Friday, September 20, 2013

Smart-phones business in INDIA: Getting bigger, brighter, and even smarter!
One out of every 7 persons in the world will have a smart phone this year. According to a new forecast from market research firm IDC, more than 1 billion new ‘smart phones’ will make their way into consumers' hands in 2013, the first time it will reach that mark in a single year! India’s total population 1.27 billion. Population between 15 and 50 years: 640 millions (approx.) Number of smart phone users in India: 67 Millions. This proves that the penetration of the smart-phones will be much higher in the upcoming days. When we talk about the smart-phones, we must talk about the types of smart-phones those are popular in India. Low price, high memory, bigger displays, better music system, better camera. “Indian market is too much price sensitive and competitive.” says Alcatel Lucent CEO Michel Combes. Major smart-phone providers in India: Samsung, Micromax, Apple, Blackberry, NOKIA, htc etc…
Samsung: According to the report, Samsung had 43.1 percent smartphone market share at the end of 2012, which does not include the Galaxy Note and the Galaxy Note II, which the market research outfit classifies as phablets and does not include in its smartphone shipment numbers. The actual reason for the success is they targeted customers very well. However, they did not innovate but they have launched their products at proper time and with proper price. The most noticeable thing about Samsung is they have targeted all the segments whether it is high-end customer segment or low-end customer segment. When in 2007 Apple comes with its first iPhones suddenly in 2007 end Samsung adapted Android operating system and launched many smart phones that helps them really well in grabbing the market. Recent news is that Samsung is going to release 2 new smart phones ranging around 15000Rs in 2014 targeting the youth.

NOKIA: Microsoft and Nokia have been more aggressive about pushing new phones running the platform onto the market, particularly by showing off camera-focused models such as the Nokia Lumia 925 and 1020. Nokia, in fact, recently pushed out an ad directly challenging the iPhone by lampooning Apple’s “Photos Every Day” ad that touted the fact that the iPhone is the most-used camera on the market. Once NOKIA was the market leader in India. Then, what went wrong with NOKIA? When apple came with its innovative iPhones for the first time in 2007, companies like Samsung realizes that it is a market transition point and to sustain in this market they need to give better products with competitive features. However, at that time rather than adapting a new operating system NOKIA stuck to his old symbian OS. Then as we all know the market of NOKIA started falling. Then back in 2011 NOKIA adapted windows OS and tried to catch the market that it has lost earlier. But it will take time to compete with widely acceptable android OS. Analysts are expecting that Windows Phone to eclipse iPhone's market share by the year 2016 due to the recent release of the Nokia Lumia 925 to emerging markets.

Micro-Max: In 2008, it entered mobile handset business and by 2010 it became one of the largest Indian domestic mobile handsets company by offering unique affordable innovations. The company has a 22% market share in the smartphone segment in India As per IDC Asia/ Pacific Quarterly Mobile Phone Tracker 2013 Q2. The reason for micro-max’s success is it has adapted new technologies at the right moment. It’s main target is youth and lower-end segment. It has also introduced segment specific phones like for young girls BLING 2.This strategy has helped it in growing rapidly.
Apple: Apple is known for its innovations. Apple was the one who changed the definition of a smart phone. Earlier smart phones were for business people but apple changed the whole conception in 2007 by launching iPhones with innovative apps. Apple’s concept is to provide best and most innovative phones to its customers. Apple recently launched iPhone 5S and 5C. 5C is the cheaper version and made to target especially Asian market. It is seen that iphone 5C has copied the style of LUMIA’s covers; it may be a point that can tamper its innovative image.
Htc: HTC is aiming to capture 25 percent smartphone market share in India in 2013, Faisal Siddiqui, country head, HTC India told at the sidelines of the HTC Butterfly launch. What went wrong with htc is they did not target the market properly in the earlier stage of the smartphone era. What Samsung did is they targeted every segment by launching different phones but htc stuck with the high-end customers only. That went wrong but letter it realizes and launches low-end phones like htc explorer, desire etc. But the question rises here is it sufficient to grab the market back?
Blackberry: Once upon a time, they were so-called one and only business phones. But Samsung and Android OS together broke it. The problem that has happened with blackberry is they responded late while Apple and Samsung are competing in to the markets. Their main flagship feature BBM is expensive while whatsapp OTT player has provided the same on iOS, android and windows phones for free. This has smacked blackberry very badly. Now blackberry has responded and launched 3 back to back smart-phones in 2013.
Now, we will have to wait and watch to see who wins the race.

MONIL THAKER

Class of 2013-15 

Tuesday, September 10, 2013


Where the Telecom industry is heading in coming years...? 

          The historic Indian economic reforms of 1991 which gave birth to LPG policy (Liberalization, Privatization and Globalization) completely changed the industrial and business scenario in India. It boosted many sectors in India; telecom sector being one of them. India being a developing country and also the second most populous, Indian telecom industry has witnessed several key moments in the last couple of decades. While many of the events like NTP of 1999 and broadband policy of 2004 led the foundation to help the telecom sector flourish, some of the recent issues like 2G scam have caused uncertainty and slowed down the growth. But recently due to some advancements in FDI and government policies, the debt ridden mobile operators have got some ray of hope. The future of Indian Telecom industry as well as Global Telecom will depend a lot on few factors which are the major driving force for them.

Government Policies

            One of the biggest reasons why telecom industry is sceptical about Indian telecom environment is ambiguity in government policies. Even after government approved 100% FDI in telecom, operators are not sure about M&A policy and hence we won’t see any major advancement in telecom investments in India. With decision on telecom M&A policy around the corner, we can hope for some good news for mobile operators and also users. If the policy is positive for operators, big foreign guns like Vodafone will try to get maximum stake in Indian market.

            The government has also announced key policy measures intended towards providing a transparent business environment to bring the telecom sector back on track. The government has made it clear that future licenses will be de-linked from the spectrum, and companies will need to buy bandwidth at market rates, going forward. While many of the recommendations are yet to be implemented, government has already issued final guidelines on Unified License. According to the new rules, telecom operators can offer telephony, Internet, IPTV and linked communications services under a single license replacing the earlier United Access Service License (UASL) model, where operators had to take separate licenses for offering each of those services. So, in coming years, we can see operators providing these services on a large scale and in a cost effective manner.

            The government is also thinking about refarming of spectrum in 900 MHz band. The operators have taken varying stands on the crucial matter of re-farming that primarily deals with re-auctioning of spectrum once the licence of an existing operator expires and spectrum is vacated. Three private operators (Bharti Airtel, Vodafone and Idea), besides state-run BSNL and MTNL, hold nearly 85% of the spectrum in the 900 MHz band, which is considered valuable by mobile operators in view of the cheaper capital expenditure required for rollout of services. Licences of operators in this band will be expiring progressively from the year 2014 to 2024, prompting the newer operators to seek a chance for buying spectrum. So this will create a level playing field for all operators but at the same time will create a blood bath during spectrum auction. It’s a wait and watch game as to how things will work out.          

Increased Competition among operators

            As aforementioned, privatization attracted many domestic and foreign telecom players in India. Today, considering the vast geography and potential subscriber growth, nearly 13 mobile operators are providing mobile and data services in India. In 2003, Reliance, led by Mr. Mukesh Ambani, disrupted the Indian telecom market with its Mobile Monsoon Hungama offer, wherein they introduced subsidized phone with super cheap call rates. It compelled other telcos to introduce various budget mobile schemes and put the market on fire.

            But the dynamics have changed today as users are concerned with the data schemes provided by their operators. Current trends show that data ARPU forms nearly 30% of ARPU for almost all the operators. In the coming years, with technology slowly shifting from 2G to 3G to 4G LTE, data ARPU is going to be the major revenue source for mobile operators. So the operators like Reliance Jio and AirTel which have 4G licenses can be winners in this case.

New Technologies – 4G LTE

            The major reason for the surge in growth of Telecom Industry has been timely innovations and new technologies. The world is talking about 4G LTE but most of the rural India still lives in 2G world. 3G did not catch the required user attention in India but success of 4G depends on how mobile operators communicate with the users.

            The immature Indian LTE ecosystem, especially so in the TDD variant of LTE, has been a major roadblock for Indian telcos. The device manufacturers have been focusing on the FDD version of LTE mainly because this was witnessing accelerated adoption. This is also the key reason why telcos like Aircel, Tikona and Reliance Jio are yet to launch 4G services in the country. But now that the LTE TDD technology has been launched in Japan and China, device manufacturers have started developing devices for this technology. Despite the positives, the mobile device ecosystem for 4G could still take two or more years to really develop even to the level of 3G in India given that 3G itself has not reached up to a satisfactory level in India.  The challenge faced by the Indian operators is the ecosystem and once that falls in place it will trigger very fast.

Deals with OTT players

            Recently, Over the Top (OTT) players like Whatsapp, Nimbuzz, Facebook, Viber, Skype, Twitter, etc. have become a threat to mobile operators as they are eating into their SMS revenue. These OTT players are here to stay as they offer social networking benefits to the users.

            Mobile subscribers’ adoption of OTT services has had a momentous impact on mobile operators as data revenue seems to be the way ahead for telcos. Telecom operators are increasingly exploring the possibility of partnering with Over the Top (OTT) players for mutual benefits. Vodafone partnering with Twitter and AirTel partnering with Google are few examples. With more and more consumers gravitating to Smartphone’s and subscribing to an ever expanding array of OTT services, the operators are left with little picks. Undoubtedly, the Indian telcos are actively pursuing opportunities to establish meaningful businesses with OTT players to effectively monetize the benefits they bring. Almost every major operator is stepping out of its comfort zone to engage services offered by OTT players to add value to their offerings and in the process gain some competitive advantage. In a bid to drive internet usage, offering free access to OTT players will naturally add more internet users, which will, in due course act as a catalyst for generating higher revenues. Monetary realization of these partnerships will certainly take at least three-five years; hence to evaluate the success rate of such partnerships we have to wait and watch. But, this is how mobile operators will make use of OTT players in coming years.

Kiran Raikar

Class of 2015