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'India focus on top-end of market'

business Updated: Jun 21, 2007 17:41 IST
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Cellphone maker Sony Ericsson will leave other vendors to scrap for sales in India's huge market for cheap handsets, while it focuses on pricier phones for users replacing their first models, a senior official said.

All major cellphone makers are targeting India, the world's fastest growing large telecom market, where 300-400 million people will buy their first cellphone in the next three years attracted by call rates as low as 1 US cent a minute.

As most of the new customers are coming from poorer rural areas of the 1.1 billion nation, this has turned handset makers' focus on to cheaper phones.

The lower end of the market in India and globally is dominated by Finland's Nokia, the world's largest handset maker, which has about 50 per cent market share in India, better than its 36 per cent global share.

World No 2 Motorola has struggled to win more of the lower-end market, and the US firm posted a loss in the January-March quarter.

"That's the battle we are not going to get into in the near-term future. We are not in the business of making everything for everyone," Chris Lee, head of marketing in Asia Pacific, told Reuters on Thursday in an interview at the CommunicAsia telecoms fair.

"People see the 1 billion number and that's what they go after, not realising the risk they are taking. We see our strength in the top- to mid-segment and we believe that segment will grow as fast as the overall market."

Six million new customers sign up in India each month.

Sony Ericsson has built its strength on a wide offering of higher priced phones carrying Sony's Walkman and Cybershot brands, but has recently shown more interest also in the lower end of the market. Lee said the cheapest Sony Ericsson phone costs around € 45 ($60.23).

He said the replacement market in India, where 70 million people own a phone, should see strong growth in the near future.

Lee estimated the top end of the Indian market comprises up to 2 million people, while the mid-market will have tens of millions.

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Sony Ericsson, a joint venture between Japan's Sony Corp and Swedish telecom equipment maker Ericsson, has about 5 per cent market share in India, and aims to become the country's third-largest player by 2010, behind Motorola and Samsung Electronics.

As part of its India growth plan, Sony Ericsson will open about 100 new brand outlets to be owned and run by private entrepreneurs, though Sony Ericsson will invest in reshaping the stores and renting at the most attractive locations, Lee said.

The company will also increase its presence on the shelves of India's near-100,000 handset retailers, about half of which currently sell Sony Ericsson phones, he said.

On Wednesday, the company said it would create a research and development unit in India's southern city of Chennai.

Sony Ericsson began selling cheap mobile phones in India in January through manufacturing agreements with Flextronics and Foxconn, and has a production target of 10 million units by 2009.