MOBILE PHONES IN INDIA

Euromonitor International September 2011

MOBILE PHONES IN INDIA

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LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1 Trends .......................................................................................................................................... 1 Competitive Landscape ................................................................................................................ 2 Prospects ..................................................................................................................................... 2 Category Data .............................................................................................................................. 3 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Table 12 Table 13 Sales of Mobile Phones: Volume 2005-2010 ............................................... 3 Sales of Mobile Phones: Value 2005-2010 .................................................. 3 Sales of Mobile Phones: % Volume Growth 2005-2010 ............................... 3 Sales of Mobile Phones: % Value Growth 2005-2010 .................................. 3 Mobile Phones Company Shares 2006-2010 ............................................... 4 Mobile Phones Brand Shares 2007-2010..................................................... 4 Sales of Mobile Phones by Distribution Format 2005-2010.......................... 5 Forecast Sales of Mobile Phones: Volume 2010-2015................................. 5 Forecast Sales of Mobile Phones: Value 2010-2015.................................... 5 Forecast Sales of Mobile Phones: % Volume Growth 2010-2015 ................ 6 Forecast Sales of Mobile Phones: % Value Growth 2010-2015 ................... 6 Sales of Smartphones by Operating System 2008-2010.............................. 6 Sales of Mobile Phones by Type of Contract 2005-2010 ............................. 6

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MOBILE PHONES IN INDIA

HEADLINES
Mobile phones grows by 12% in 2010 to reach sales of Rs500 billion Low-priced phones driving the growth by attracting masses Smartphones the fastest-growing volume category, with 40% growth in 2010 The average unit price in 2010 was around Rs3,300, with minimal price movement from 2009 Nokia India Pvt Ltd leads mobile phones with a 51% retail volume share in 2010 Mobile phones is expected to register a 4% constant value and 0.2% volume CAGR in the forecast period

TRENDS
Many domestic Indian companies as well as multinational players have come up with mobile phones that cost as little as Rs1,000 per unit. In fact, in 2010, Vodafone introduced a mobile phone for just Rs700. These mobile phones help reach out to the masses and rural consumers, where the penetration rate for mobile phones is still only around 30%. The volume growth rate in 2010 was 13%, which was significantly lower than the review period CAGR of 31%. This is because, in 2006, there was a significant drop in call rates from mobile phones from Rs3 per minute to Rs1 per minute throughout India. As a result, there was very sharp growth in 2006 and 2007, which significantly pushed up the CAGR in the review period. Smartphones was the fastest-growing category with 40% volume sales growth because such products are becoming extremely popular among professionals and youngsters as they offer internet connectivity, e-mail facility etc and help professionals and youngsters to remain connected to their work and their friends when on the move. The introduction of low-priced smartphones also reduced the price difference between feature phones and smart phones, thus making smart phones even more attractive. The average unit price in 2010 was around Rs3,300, with the average unit prices holding steady because manufacturers sought to attract rural and lower-income customers. Since the most popular smartphone Nokia with 74% volume share, the most popular operating system is also Symbian, followed by Android. The most popular apps are gaming apps, social networking like Facebook and YouTube, and news and navigation apps. While the majority of handsets, ie over 65%, are sold as handsets only, a few handsets, especially for the CDMA technology, are also sold as pay as you go. Subscription contracts were introduced with the launch of CDMA phones in 2002, but they did not work out well as the mobile phones used to break down too often and people had to change their numbers to get a new phone. So the subscription contract sales are negligible in India. The most important influences on consumers purchasing decisions in feature phones are looks, style, colour and battery backup. Cellular reception is a problem in some parts of the country, but it is not a major problem. Electricity access is a major problem for Indians, especially in the rural areas. Hence, they are looking for mobile phones with really long battery backup as they sometimes have to remain without electricity for days on end. The 3G network has not been fully implemented in India. In fact, most service providers only introduced 3G in 2011. It will take a few more years to fully implement 3G in India. The 4G network has not even been heard of in India and the government has no immediate plans to introduce the 4G network in the near future.

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The most important retail channels for mobile phones are specialist retailers specialising in selling mobile phones only. These may be company owned like Nokia Priority Dealers, Spice Hotspot or Sony Ericsson franchises or independent retailers specialising in mobile phones only. In small towns, usual independent electronics specialist retailers contribute maximum to the mobile phone sales. A few mobile phones are also sold through PCOs and music shops. Department stores and hypermarkets are also expanding their range of mobile phones offered.

COMPETITIVE LANDSCAPE
In feature phones Nokia is the leader with a 50% retail volume share and in smartphones Nokia has a 74% share. Nokia India leads sales because people find its phones sturdy and reliable and also because Nokia India offers a very wide variety of phones in all price ranges and in various styles. Nokia leads the sales in smartphones because it enjoys the first-mover advantage. In feature phones, Nokias share decreased by five percentage points. Nokias share has been steadily declining because other manufacturers have introduced much more stylish and good-looking models whereas Nokia has not carried out many changes to the styling and looks of its phones. In fact, youngsters today find Nokia phones extremely boring in their appearance when compared to the mobile phones of other manufacturers, which come in attractive colours and styles. Also, Nokia took too long to add features like multi-sim to its phones, while other manufacturers had successfully launched them a long time back. In smartphones, other manufacturers are eating into Nokias share as they are introducing more stylish looking models at cheaper prices and with more features such as the iPhone. Hence, Nokia lost six percentage points in share. Domestic players like Micromax Informatics, Karbonn Mobiles and Spice Mobility Ltd are emerging as good competitors to multinational players like Nokia, Samsung, LG and Sony Ericsson. In fact, these domestic companies had more sales share than Sony Ericsson in 2010. This is because these domestic companies provide phones with all the desired features and long battery backup at considerably lower prices. In fact, some models from Micromax and Karbonn Mobiles have battery backup of 30 days, and this long battery backup was the primary reason for the success of these domestic brands as they made these models specially for rural customers. The most significant new launch of 2010 was the Vodafone150 phone, which is priced at just Rs700. This is the first time any manufacturer has launched a mobile phone below the Rs1,000 mark. This phone is specially designed to attract the lower-income masses and rural customers.

PROSPECTS
Volume sales of mobile phones are expected to see volume sales stagnate at -0.2% CAGR in the forecast period, which is significantly lower than the review period CAGR of 31%. This is because while there was a major drop in call rates in the review period, there is no such change expected in the forecast period. Also, the mobile penetration rate in India is already over 60% and even people below the poverty line own a mobile phone, so the room for expansion will be less in the forecast period than in the review period. The price, battery backup and looks will be the most important factors for consideration when purchasing a feature phone. However, urban youths will also look for memory capacity to store songs as well as camera resolution. The price and apps supported will be the main deciding factors for smartphones. Tablets with cellular functionality like the Samsung Galaxy Tab are likely to provide strong competition to the sales of smartphones in the forecast period, but, in 2010, there was a major

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difference between the prices of tablets and smartphones, making tablets unattractive to most. However, many mobile phone manufacturers like Micromax Informatics and Olive Telecom are planning to introduce low-priced tablets, which could intensify the competition. Microsoft is introducing Windows Phones and has also entered a strategic partnership with Nokia India, so the outlook for Windows for Mobile Phones is quite bright and it may provide strong competition to Blackberry OS. The average unit prices in 2015 will be 20% higher lower than the 2010 average unit price because of the growing preference for the more expensive smartphones, as compared to the basic, entry level feature phones. Vodafone 150 is expected to be very popular among lower-income groups and may force other manufacturers to come up with similar low-priced phones.

CATEGORY DATA
Table 1 '000 units 2005 Feature Phones Smartphones Mobile Phones
Source:

Sales of Mobile Phones: Volume 2005-2010

2006 69,008.7 697.0 69,705.7

2007 104,617.2 1,808.7 106,426.0

2008 115,602.0 3,212.3 118,814.4

2009 128,780.7 4,535.8 133,316.5

2010 143,976.8 6,350.1 150,326.9

38,380.8 231.7 38,612.5

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 2 Rs million

Sales of Mobile Phones: Value 2005-2010

2005 Feature Phones Smartphones Mobile Phones

Source:

2006 248,321.9 15,908.0 264,229.9

2007 345,167.5 40,244.0 385,411.5

2008 346,893.3 60,293.0 407,186.3

2009 373,604.1 70,722.3 444,326.5

2010 410,964.5 88,402.9 499,367.5

149,591.5 5,500.0 155,091.5

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 3 % volume growth

Sales of Mobile Phones: % Volume Growth 2005-2010

2009/10 Feature Phones Smartphones Mobile Phones

Source:

2005-10 CAGR 30.3 93.9 31.2

2005/10 Total 275.1 2,640.4 289.3

11.8 40.0 12.8

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 4

Sales of Mobile Phones: % Value Growth 2005-2010

% current value growth 2009/10 2005-10 CAGR 2005/10 Total

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Feature Phones Smartphones Mobile Phones

Source:

10.0 25.0 12.4

22.4 74.3 26.3

174.7 1,507.3 222.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 5 % retail volume Company

Mobile Phones Company Shares 2006-2010

2006 70.2 7.9 5.9 5.5 0.7 0.7 0.6 0.1 0.0 6.9 1.4 100.0

2007 68.3 8.9 5.3 8.2 0.7 0.7 0.6 0.1 0.1 4.6 2.6 100.0

2008 65.5 9.8 4.4 5.8 5.4 1.3 0.6 0.6 0.2 0.1 3.4 2.9 100.0

2009 55.8 16.5 5.7 4.0 2.9 2.9 2.9 1.8 1.4 0.6 0.6 0.3 0.2 1.0 3.4 100.0

2010 51.0 17.4 5.9 5.7 4.8 3.8 1.9 1.9 1.5 0.7 0.6 0.4 0.3 0.1 3.9 100.0

Nokia India Pvt Ltd Samsung India Electronics Ltd LG Electronics India Pvt Ltd Micromax Informatics Karbonn Mobiles Spice Mobility Ltd Sony Ericsson Mobile Communications AB ZTE Corp Huawei Technologies Co Ltd Kyocera Wireless India Pantech & Curitel Communications Inc Research in Motion Ltd High Tech Computer Corp Motorola India Pvt Ltd Others Total
Source:

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 6 % retail volume Brand Nokia Samsung LG Micromax Karbonn Spice Sony Ericsson ZTE Huawei Kyocera Pantech Blackberry

Mobile Phones Brand Shares 2007-2010

Company Nokia India Pvt Ltd Samsung India Electronics Ltd LG Electronics India Pvt Ltd Micromax Informatics Karbonn Mobiles Spice Mobility Ltd Sony Ericsson Mobile Communications AB ZTE Corp Huawei Technologies Co Ltd Kyocera Wireless India Pantech & Curitel Communications Inc Research in Motion Ltd

2007 68.3 8.9 5.3 8.2 0.7 0.7 0.6 0.1

2008 65.5 9.8 4.4 5.8 5.4 1.3 0.6 0.6 0.2

2009 55.8 16.5 5.7 4.0 2.9 2.9 2.9 1.8 1.4 0.6 0.6 0.3

2010 51.0 17.4 5.9 5.7 4.8 3.8 1.9 1.9 1.5 0.7 0.6 0.4

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HTC Motorola Others Total

Source:

High Tech Computer Corp Motorola India Pvt Ltd

0.1 4.6 2.6 100.0

0.1 3.4 2.9 100.0

0.2 1.0 3.4 100.0

0.3 0.1 3.9 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 7 % retail volume

Sales of Mobile Phones by Distribution Format 2005-2010

2005 Store-Based Retailing - Grocery Retailers - - Discounters - - Hypermarkets - - Supermarkets - Non-Grocery Retailers - - Electronics and Appliance Specialist Retailers - - Mixed Retailers - Other store-based retailing Non-Store Retailing - Direct Selling - Homeshopping - Internet Retailing Total
Source:

2006 99.9 99.9 99.9 0.1 0.1 100.0

2007 99.8 99.8 99.8 0.2 0.2 100.0

2008 98.5 0.8 0.8 97.8 97.8 1.5 1.5 100.0

2009 98.3 1.0 1.0 97.3 96.3 1.0 1.7 1.7 100.0

2010 98.0 2.0 2.0 95.0 93.0 2.0 1.0 2.0 2.0 100.0

100.0 100.0 100.0 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 8 '000 units

Forecast Sales of Mobile Phones: Volume 2010-2015

2010 Feature Phones Smartphones Mobile Phones

Source:

2011 146,856.3 8,826.7 155,683.0

2012 143,184.9 12,180.8 155,365.7

2013 138,889.4 17,905.8 156,795.2

2014 128,472.7 23,993.8 152,466.5

2015 118,194.9 30,952.0 149,146.8

143,976.8 6,350.1 150,326.9

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 9 Rs million

Forecast Sales of Mobile Phones: Value 2010-2015

2010 Feature Phones Smartphones Mobile Phones

Source:

2011 396,739.2 108,097.5 504,836.7

2012 367,909.5 134,371.0 502,280.4

2013 341,081.4 186,638.1 527,719.5

2014 302,991.5 246,061.3 549,052.7

2015 268,971.4 325,354.5 594,325.9

410,964.5 88,402.9 499,367.5

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

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Table 10 % volume growth

Forecast Sales of Mobile Phones: % Volume Growth 2010-2015

2014/15 Feature Phones Smartphones Mobile Phones

Source:

2010-15 CAGR -3.9 37.3 -0.2

2010/15 Total -17.9 387.4 -0.8

-8.0 29.0 -2.2

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 11

Forecast Sales of Mobile Phones: % Value Growth 2010-2015

% constant value growth 2010-15 CAGR Feature Phones Smartphones Mobile Phones
Source:

2010/15 TOTAL -34.6 268.0 19.0

-8.1 29.8 3.5

Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 12 % retail volume

Sales of Smartphones by Operating System 2008-2010

2008 Windows iOS Android Symbian BlackBerry OS Other Total

Source:

2009 3.0 0.3 7.5 81.0 7.9 0.3 100.0

2010 3.5 0.5 9.5 76.0 8.3 2.2 100.0

10.0 0.2 0.0 82.1 7.5 0.2 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Table 13 % retail volume

Sales of Mobile Phones by Type of Contract 2005-2010

2005 Monthly Subscription Pay as You Go Phone Only Total

Source:

2006 5.4 9.0 85.6 100.0

2007 5.0 9.0 86.0 100.0

2008 4.5 8.0 87.5 100.0

2009 4.0 8.0 88.0 100.0

2010 4.0 8.0 88.0 100.0

5.8 9.0 85.2 100.0

Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

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