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Android One set to force Samsung into price war

business Updated: Sep 17, 2014 10:32 IST
Vivek Sinha

With Google throwing its tech might behind India’s low-cost phone makers, Micromax, Karbonn and Spice, while introducing the Android One operating system, South Korean giant Samsung, which was conspicuously absent, may now have to enter into a price war at the bottom of the smartphone pyramid.

With their newfound Android One advantage, Micromax, Karbonn and Spice are expected to tap a larger chunk of the demand for low-cost, no-frills smartphones. Just last month, market research firm IDC had observed that Indian home grown vendors are breaching a new entry-level price point every quarter.

“These devices are not equipped with high-end specifications. This ultra low-cost segment may not sound a viable option to repeat buyers, but it works well on the targeted segment,” Karan Thakkar, senior market analyst at IDC India had said while releasing the report.

With Android One, this gap could worsen.

“A major threat for Samsung is that Android One will accelerate the race to the bottom on smartphone pricing,” Neil Mawston, a UK-based analyst at Strategy Analytics told Reuters in an interview.

Interestingly, both Samsung and Google make little of Android One’s potential impact on their relationship. Sundar Pichai, who heads Google’s Android and Chrome units, said the company continues to work closely with Samsung on many projects.

Rajiv Mishra, vice-president, media, Samsung India, echoed this: “We manufacture our own hardware and we have an array of Android-based products across price points. Our relationship with Google continues to be strong.”

During the April-June quarter 2014, Samsung held a 17% market share in India, while Micromax had 14% and Karbonn 9%, according to figures released by IDC.

Vishal Tripathi, principal research analyst at Gartner, cautioned against reading too much into Samsung’s absence from the Android One initiative.

“It (Android One) is just an operating system and hardware is part of a smartphone’s ecosystem... and Samsung is very good on its hardware,” he said, adding that Samsung already has good Android 4.4-based low-cost smartphones in the market.

According to IDC, the smartphone market in India grew by 84% during the April-June quarter of 2014. The contribution of sub-$200 (Rs 12,000) smartphone segment was 81% during the April-June quarter of 2014.

Feature phones make up about 71% of the smartphone market in India.