The growth of India’s mobile sector has not gone unnoticed. Last year, Virgin Mobile agreed a deal to enter the market, and Japan’s DoCoMo bought into mobile operator Tata to stake its claim in the fast-expanding industry.
India offers astounding growth statistics. In October 2008, according to the Telecom Regulatory Authority of India (Trai), 10.4 million Indians signed up for a phone service, pushing the national total to 363.9 million, a penetration of 31.5 per cent. Only 10 years earlier, India had a mere 880,000 phones, most of them landlines, for one billion people. Today, fixed-line phones account for only 10.5 per cent - 38.2 million subscribers - and this absolute number is slowly declining. Wireless operators, meanwhile, are surging ahead. Many first-time phone buyers are opting for mobile, and will drive the total subscriber base to 500 million by 2010, according to Trai.
The expansion has been fuelled by recent economic prosperity, but the accelerant is an ever-increasing affordability of handsets and services. Mobile phone service costs have plummeted. In March 1999, the effective charge was more than 15.32 rupees (US$0.31) per minute, which fell by half in 2000, again in 2001 and repeatedly dropped until today - at less than a rupee, it is believed to be the cheapest rate in the world. The sector’s expansion is not expected to be hit by the economic slowdown.
“Market growth is moving away from the cities and going into the villages and rural areas,” says Shankari Panchapakesan, executive director of mobile services, The Nielsen Company, South Asia. “The macroeconomy won’t impact this, because rural people are using phones in ways that make a difference in their life, how they work, how they educate their children, and how they access information.”
Fishermen, for example, use phones to find outlets for their catch. Women earn a living with phone exchanges. Carpenters carve their numbers on village walls. For handsets, the undisputed leader is Nokia. The Finnish telephone giant has been in India since 1994, and has invested in three R&D labs, making facilities and distribution partnerships.
Naresh Priyadarshi, head of Synovate Business Consulting, says Nokia has 90,000 distributors in India, giving it a 90 per cent retail footprint. There are also 30,000-plus stores that sell Nokia exclusively. Nokia has concept stores in at least seven major cities.
Together, India’s retail outlets sold 132 million handsets worth 700 billion rupees in 2008, according to Synovate. Nokia’s share of value was 59 per cent, followed by Sony Ericsson with a distant eight per cent, Samsung with seven per cent and Motorola with six per cent. Smartphones account for 24 per cent of sales, according to Synovate, with mid-priced feature phones taking 28 per cent, and the remainder - 48 per cent - being ultra-low-cost phones. Handset makers see ultra-low-cost phones as the road ahead despite the razor- thin profit margins. Already, sales of cheap handsets are depressing average prices. Euromonitor estimates that unit prices fell 50 per cent between 2004 and 2007 to an average of 2,808 rupees.
To put handsets within reach of India’s rural poor, phone makers have had to rethink product design. The Nokia 1100 included a torch, alarm clock and a radio. Nokia’s entry-level phones are now priced at 1,500 rupees. Spice Mobile halved that with its People’s Phone, priced at 599 rupees, including lifetime prepaid activation.
To bond with rural users, Nokia is launching a subscription-based service called ‘Life tools’ with information on agriculture and education. Such phone services will serve as the first online experience for rural Indians.
Among affluent urban users, value-added-services (VAS) for feature phones are seen as the way forward. Synovate reports VAS at 50 million rupees in 2008, and forecasts 70 per cent annual growth to push that to 165 million rupees by 2010. It is this fast-growing, rapidly diversifying market that is attractive to overseas firms, though they should not expect much profit in the short term.
Got a view?
E-mail [email protected]
India offers astounding growth statistics. In October 2008, according to the Telecom Regulatory Authority of India (Trai), 10.4 million Indians signed up for a phone service, pushing the national total to 363.9 million, a penetration of 31.5 per cent. Only 10 years earlier, India had a mere 880,000 phones, most of them landlines, for one billion people. Today, fixed-line phones account for only 10.5 per cent - 38.2 million subscribers - and this absolute number is slowly declining. Wireless operators, meanwhile, are surging ahead. Many first-time phone buyers are opting for mobile, and will drive the total subscriber base to 500 million by 2010, according to Trai.
The expansion has been fuelled by recent economic prosperity, but the accelerant is an ever-increasing affordability of handsets and services. Mobile phone service costs have plummeted. In March 1999, the effective charge was more than 15.32 rupees (US$0.31) per minute, which fell by half in 2000, again in 2001 and repeatedly dropped until today - at less than a rupee, it is believed to be the cheapest rate in the world. The sector’s expansion is not expected to be hit by the economic slowdown.
“Market growth is moving away from the cities and going into the villages and rural areas,” says Shankari Panchapakesan, executive director of mobile services, The Nielsen Company, South Asia. “The macroeconomy won’t impact this, because rural people are using phones in ways that make a difference in their life, how they work, how they educate their children, and how they access information.”
Fishermen, for example, use phones to find outlets for their catch. Women earn a living with phone exchanges. Carpenters carve their numbers on village walls. For handsets, the undisputed leader is Nokia. The Finnish telephone giant has been in India since 1994, and has invested in three R&D labs, making facilities and distribution partnerships.
Naresh Priyadarshi, head of Synovate Business Consulting, says Nokia has 90,000 distributors in India, giving it a 90 per cent retail footprint. There are also 30,000-plus stores that sell Nokia exclusively. Nokia has concept stores in at least seven major cities.
Together, India’s retail outlets sold 132 million handsets worth 700 billion rupees in 2008, according to Synovate. Nokia’s share of value was 59 per cent, followed by Sony Ericsson with a distant eight per cent, Samsung with seven per cent and Motorola with six per cent. Smartphones account for 24 per cent of sales, according to Synovate, with mid-priced feature phones taking 28 per cent, and the remainder - 48 per cent - being ultra-low-cost phones. Handset makers see ultra-low-cost phones as the road ahead despite the razor- thin profit margins. Already, sales of cheap handsets are depressing average prices. Euromonitor estimates that unit prices fell 50 per cent between 2004 and 2007 to an average of 2,808 rupees.
To put handsets within reach of India’s rural poor, phone makers have had to rethink product design. The Nokia 1100 included a torch, alarm clock and a radio. Nokia’s entry-level phones are now priced at 1,500 rupees. Spice Mobile halved that with its People’s Phone, priced at 599 rupees, including lifetime prepaid activation.
To bond with rural users, Nokia is launching a subscription-based service called ‘Life tools’ with information on agriculture and education. Such phone services will serve as the first online experience for rural Indians.
Among affluent urban users, value-added-services (VAS) for feature phones are seen as the way forward. Synovate reports VAS at 50 million rupees in 2008, and forecasts 70 per cent annual growth to push that to 165 million rupees by 2010. It is this fast-growing, rapidly diversifying market that is attractive to overseas firms, though they should not expect much profit in the short term.
Got a view?
E-mail [email protected]
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