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India’s mobile phone market proves a fierce battleground

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India is the world's second-largest smartphone market after China, overtaking the US last year but consumers are fickle

Hoardings of Apple iPhone X in Mumbai, India. Even the tech giant finds it tough going in the country. Reuters
Hoardings of Apple iPhone X in Mumbai, India. Even the tech giant finds it tough going in the country. Reuters

Prashant Redekar, who owns a mobile phone store in Mumbai, says that his customers are spending more than ever on phones.

But his biggest selling brand is not a global juggernaut like Apple or Samsung. Instead it is the Chinese manufacturer Vivo, which currently accounts for close to half of all the phones he sells.

“When it comes to phones, Indians want the maximum functions for the best price,” he says.

The price range of the Vivo phones he sells starts from about 8,000 (Dh420) rupees and goes up to 45,000 rupees.

Meanwhile, China's OnePlus in the second quarter of this year surpassed Samsung and Apple to become the biggest selling phone brand in the premium segment, grabbing a 40 per cent share of the market, according to Counterpoint, a global industry analysis firm.

India is the world's second-largest smartphone market after China, overtaking the US last year, according to Singapore-based research firm Canalys. There is an enormous opportunity for mobile phone brands to tap Asia's third largest economy, with more than 1.3 billion people, a young demographic, and rising incomes.

“India is a land of opportunity for most brands and being the world’s fastest growing smartphone market is a focus market for us,” says Vikas Agarwal, the general manager at OnePlus India.

“In India, strategy is key and doing the right thing at the right time can take you a long way.”

Social media has been a major part of this strategy and India accounted for over one-third of its global business last year.

India's smartphone market expanded by 14 per cent last year over the previous year, with total shipments to mobile phone vendors of 124 million units, making it the fastest-growing of the 20 biggest smartphone markets globally, according to market intelligence company International Data Corporation.

Half of India's mobile phone users still have basic feature phones, but they are rapidly upgrading to more high-tech devices. It is an opportunity that mobile phone brands do not want to miss. But the Indian market is a tough one to crack. Apple, for example, does not make it into the top five mobile companies in terms of market share by the quarter, according to Counterpoint.

By contrast, more unlikely players such as Vivo, OnePlus, and Xiaomi – all Chinese companies – have somehow managed to hit the rights buttons in India, the figures show.

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Newcomer OnePlus makes the right moves.

Samsung was the biggest selling brand with a 29 per cent share of the Indian market by shipments in the second quarter of the year, according to Counterpoint's research. But Xiaomi was almost on par with a 28 per cent share, and in the previous two quarters, it overtook Samsung to be the top brand by shipments. Figures from Canalys, meanwhile, show Xiaomi and Samsung, both having a 30 per cent share of the market each in the second quarter, with Xiaomi achieving a 106 per cent growth over the same quarter last year and nudging just fractionally ahead of Samsung to hold the top position.

(FILES) This file picture taken on June 12, 2018 shows people walking pass a Xiaomi smartphone and technology store in Shenyang in China's northeastern Liaoning province. Chinese smartphone maker Xiaomi kicked off its initial public offering on June 21 but the firm is likely to pull in about 6.1 billion USD, far less than originally expected, with investors having mixed views about its main business. - China OUT / AFP / -
Xiaomi has expanded rapidly in India. AP

“India has a voluminous smartphone market,” says Dushyant Jani, the founder and chief executive of Mobclixs Technologies, a digital media firm based in Mumbai. “Manufacturers are well aware that the wants and desires of Indian customers will have a significant impact on sales. The progress of the online market has also strongly affected the smartphone industry.”

Xiaomi only entered India four years ago and started out selling its devices online. Its expansion has been rapid and it now has six smartphone manufacturing plants and more than 1,000 service centres in the country.

“Xiaomi never relied on traditional advertising methods like most other brands in India,” says Manu Jain, the vice president, Xiaomi, and managing director of Xiaomi India. “Many smartphone players would shell out massive funds on traditional marketing campaigns to promote their brands.”

Instead, he says the company has targeted its community of what it refers to as “Mi fans” through social media and has heavily relied on word-of-mouth.

“India is a truly diverse consumer market, with so many different communities and socio-cultural practices which influence consumer habits and trends,” says Mr Jain. “India has the largest millennial consumer segment who are the most smartphone friendly of the lot, and willing to experiment with smart technology.”

Companies like Vivo and Oppo have developed smart marketing strategies by investing heavily in cricket sponsorship in India, where the sport is often described as “a religion” and reaches hundreds of millions of Indians via television across the entire country - from the biggest cities to the most remote villages.

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Oppo last year took over the sponsorship of the Indian cricket team this year in the cricket-obsessed nation, while Vivo is the title sponsor of the Indian Premier League cricket tournament.

RESENDING WITH CAPTION CORRECTION, Members of Chennai Super Kings pose with trophy after wining against Sunrisers Hyderabad's at VIVO IPL cricket T20 final match in Mumbai, India, Sunday, May 27, 2018 . (AP Photo/Rafiq Maqbool)
Chennai Super Kings won the VIVO-sposored IPL cricket T20 final. AP

The factor that hugely influences which phone the Indian consumer opts for is cost. Whether they are looking to buy a high-end or budget phone, they always want to get value for money, analysts and shop owners say.

“India is a cost-conscious economy, where affordable products sell the highest,” says Mr Jani. “From local brands like Micromax to Karbonn, to foreign brands like Samsung and HTC, budget smartphones have flooded the market.”

Giant global brands are facing stiff competition in India in the premium segment, too, and mobile phone makers are increasingly looking to corner this end of sector in addition to the mass budget market.

“The premium market demand is being skewed towards sub-40,000 rupee devices due to aggressive offering such as OnePlus through online segment,” analysts at Counterpoint wrote in a report. “This is a new trend where 'affordable ultra-premium' is wooing aspiring rich and young consumers away from more expensive offerings from likes of Samsung and Apple. With the likes of Oppo, Huawei, Vivo and Google looking to be aggressive in 40,000 to 60,000 rupee segment in coming quarters, pressure on likes of Apple and Samsung will be even higher.”

OnePlus' bumpers sales in the country in the second quarter were driven by the launch of its latest flagship device, the OnePlus 6 – with high-tech spec priced at less than half the cost of the iPhone X. The company launched its first phone in India at the end of 2014, only sold online through Amazon.in

Its management says a lot of work has gone into wooing the Indian consumer.

“If you want to succeed as a brand in India, you must truly understand the needs of the Indian market,” says Mr Agarwal.

The Indian customer, for example, is very “experience based” and he says that has prompted the online-focused brand to open stores in India.

“This is something that we realised would require some tweaks in our model,” says Mr Agarwal. “For India alone, we then set up a large-scale experience store in Bangalore as an additional offline touchpoint for our customer to engage with the brand. We are now setting up over 14 new offline touch points in key markets across the country. “

After-sales service is something that is very important for the Indian customer and consequently the company plans to set up “large-scale state-of-the-art service centres” in major cities, he adds.

Social media is key for OnePlus – as is Bollywood.

“We maintain constant engagement with our fans through Facebook, Twitter and Whatsapp for their feedback,” says Mr Agarwal. “Thus, instead of using one ambassador across the Indian market, OnePlus engages with its core fan community through various influencers that appeal to divergent demographic groups across different geographies.

epa06243512 (FILE) Bollywood actor Amitabh Bachchan attends a photocall in New Delhi, India, 21 August 2013 (reissued 04 October 2017). Amitabh Bachchan will celebrate his 75th birthday on 11 October 2017. EPA/MONEY SHARMA
Amitabh Bachchan. EPA

For example, while [Bollywood actor] Amitabh Bachchan’s endorsement worked for a certain category of consumers in urban and rural markets, comedian Vir Das helped us reach the urban young.”

Analysts say India is a fickle market, though, when it comes to mobile phones and a quarter or a year of success does not guarantee that a company can hold on to its market share.

“It's a fight everyday,” says N Chandramouli, the chief executive of TRA Research, a consultancy based in Mumbai. “The Indian market for phones is extremely complex, extremely competitive.”

OnePlus sees huge opportunities in Indian market

Vikas Agarwal, the general manager for OnePlus India, talks to The National about the brand's journey in the country

How does India differ from other markets?

OnePlus is present in over 35 countries with major presence in Europe, US, India and China region. [Since being] launched in December 2014, India has quickly surpassed other regions to become the biggest and the most important market for OnePlus. In 2017, it accounted for over one-third of global business.

How has OnePlus marketed to India?

We do not look at marketing the traditional way and have always relied on word-of-mouth and positive feedback.

Can you give an example of this?

One of the highlights of 2017 was our association with Star Wars whereby we launched a limited edition OnePlus 5T Star Wars device. It all started with a social media post on Star Wars which went viral within the OnePlus community. That’s when we realised that there is a huge overlap between the OnePlus and Star Wars communities in India. The Star Wars campaign further established the connect we have with our users.

What effect is India having on your strategy?

In addition to contributing to global business growth, India has also played a critical role in being a platform for experimentation and learning and therefore establishing partnerships with brands in other global markets like Amazon in Germany and UK and Disney in Nordics and China. Lastly, our Indian community has feedback has played a key role in improving product experience, such as wallpaper designs, software improvements.

What are your plans for India?

OnePlus is committed to long-term growth in India and is investing significant resources into the country. The company intends to move deeper into the ‘Make in India’ strategy and is presently finalising plans on local component manufacturing and sourcing. With an R&D centre coming up in India, the focus being on decentralisation to make India our second headquarters and the sheer potential that India offers, it is safe to say that the brand is looking to explore further exponential growth in the market.

What other interesting trends have you noticed in India?

Apart from being the largest market for OnePlus, India also has the most vocal user-base. The Indian community stays very much involved with the brand and are highly active in terms of feedback. Also, the premium smartphone segment in India is at its nascent stage right now. This means there is tremendous potential for us to explore and grow in India.

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