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Newbies take on Nokia

You saw their ads grab your eyeballs during the IPL cricket season. You had not heard of them two years before, but they are now blitzing in. Welcome to the world of the low-cost mobile. Rachit Vats reports.

india Updated: Jul 24, 2010 01:18 IST
Rachit Vats

You saw their ads grab your eyeballs during the IPL cricket season. You had not heard of them two years before, but they are now blitzing in. Upwardly Mobile

Welcome to the world of the low-cost mobile. In fact, make it the cut-rate smartphone. With prices at anything between Rs 1,000 and Rs 8,000, local Indian brands are taking on big names like Nokia with many models sporting features such as dual SIM cards, QWERTY keyboards, touch-screens to social networking applications.

While some wonder about their quality, there are thousands voting with their wallets. In the past one year, brands such as Micromax, Karbonn, Max, Spice, Lemon and Lava have made rapid strides. Top local brands gained 10 per cent market share while Samsung gained 7.4 per cent in 2009-10. There are as many as 250 small and emerging mobile handset brands operating in the Rs 1,000-8,000 price bracket.

The market grew 4.2 per cent in revenues during 2009-10 (compared with 7.9 per cent in 2008-09), aided by low-price handsets selling high volumes. "There is a strong acceptance for the emerging Indian brands and the demand is now moving from smaller towns to the cities and the metros," said Arvind R Vohra, managing director of Wynn Telecom. The company, part of the SAR Group that makes Luminous inverters, plans to invest Rs 500 crore to set up a 1.2-million handset facility in India, and also spend on branding.

Like most local players, Wynn now makes its phones in China. Others are also planning local factories.

Prasanto K. Roy, chief editor at Voice & Data magazine, said new players are ready for big promotional spending. "What these emerging players have done is realised and filled the gaps in the market," he said.

S.N. Rai, co-founder and director at Lava International, said his firm, with Rs 1,000 crore in sales, was looking to make at least one million handsets per month in India.

"We are looking at increasing our product offering and move up our price offering to Rs 8,000 from the present Rs 6,000 bar," he said.

Can clones sustain?

A confident Rai said software in the handsets was the "real game" in mobiles. But some, like Mumbai executive Karan Panjwani, crib about quality. He says a Rs 7,500 smartphone from Micromax gave him touchscreen problems and he switched back to his BlackBerry.

Giants such as Nokia, which has seen its market share fall 12 per cent over 2009-10 are betting on quality and sturdy features still.

D. Shivakumar, manging director, Nokia India, says his brand did not offer low-cost options in touchscreen and did not have a SIM phone. "When Nokia fills in that, there is no reason why consumers will not choose it," he said. "Fundamentals always win and hit and run tactics don’t win."

Jaideep Ghosh, executive director at KPMG advisory services said the new players were leveraging a "short term window of opportunity."

"Research and development would play a major factor in the sustainability of the Indian brands," he said.

For the moment, however, local brands are leading.