Industry Analysis Smartphone Market Structure in India

The smartphone market in India has gained significance with increase in disposable incomes, demographic dividend with 2/3rd of population in income earning stage (23-60 years) and a rapidly expanding global economy. The main factors influencing usage of smartphones include: Continuously evolving applications (apps) that have enhanced user experience and increased versatility of phones which can now be used for myriad purposes. Advent of high speed internet technology namely 3G and 4G technology at relatively affordable prices Decreasing prices of smartphones with increased competition Unorganized market facing competition from organized market who have started to develop affordable phones with same set of features Apart from mobile phone manufacturers, the industry has also seen the growth of mobile phone carriers, mobile phone application developers and mobile phone content providers. It is expected that the industry is going to keep on growing to attain the anticipated goals at a fast rate. There are two big reasons for the rapid growth of mobile phones industry in India. First, there is a huge market for entry-level mobile phones. And second, the high-end mobile phone buyers too exist in the Indian mobile phone market. These reasons encourage the top mobile phone manufacturers to experiment their products from different categories in Indian market. Porter Five Forces Analysis Entry Barriers: High High Fixed Costs and Investment for Research and Development Reputation of incumbent firms Established brands enjoy trust Networking choices influenced by family and friends Switching costs Switching phones and service costs money and time to users Differentiation limited ability to differentiate from other phones

Intensity of competition among firms: High The advent of new players particularly local Indian manufacturers has increased the intensity of competition in industry over the last 2-3 years. The market share of the mobile companies reflects the fragmented nature of the industry, with more than 10 players operating in Smartphone industry.

Degree of product substitutability: High Smartphones can be substituted with other devices due to which degree of substitutability is high. Substitute product for Smartphone may be normal 2 and 2.5G or feature phones , Tablets and Laptops depending upon price and features.

Degree of bargaining power of suppliers: Low Smart Phone firms have relatively weak bargaining power owing to Presence of substitutes plenty of substitutes are easily available, accessible and affordable Elastic Demand smart phones are not a necessity and therefore there is an Elastic demand for them. Ease of Availability of Information customers can readily access information, compare and benchmark phones against each other to determine right choice for them Differentiation limited ability to differentiate from other competitors

Degree of bargaining power of customers: High Competition Wide variety of choices for customers Ease of Availability of information Presence of substitutes

Mobile Phone Market Overview

Mobiles

1. Ultra Low-cost Mobile Handsets (ULCMHs)

2. Low-to-medium cost Mobile Handsets (LCMHs)

3. High cost Mobile Handsets (HCMH)

4. Smartphones

Price Range: Price Range: Price Range: - Less than Rs 1500 - Key features include B&W screen, messaging and handbook Price Range: - Rs 1500 to Rs 2500 - Key features include colored screen, FM radio and VGA screen - Rs 2500 to Rs 5000 - Key features include GPRS,extendible memory, MP3 player, and digital camera - Greater than Rs 4500 - Key features include application installation, QWERTY Keypad/touch screen, dual SIM, Wi-Fi and 3G

Smartphone Market Share of Manufacturers

Market Share (%ge)

Others 29%

Samsung 26%

Nokia 5% Sony 5% Karbonn 13%

Micromax 22%

As per a report published by market research firm IDC in 2013, number of smartphones shipped in India rose by whopping 200% increasing to 9.3 million shipments in second quarter of 2013 as compared to 3.5 million shipments in second quarter of 2012. Samsung Galaxy Star in the low-end segment and Samsung Galaxy Note II in high-end segment are bestsellers that have catapulted the rise of Samsung in 2013. Zero Interest Equated Monthly Installment (EMI) plans are particularly popular with customers thereby removing the barrier of affordability. Android operating system developed by Google that offers wide range of applications(apps) which can be run by users on their phones is a major factor that has fuelled growth of Samsung. Micromax Canvas series of smartphones are smartly priced a notch lower than market leader Samsung offering same benefits at lower prices to consumers. In a price-sensitive Indian market, their strategy has started to pay dividends as they slowly begin to consolidate their market share. Screen Size of these phones has also increased over time with latest Canvas Doodle 2 model having a screen size of 5.7 inches.

Karbonn, another Indian manufacturer has also adopted a similar strategy to Micromax with their A series and Titanium series being the most popular choices in market. Dual-SIM functionality and large screens are the most sought after features. Devices with 5-7 inch screens accounted for 30% of the market, growing a whopping 17 times year over year

Smartphone Market Share of Operating Systems

As per report published by CyberMedia Research in 2013, the market share of smartphones captured in terms of operating system includes:

iOS 3%

Market Share
Windows Mobile 3% Bada 9%

Research in Motion 12%

Symbian 17%

Android 56%

Android has continued to cement its position as the numero uno in terms of market share and it seems set to retain that crown for a few years. Googles Android has developed huge number of applications (apps) which work on their software. Many India specific apps have been added and customized for Indian customers. Symbian is on a terminal decline path globally and Windows Mobile OS is gaining users albeit at a slow pace.