in today’s cell phones was created and the idea of a mobile phone was introduced. This cell technology was first used in mobile rigs which was mainly used in taxis, police cars and other emergency vehicles and situations. Truckers also used a form of this technology to communicate with each other. Little did they know how far their idea would advance to make it accessible to the majority of the population.

The first mobile phones, referred to as First Generation or 1G, were introduced to the public market in 1983 by the Motorola Company. These first mobile phones used analog technology which was much less reliable than the digital technology we use today. The analog phones also had a great deal more static and noise interference than we are accustomed to today. The first mobile phones during this era were confined to car phones and they were permanently installed in the floorboard of automobiles. After a few years, they became mobile and consumers could take the phones with them outside of the car. However, they were the size of a large briefcase and very inconvenient. The main purpose of this First Generation technology was for voice traffic, but consumers felt insecure about people listening in on their conversations. These new mobile phones were also rather expensive, many of them costing hundreds of dollars. They were more of a status symbol during the decade rather than a means of convenience.

During the 1990s, great improvements were made in the mobile phone technology. These phones used Second Generation, or 2G technology. In 1990, the first cell phone call was made using the new digital technology that became characteristic of this era. The Second Generation cellular phone technology was faster and much quieter than its analog predecessor. As a result, it became even more popular than previous models, too. The new technology also made them capable of being smaller rather than the large briefcase-sized units from the 1980s. Smaller batteries and other technology that made the phones more energy-efficient helped contribute to their smaller sizes and their popularity. Companies also strived to make the prices more affordable than the mobile phones of the 1980s. You could buy a decent cell phone with 2G technology for approximately $200 along with an airtime service. The cell phone industry was beginning to take off.

The Third Generation technology, or 3G, is what many people currently use in their digital cellular phones today. This technology was created very soon after the excitement that the 2G technology created. This new technology is not only capable of transferring voice data (such as a phone call), but it is also able to transfer other types of data, including emails, information and instant messages. These capabilities have helped to increase the amount of sales and the popularity of these new phones. Many users prefer to use the instant messaging capabilities to “text” other users rather than call them in the form of a traditional phone call. Many cell phone companies offer free and very affordable phones for consumers who sign-up with their airtime service for a contractual period. Prices for the services range but the competition in the industry is helping to keep them more affordable than they have been in previous years.

You would think that there is little more that you could do with cellular phone technology. This is, however, not the case. There are currently plans in place to develop a Fourth Generation – 4G – technology. Goals for this new set of standards include a combination of technologies that will make information transfer and internet capabilities faster and more affordable for cellular phones. At this

time, there is no one definition that can be attributed to 4G technology because researchers are still striving to make advances and build upon the technology that already exists.

The mobile phone industry continues to grow by leaps and bounds as it has in the past few decades. Even though it started a little more than 20 years ago, manufacturers have created an abundance of new technologies that keep cell phone users coming back for more. They continue to increase the number of capabilities and services to accommodate the growing needs of today’s “on the go” culture. Waiting anxiously is the only way to find out what they will think of next.

As the number and quality of WI/FI points become available and with the growth of Smart Phones that not only provide the basic functions expected in a mobile phone but provide so much more the market is changing and brand new players have entered the market including Apple with the successful Iphone and Research Machines with the equally successful Blackberry. In 2008 a new player enters the market providing an open source operating system for mobile phones that manufacturers can use and adapt, the new player is Google who make the Android operating system available and the first phone to appear is the G1 from T-Mobile, because the OS is open source the number of applications available is expected to grow and sites like The Android Library who provide a library of the latest free and commercial applications will grow. It remains to be seen if this latest entry of an Operating System in the Smartphone market will make a significant impact but many feel this could be the future for the market

In short, as of last year India had about 68 mobile handset players, and if the report is to be believed it will go above 200 ! Another important analysis of the survey is the fact that more than 70% of the Indian population still consumes only voice services. But with the onset of 3G and cheaper data usage options, this is expected to change in the near future India’s base of 81 million mobile internet users is the world’s fourth largest, though this is composed of just 20 percent of India’s urban citizens who are connected to the internet, compared with the 60 percent in China.

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