INDUSTRY PROFILING :

MOBILE INDUSTRY
UNDER THE GUIDANCE OF PROF
A.K. SHARMA

Submitted by
Dishant Hans
Mohit Goyal
Piyush Jain
Shivank Rastogi
Vaibhav Agrawal

(22)
(33)
(43)
(57)
(66)

Table of Contents
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HISTORY OF MOBILE INDUSTRY

REASONS FOR CHOOSING MOBILE
INDUSTRY

MAJOR PLAYERS IN MOBILE INDUSTRY

PRESENT SCENARIO OF INDIAN MOBILE
INDUSTRY
RECENT DEVELOPMENT & TECHNOLOGY
6 KEY DRIVERS OF THE INDIAN MOBILE
INDUSTRY
GROWTH OF MOBILE INDUSTRY

INDUSTRY PROFILING MOBILE INDUSTRY

HISTORY OF MOBILE INDUSTRY

Till 1984 telecom services were under state

government control with the department of Post and
Telegraph which was later crafted out as
Department of Telecommunication (DoT) in
1985.
After government of India announced National
Telecom Policy in 1994 to allow Private players.
Mobile industry held ground way back in 1995 with
only a few subscribers. At that time it was
considered as an item of luxury and not as necessity.

Indian

telecom industry has penetrated market to 43%

in last 10 years and so the Indian mobile industry has
undergone a revolutionary change during the past few
years to become one of the leading mobile markets on the
global map.
Essar launched first mobile in India and the first
mobile operation was provided by MODI Telstra.

Sluggish growth thereafter due to unfriendly telecom

policies only 1 million users till 1998 but then comes new
regulations in 1999.

. The number of mobile phones crossed five million by

2001 and doubled to 10 million in 2002.

INDUSTRY PROFILING MOBILE INDUSTRY

o As here in graph we can see how mobile industry

take stride in 2005 and continued in 2007 as well
while landlines scoring almost same in users from
2005-2007.
o In 2008-09 the overall telecom equipments revenue
in India stood at 136,833 crore during the fiscal, as
against 115,382 crore a year before.
o The mobile handset market is expected to show
steady growth through 2014 when end user sales
surpass 206 million units.

INDUSTRY PROFILING MOBILE INDUSTRY

REASONS FOR CHOOSING MOBILE

INDUSTRY

Mobile industry in India is the fastest growing

industry with lot of opportunity to grab ahead.
Factors responsible for the growth of the industry:

Growing income of the middle-class families,

Popularity of mobile based services like online ticket booking

Low rate mobile connection plans

Technological advancement

India is the fastest growing telecommunications

industry in the world, it is currently holding a
market of 706.69 Million (Dec 2010) mobile phone
users and is projected that India will have 1.159
billion mobile subscribers by 2013.

INDUSTRY PROFILING MOBILE INDUSTRY

The mobile industry in India has been an

attractive destination for the global mobile
phone manufacturers from the very start.

The number of emerging vendors in India

grew to 68 and these mobile handset
providers captured 41.2% of total shipments
(sales) for the first time during the July-Sep
2010 quarter.

Apart from mobile phone manufacturers, the

industry has also seen the growth of mobile
phone carriers, mobile phone application
developers, mobile phone content providers
and so on

INDUSTRY PROFILING MOBILE INDUSTRY

MAJOR PLAYERS IN MOBILE

INDUSTRY

There were more than 28 new handset brands

which started selling handsets in 2009 making
total to 63 and these new players account for over
12.3%of handset sales which is quite significant.
The local players account for 17.5 % percent of
sales now
Some of the major players are
Nokia
Samsung
LG
HTC

INDUSTRY PROFILING MOBILE INDUSTRY

On the basis of technology, Nokia is the dominant

player on the GSM space, accounting for 63% of
the installed base (phones currently in use) while
LG rules CDMA with 48% of installed base
market share.
The Chinese brand G'Five emerged as number
two player in terms of unit shipments market
share while Korean handset manufacturer
Samsung stood at number three in 3Q 2010.

INDUSTRY PROFILING MOBILE INDUSTRY

MARKET SHARE IN INDIA

Even after facing tough competition from

companies like- Micromax and G-Five, Nokia is
having a market share of 65% and Sony Ericsson
is at second place with market share of 12%.

INDUSTRY PROFILING MOBILE INDUSTRY

DISTRIBUTION IN TERMS OF
UNITS

INDUSTRY PROFILING MOBILE INDUSTRY

GROWTH RATE OF INDUSTRY

INDUSTRY PROFILING MOBILE INDUSTRY

PRESENT SCENARIO OF INDIAN

MOBILE INDUSTRY

India constitutes approximately 10 percent of

world wile sale of mobile devices. Market is
supported by global and local players as well.
Growing influence of local handset players in the
low-end segment has forced high-end companies
to sell phones at a discounted rate.
Mobile device sales in India are forecast to reach
138.6 million in 2010, an increase of 18.5 percent
over 2009 sales of 117 million units. The mobile
handset market is expected to show steady
growth through 2014 when end user sales
surpass 206 million units.

INDUSTRY PROFILING MOBILE INDUSTRY

Cellular phone penetration in India stood at 45

percent in 2009, and the market is entering into
a second phase of growth, with replacement sales
increasing from 45 percent in 2009 to 50 percent
of total sales in 2010.
Sales of mobile has shown an aggregate increase
of about 50 %.
Despite very high competition Mobile industry is
growing at a very high pace.

INDUSTRY PROFILING MOBILE INDUSTRY

LEVEL OF COMPETITION
Global mobile manufacturing firms are facing
tough
competition
from
local
mobile
manufacturing firms
New entrants are using various techniques likelow price, innovative products etc. to capture
market share. Companies like Micromax, G-Five
etc are using low price strategy to gain market
share. These companies are offering products
similar to products of other high-end companies
but at much lower prices.
With the entry of low priced Indian mobile
handset player like- Micromax, Lemon mobiles
etc, focusing on value conscious consumers has
intensified competition in the Indian mobile
device market.

INDUSTRY PROFILING MOBILE INDUSTRY

Due to this strategy, Micromax is now Indias

third-largest GSM mobile phone vendors with
a market share (in term of units sold) of 6
percent after Nokia (62 percent) and
Samsung (8 percent).

INDUSTRY PROFILING MOBILE INDUSTRY

MARKET STRUCTURE &

SEGMENTATION
Low-end

products

Low-end
products
have
price
band
of
approximately Rs.1000 to Rs.3000. This segment
contributes to approximately 15% of total Indian
mobile device market. The average selling price
(ASP) of a mobile device is approximately $52, with 85
percent of devices sold costing below $100.These
phones are generally meant for basic functions.
These products are meant for people for whom
cell phones are just another communication
device.

Mid

ranged product

These products have price band of Rs.3000 to

Rs.10,000. Almost all companies offer products in this
range. These types of products have various feature
like- good music speakers and compatibility, good
mobile camera and social networking application. These
products are used by Mobirati Users, Paragmatic
Adopters and Social Connectors

INDUSTRY PROFILING MOBILE INDUSTRY

High-end

products

High-end segment have price band of above

Rs.10,000. Local players like- Lemon mobile,
karbonn mobile etc dont target this market. This
segment constitute products like- smart phones,
PDA and high-tech mobile handsets. Smartphone
are the fastest growing market segment,
registering over 50 per cent growth in 2010 over
2009. Smartphone sales are expected to grow 60
per cent in 2011 over 2010.

INDUSTRY PROFILING MOBILE INDUSTRY

GOVERNMENT REGULATIONS &

LEGAL ASPECTS

In 1994 the government of India announced National

Telecom Policy which allowed private players to enter
in the market of telephony in India but the policy was
not friendly enough to attract the private companies
for a longer duration.
Anti-Dumping Duty
Anti dumping duty of up to 266 per cent was imposed
on imports of IT equipment also used in the telecom
sector to guard the domestic industry from cheap
Chinese and Israeli shipments. The mobile industry
was also suffering from the same in India due to
cheap Chinese mobiles which disturbed the whole
Indian mobile market especially rural. Anti- dumping
duty made the price of the Chinese or Israeli mobiles
comparable with the domestic players.

INDUSTRY PROFILING MOBILE INDUSTRY

RECENT DEVELOPMENT &

TECHNOLOGY

3G Auction
With the auction of 3G spectrum in 2010, some of
the telecom service provider companies are all set
to launch their 3G services which has
transformed the mobile industry. Mobile phone
companies have launched their 3G compatible
handsets to redefine the Indian mobile market.
Bluetooth and Wi-Fi technologies enabled
handsets were in the most demanded mobile
phones and now the demand for 3G enabled
handsets has also risen up.

INDUSTRY PROFILING MOBILE INDUSTRY

RECENT MERGERS AND

ACQUISITIONS
Activities in the industry

Idea, the countries fifth largest telecom service

provider company, acquired Spice Telecom in
2008 and the deal consisted of 4 transactions.
It acquired the MODIs 40.8% stake in Spice (for
Rs 2,720 crore).
It launched the mandatory 20% open offer for the
Spice shareholders, jointly with Telekom
Malaysia International (TMI).

The

merger of Spice with itself and it offered a 14.99%

stake to TMI through a preferential allotment.
The

Idea-TM combine launched the open offer at Rs

77.30 jointly with TMI, which now holds 39.2%in Spice.
It

was the fourth largest merger and acquisition deal

involving an Indian entity in India

FOREIGN INVESTMENTS

India has become an extremely attractive market

for Original Equipment Manufacturers (OEMs)
in most segments of electronics production, with
an estimated 11% of the global market share by
2015.
At the current growth rate, the Indian telecom
equipment manufacturing sector is set to become
one of the largest globally by 2020.

FOREIGN DIRECT INVESTMENT

6 KEY DRIVERS OF THE INDIAN

MOBILE INDUSTRY

Further cuts in regulatory costs (license fee, USO

fund contribution, ADC, etc)
Infrastructure sharing to result in speedy rollouts of
networks and wider coverage
Lower cost of equipment (with most of the global
equipment manufacturers setting up operations in
India)
Low wireless penetration of about 22.5% compared to
world average of 50%
Favorable demographics rising young population
coupled with growing middle-class to drive
consumption power
Increasing affordability low tariffs, easy payment
plans and low priced handset

SWOT ANALYSIS

INDUSTRY PROFILING MOBILE INDUSTRY

SWOT Positive

Negative

Internal Strength
Factors High technological
advancement

Large customer base

Increasing disposable
income of the people

Greater number of
Telecom service
providers thus high
demand of mobile
phones

Government policies
to support the
industry

Weakness

Highly Competitive

Intensive R&D required

Low end products yields

very less margin

INDUSTRY PROFILING MOBILE INDUSTRY

Extern
al
fact
ors

Opportunity
Threats

Rural market is very less Very lucrative industry,

penetrated so great
and low barriers to enter
opportunity ahead
in the industry

3G auction has paved

Unorganized sector

the way for highly

Need to look for each
sophisticated mobiles.
social class

I-pods, Smart-phones are Need to keep abreast

highly demanded
with the technology

QWERTY keypad mobiles

with various applications
like GPA, Maps 3G
features.

Android compatible
mobile phones.

Microsoft office and pdf

readers enabled phones.

Government policies for

mobile banking provides
great opportunity ahead

INDUSTRY PROFILING MOBILE INDUSTRY

KEY OPPORTUNITIES

With fastest growing population in India, it proves

to be one of the largest market in the world. The
telecommunication market is growing with
tremendous pace which provides immense
opportunities for mobile industry.
The present penetration of mobile industry in
India is only about 43% which is highly contributed
by urban market, thus rural market is yet to be
tapped

INDUSTRY PROFILING MOBILE INDUSTRY

PORTER 5 FORCES MODEL FOR

MOBILE INDUSTRY

Barriers to Entry

The mobile industry is free of barriers, and any

organization can enter as long as it fulfills the
general compliances of the government. Absence
of any barrier in the mobile industry makes it
highly competitive, where in the companies need
to keep them attached with the customer to get
the pie of the market

 Threat

of Rivalry

A segment is unattractive if it already contains

numerous strong or aggressive competitors.
Mobile industry in India has a number of strong
competitors but it has a lot of opportunity to grow,
with only 43% of the market penetrated yet. The
companies which impose high threat to the young
entrants are:
Nokia
G Five
Samsung
Lava

INDUSTRY PROFILING MOBILE INDUSTRY

LG

Micromax
Videocon
Fly

ZTE
Threat

of substitute product

Low end mobile phones in India are highly

substitutable. With people demanding more and
more sophisticated mobile phones, the low end
product in the industry are facing threats of
substitution.

Threat of suppliers growing bargaining

power
Threat of suppliers bargaining power is the
ability of the supplier to raise prices or reduce
quantity supplied. At the low end mobile
segments, the suppliers have high bargaining
power with low brand equity products. If high
end products are taken into consideration then
the suppliers bargaining

INDUSTRY PROFILING MOBILE INDUSTRY

power is very low because the brand equity of the

products that are available in this segment is
very high.

Threat of Buyers growing bargaining

power
The companies are competing on price in India
with growing companies in the industry. Thus,
the buyers bargain power is becoming very high.
The companies in the industry are also suffering
due to unorganized sector, which is eating up
their market share.

INDUSTRY PROFILING MOBILE INDUSTRY

MARKET FORECAST WITH

MACROECONMIC ASSUMPTIONS

At present, India with more than 700 million

mobile subscribers is ranked number 2 in the
world mobile market and it is expected that with
in no time it will cross 1 billion mark with the
present growth rate. The innovations in the field
of telecom sector are preparing market for mobile
industry as well.
The Mobile TV, Mobile commerce, 3G, PDAs are
some of the examples that clearly show the bright
future of the Mobile industry ahead

INDUSTRY PROFILING MOBILE INDUSTRY

Mobile is always seen as a front runner in

claiming Indias position in digital landscape.
The mobile density in India is in upwards of 40
% with urban region having tele-density 50.3%
and rural with only 28.2%, whereas Internet
penetration continues to lag between 4-6%. Thus
there is a huge scope to capture the rural market
and urban market as well.

INDUSTRY PROFILING MOBILE INDUSTRY

GROWTH OF MOBILE INDUSTRY

The graph below shows the growth in number of

towers to support telecom services in India with
361000 towers in 2010 and is expected to grow by
20% pa. The increase in number of towers represent
increase in the penetration of the telecom industry
and hence the mobile industry in India.

INDUSTRY PROFILING MOBILE INDUSTRY

Mobile internet usages are also on upheaval trend

worldwide due to increasing sales of iPhone and
other high end phones
Social networking site penetration is 68.5% reach
with 130.1 average minutes per visitor and 13.0
visits per visitor. The intensity of penetration of
social networking sites is expected to be more than
75% by 2015 which will raise the demands for mobile
phones that can support these sites
India produce a large scope for mobile commerce
with 91% of the transactions happening in India by
the way of cash and cash continuing to be the most
preferred payment mode for the common man in
India-marked-to-market mobile applications will play
a significant role in making m-commerce successful

INDIA, A HUB FOR EXPORTS

Nokia is exporting 30-40% of its annual
production at the Sriperumbudur (Chennai)
plant to countries in Southeast Asia, ie.
Singapore, Thailand and Malaysia, and is
planning to expand its exports to other
continents.
LGs manufacturing unit in the outskirts of Pune,
Maharashtra exports mobiles to countries in the
Middle East, Africa and Asia. The company has
earmarked 10 million handsets from its unit in
India.

India is geographically central to growing markets

in the Middle East and Africa, making the time
span from design-to-market shorter than if the
mobiles were to be transported from Europe or
other production zones.
An added advantage is that indirect labor costs in
India are about the same as in China but direct
labor costs are about 30% lower.
Mobile manufacturers plan to make India a hub for
exporting mobiles to the Middle East, neighboring
countries and Europe.
Foreign Direct investments has helped India to
reveal its potential of becoming a global hub in the
transnational production networks

Imports
India imports 8 million handsets every month.
Import of unbranded Chinese handsets into the
country has increased 90 per cent to 38 million
units in the current year against 20 million units
in 2009-10 .
According to the Indian Cellular Association
(ICA), the import of unbranded Chinese handsets
has grown four-fold in three years from 5.5
million handsets in 2007-08 .
India has banned the import of mobile phones
without a unique international mobile equipment
identity (IMEI) number in 2009.

GSM & CDMA Mobile Phone Importers Data

Mobile Brand

Qty (Pcs)

Total value INR

APPLE

769

18464395

BLACKBERRY

118373

1577076671

CHINESE

2758502

4030201341

FLY

40800

45683435

G-FIVE

233410

340843650

HTC

25409

506443202

KARBONN

54700

80146449

LAVA

146408

200038198

LEMON

123540

195411215

LG

286067

504828871

MICROMAX

656490

1131643904

NOKIA

538375

3276070731

SAMSUNG

1125238

3299353637

SONY

67043

570100309

INDUSTRY PROFILING MOBILE INDUSTRY

REFRENCES
Department of Telecom, India
Telecom Regulatory Authority of India
India-cellular Association
Internet and Mobile Association of India
Mobile Future Forward
Indian Telecom Industry, Corporate Catalyst
India
Spectrum Auction in India, IIMA
www.siliconindia.com
Voice and Data online, CIOL