Indian brands close the gap with MNCs in smartphone market

Mumbai: Price-conscious Indian buyers have been lapping up lower-priced smartphones sold by local companies such as Micromax Informatics Ltd and Karbonn Mobiles India Pvt. Ltd, which now account for almost 30% of the country’s handset market from less than 3% a year ago.

add_main_imageIndian companies, having already made an impact on the basic phone market, made the progression to smartphones over the past year or so by taking advantage of a market created by Samsung India Electronics Pvt. Ltd and others by offering lower-specification devices at lower prices.

Numbers provided by CyberMedia Research (CMR) were similar, reflecting the dramatic degree to which Indian companies have made an impact in the smartphone segment in the January-March quarter. The share of Micromax rose to 17.1% from 1.7% in the same period a year ago while that of Karbonn grew to 8.4% from 0.7% and Samsung’s to 42.3% from 40.4%. That increase took place at the cost of Nokia and BlackBerry—their market share dropped to 5.6% and 1.2%, from 25.5% and 12.3%, respectively.

Research firm Convergence Catalyst said in a 28 February report that “the share of Indian players (such as Micromax and Karbonn) grew from sub 2% in January to close to 30% by December 2012 (in volume).”

Price matters to Indians, with nearly 75-80% of smartphone sales coming from mobile devices priced under ₹ 10,000, said analysts.

“The competition between top international and local vendors remained prominent in the last (Q1) quarter with Samsung, Micromax and Karbonn controlling almost two-thirds of the Indian smartphone market. However, the market remained driven by low-cost devices” said Manasi Yadav, senior market analyst at IDC’s client devices team.

Madhura Marathe, a 27-year-old school counsellor based in Mumbai, bought a Karbonn Titanium S1 smartphone in May. sixthMAds

“It is half the price of (Samsung) Galaxy Grand and one-third that of the iPhone and it looks just like the iPhone 5,” she said. “Karbonn’s camera is as good as that of the Samsung Galaxy Grand.”

The Titanium S1 costs about ₹ 10,490, while the Galaxy Grand costs ₹ 19,900.

Similarly, Rahul Jain, a 19-year-old student of accounting and finance, bought a Micromax Canvas 2 for about ₹ 11,000 in December “because of its (lower) price and yet with all the features” he wanted. The Samsung Galaxy Note II that it resembles costs about ₹ 37,380.

Both Micromax and Karbonn are set to launch higher-specification devices this year, priced below similar models from Samsung, Nokia, BlackBerry and iPhone, all of which have been gaining traction thanks to their phones being made available on instalment. Micromax is planning to launch 40 new smart devices in the current fiscal year while Karbonn is launching its own app store. “We aim to be present across all relevant screen sizes and at all customer-desired price points” said Ajay Sharma, smartphone business head at Micromax.

The company recently launched the Canvas Doodle smartphone with a 5.3-inch for ₹ 12,999, pitting it against the Galaxy Note. It also offers 3.5-inch phones at ₹ 3,000-4,000 and the 4-inch phones at ₹ 4,000-5,000.

Karbonn’s launches this calendar year include phones priced at ₹ 15,000- ₹ 20,000 with full HD (high definition) capability, 12 to 13 megapixel cameras and 1.5 GHz plus processors.

“We are trying to massify the mobile technology and we will provide value for money products. We will bring latest technology at better prices,” said Shashin Devsare, executive director, Karbonn Mobile.

Karbonn, according to IDC report cited above, saw its smartphone shipments double from the earlier quarter, with a dedicated marketing and advertising push.

“Indian companies have been strategizing their plans and currently these are the early days of Micromax, Karbonn strengthening their position in the Indian smartphone space with strong portfolio of products having reasonable prices and high specifications,” said Jayanth Kolla, founder and partner, Convergence Catalyst.

Anshul Gupta, principal research analyst at research firm Gartner Inc., said, “There are huge growth opportunities for smartphone makers in India as consumers look for upgrade opportunities. When feature phone users will upgrade to smartphones, they won’t buy ₹ 15,000 to ₹ 40,000 devices. Obviously for them, the next jump would be around ₹ 5,000. As far as high-end devices are concerned, that will grow too.”

But it’s not as if market leader Samsung will allow the Indian companies to have it all their own way. It has launched a portfolio of smartphones across various price categories, targeted squarely at the cost-conscious Indian.

“We want to fuel the smartphone growth in the Indian market with devices across various points, so that even when existing Galaxy users upgrade, they upgrade to the next Galaxy,” said a Samsung spokesperson.

Nokia is doing the same with the Asha and Lumia range of devices.

“In a span of nearly 16 months, Nokia has launched 15 new Nokia Asha devices in India. Continuing the Nokia Asha smartphone story, earlier this month we introduced the Nokia Asha 501—the first of a new family of Asha smartphones,” said Vipul Mehrotra, director, smart devices, IMEA (India Middle East Africa).

Gartner estimated the Indian smartphone market at 17 million units at the end of calendar 2012 and expects it to reach 26-28 million by the end of this year.