It’s not just the telecom operators who are seeing a slowdown in new subscriber additions which has dropped from close to 15 million a month to below 5 million, even the mobile brands are seeing a drop in the first time buyers.
To tackle this challenge most Indian and Chinese vendors are focusing on the replacement market by launching costlier but feature rich phones. The first one to announce this shift was Spice Mobile.
BK Modi, chairman of Spice Mobile said, “We are looking at increasing our average selling price of Rs 2,000 to Rs 3,600. We see a rise in the demand for internet enabled phone, which is in line with the fact that most Indian’s will experience internet first on the mobile rather than on PC”.
Another brand to formally accept the change in the strategy is the Chinese brand G’Five, which according to IDC is the second largest brand in the Indian market according to number of handsets sold.
Arshit Pathak, managing director, Kingtech Electronics, a group Company of G’Five International, said ” We will now also focus on mid end segment to tap the growth in replacement market, we will be launching several new phones in this category in the next couple of months. And since the buyer awareness level is higher in this category will also try to be more visible”.
He adds, “The first time buyer connects well with the retailer and it is the retailers’ recommendation that works for them. However, second time buyers are more aware and they rely on media for their research and therefore we will be more visible in the media now”.
Micromax, which is one of the best known Indian brands, is also following a similar strategy. In fact, they are going a step beyond that by launching higher end Android phones like the A85, which they believe will appear to the higher end of the second time buyers who are looking for better but value for money products.
However, not everyone is shifting gears that fast or at least they are not willing to abandon the first time buyers. Even G’Five said very categorically, “We are focusing on the mid segment does not mean we are abandoning the basic segment, we will continue to bring products in Rs 1000 plus range. We believe there is still a market for these phones on the rural belts”.
Shashin Devsare, executive director, Karbonn Mobiles said, “There will be no impact of the slowdown on our sales and product mix”. Though even Karbonn has entered the race of Android phones, they still feel comfortable in the basic phones market as well.
Some in the industry feel that it is a natural progression of the brands – something that has happened in all the industries including automotive. Volkswagen for instance, started with ‘peoples car’ Beetel but now both Beetel (a low cost to begin with a premium now) and Volkswagen are premium brands.
And there will be newer unknown brands that will fill the space that the well established players will vacate when they move up the value ladder.
On this BK Modi says, “Our products will be much cheaper than the MNC brands similar products. So we will still be price conscious, however in a different segment.”
This is something that is common across all the Indian and Chinese brands. For example entry level Android phones from these brands are priced close to Rs 7,000, which have similar specifications as the phones of MNC brands that are priced close to Rs 10,000.
What is of greater interest to the consumer is the fact that this brings to them products with features that were earlier out of their reach.
Also important is the fact that these brands are also entering the tablet space in pursuit of higher margin products bring the price of tablets down, and making internet access affordable as well as enjoyable (due to bigger size of the screen) for the consumer.
However, all this means that the prices of handsets are increasing both because of this shift and due to falling value of Rupee.