The market for mobile phones is increasing at a rapid pace all over the world and emerging country like India is also witnessing a two digit increase in the numbers YoY. It is but natural that many a local and international companies shall be interested in setting their foothold in this lucrative market. Mobile phone industry is further divided as mobile Phone Instrument (Nokia, Samsung, LG, Sony Ericsson, Motorola and other local players like Micromax, Karbon, Spice, etc.) and Mobile Phone Service (Airtel, BSNL, Reliance, TaTa Idea, Hutch and others). Both sectors are witnessing fierce competition in pricing and offering extra features and attractive promotional activities is also common to all players. It is but natural that Mobile phone instrument industry is directly dependent on Mobile Phone Service industry. The more areas covered under the service paradigm more market for various instruments.
Mobile Productions and Exports
Mobile phone production in India increased to 512 million from a mere 144 million in 2002-03 at a compound annual growth rate (CAGR) of 28.3 percent. Mobile phone production revenue reaches $13.6 billion by 2011 from $4.9 billion in 2006, a CAGR of 26.6 percent. The growth in production is driven mainly by the expanding mobile subscriber base in India and favorable local government policies promoting local electronics manufacturing in India.
India is the world's second-largest telecom market after China, with the total wireless subscriber base crossing 850 million at the end of June, 2011. By 2020, the handset demand is projected to reach 350 million a year. At present, Indian mobile handset market is estimated to be in around 130 million handsets per annum. It added that 510 million handsets are estimated to be manufactured in India, during the same year.
In India, handsets are categorized as high, medium, low, and ultra low cost ASP devices. The medium ASP segment is likely to be the fastest growing segment in terms of volume, affordability of feature-rich handsets is also expected to be a key enabler of handset adoption. The government should create a sizeable export promotion fund for the telecom equipment and services export and handset exports from India may be included in bilateral trade agreements with emerging markets in regions such as South Asia, Africa, Latin America, Russia and Eastern Europe.
Figure 1: Production and Exports of Mobile phones in India Source: (www.dot.gov.in)
Challenges and Options to Create Competitive Advantage in Mobile Phone Industry
1.Competition from discounted pricing and falling margins
2.Rivalry among existing players to capture market
3.Growing number of players making value chain modus operandi critical 4.Complexity of change
5.High marketing costs
1.Strict cost controls through the use of more outsourcing options and controlled investment in infrastructure 2.Micro segmentation, increased range of products and focus marketing 3.Innovations of new models in value chain to create competitive advantage 4.Develop positive attitude towards change and restructure business procedures 5.Effective customer relationship management and customer retention
Porter’s Five Forces
Figure 2: Porter Five Forces Model
1.Threats of New Entrants
A first look, any new entrant in this market faces heavy restraints. Capital requirements and technological barriers are very high. The new entrants have to face a lot of obstacle to build their market in India. The well-established big companies like Nokia, Samsung, LG, Motorola, and Micromax have actively taken steps to increase their market share. It will tough to differentiate mobile phones by the new entrants while keeping a competitive price. As Micromax have a large portfolio of phones from low range i.e. Rs. 1000 to the high range i.e. above Rs. 20000....