At a charity auction of a limited-edition Nokia Vertu handset in a Mumbai nightclub last week, the bejewelled mobile phone went for more than $30,000 (Rs12.3 lakh) after frenzied bidding by movie stars and businessmen.
Even at its regular price of Rs380,000, there is growing demand for the Vertu Ferrari 1947 and other premium models in India, the world’s fastest growing mobile market.
“The demand for luxury goods is rising, and we are seeing that reflected in phones, as well,” said Rajiv Popley, director of Popley Group, a premium city jeweller which sells the range.
“We started last March with five Vertu phones. Today we stock 30 phones in two stores,” he said, adding that the most popular Vertu phones cost $14,600, with the most expensive model priced at more than $97,000 in his stores.
Indian mobile operators are signing up almost seven million new users a month on average. While most first-time users tend to buy cheap, basic phones, replacements are frequent and more pricey.
“What is interesting to note is the misconception that the majority of people want a $30 or 40 device,” said Carolina Milanesi, research director for technology consultancy Gartner’s mobile device and consumer services group.
“The reality is that people want a bit more than entry-level products, and the sweet spot seems to be more around $60.”
While basic phones can be had for $20, Gartner expects feature-rich phones to account for more than 40% of the market next year, and high-end smartphones just over 10%.
“Three to four years ago, our portfolio was largely monochrome phones,” said Asim Warsi, general manager, marketing, Samsung Telecom India. “Now we don’t even have monochrome phones because consumers don’t want plain vanilla phones. They want cameras and MP3s,” he said, adding that the most popular phones are priced at Rs2,500-6,000.
The average replacement cycle has also fallen to 18-36 months, compared to 12-24 months in mature markets as higher incomes and a young customer base boost demand.
Demand for its handcrafted Vertu phones, which retail at more than $5,500 in India, is climbing: Nokia launched its Vertu Signature Cobra—a sapphire- and gold-phone with a diamond and ruby snake slithering down its sides—in Paris and Mumbai last year, a sign of where it expects its future clients to come from.
Taking the fight for the premium segment to Nokia, Mot-orola has roped in actor Abhishek Bachchan to endorse its phones, including the RAZR.
The bulk of demand will still be for cheap, basic phones for first-time users, cautions Gartner, which expects the market to more than double to 462 million users by 2011, or 58% of the rural population and 95% of urban population.
“Consumers take a fairly pragmatic view of their mobile devices in terms of delivering basic services,” said Milanesi, who sees a demand for messaging and music-related features.