India's handset makers may have to diversify into new business avenues such as TV manufacturing in order to stave off the steep competition in the local mobile market and offset slower growth from its main business.
One of the country's largest mobile phone manufacturers Micromax, for example, has made such a move after it announced itsin October. In fact, beyond manufacturing television sets, it also launched a dongle to convert normal TVs into "smart" one capable of accessing the Internet and, with it, online services. The company said the move into TV manufacturing was a natural progression as it looked to widen its reach.
Commenting on this development, Pradeep Singh, analyst at Itim Research, said this is an "interesting" move by Indian phonemakers given that the TV business is not the cash cow it used to be.
"It's an interesting move, especially sincelike Panasonic, Sony and Sharp are from their TV businesses with competition from South Korea and China," Singh noted.
Another market watcher was slightly more optimisitic over the move to branch out into new areas. lok Shende, principal analyst at Ascentius Consulting, said looking at past examples, there was enough ground for companies such as Micromax to feel positive about their prospects.
He cited the example of Videocon, a local white label goods vendor in the Indian market, which transformed itself from the mid-80s selling color television sets to now straddling across many product categories including phones and wireless telecom services.
"While the television market is savagely competitive, there is room for players like Micromax to acquire marginal market share," Shende said.
Growth in existing markets limited
The analyst then pointed out Micromax's decision to branch out to the TV business needed to be seen in context of , in that mobile growth had reached its limits. , for example, was reaching its natural points of saturation, he noted.
"The demand drivers for phones in the past were led by new customer acquisition; the market in the future is likely to be driven by replacement cycles. It takes 2 to 3 years to run the course," Shende explained.
Additionally, since Micromax's traditional markets are India's hinterland states, it would be difficult to find new growth avenues given that consumers there are not showing the same level of enthusiasm to shift from feature phones to smartphones, he said.
The Indian company can also leverage its traditional strengths in its well-established distribution network and brand name to boost its TV foray, he added.
Singh said with foreign mobile players chipping away at the market share of, they would need to find new ways to compensate. Many have already started going into tablets and mobile phone-watch hybrids, and he would not be surprised if such business diversifications continue as companies look to provide for their products.
South Korea's Samsung is one vendor that's been aggressively gaining ground in, rising 38 percent from the year before to corner a quarter of the market, according to July figures by CyberMedia. It stayed behind Nokia though, which dropped 8 percent but still held on to first place with 38 percent market share. Micromax was a distant third with 6.3 percent, it noted.