India smartphone wars brewing with challenge from Chinese vendors

India smartphone wars brewing with challenge from Chinese vendors

Summary: With the Chinese players serious about invading the Indian smartphone turf and local companies like Micromax well entrenched, the country is going to see an all-out contest for the consumer.

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Who would have ever thought that phone giants like Nokia and BlackBerry, which captured the imagination and wallets of Indians in the past, would become fringe players in a handful of years, eclipsed by local phenomena such as Micromax and Karbonn?

But that's exactly what has happened here in the last two years as the latter two local stalwarts have gained market share of some 17 percent and 11 percent, respectively, in smartphones (with Samsung losing share, but still ahead at around 33 percent). The trio accounted for over 60 percent of the smartphone market during the July-September period in 2013, when nearly 13 million smartphones were sold.

Yet, these companies may not have too long to rest on their laurels. Long known for providing cheap and unreliable dual-SIM phones in India, Chinese phone makers are now getting serious about invading a sizzling market that has seen 40 million smartphones sold so far, with another 110 million units predicted to be snapped up by 2017.

For instance, Shenzhen-headquartered ZTE, China's largest 4G vendor, which had successfully won contracts to supply 4G network and gear to Bharti Airtel's operations in Kolkata, Punjab, and Haryana, announced a few days ago that it is going to mount a hard charging campaign to attract Indian customers hoping to grow the device market in India by about 30 percent via its popular Grand and Nubia line of phones.

The firm, which now has less than 5 percent share in the global smartphone market, plans on doubling it by the end of 2016, helped by a line of wearable technology products, such as its "grand watch". A sign of its seriousness is its recent announcement regarding setting up 1,000 branded stores in China, India, and Indonesia, amongst other countries, very soon.

Joining ZTE is Gionee, another Chinese handset maker known for supplying a number of Indian companies, which is now eager to take the plunge here. It has already begun flogging its devices for around $110. The company recently launched one of its smartphones at the Formula One track in Greater Noida.

These are bold plans for a number of reasons. As far as value for money is concerned, Indians have already been won over by local favorite Micromax, which has been going all out to woo Indian customers, especially of a newer generation, who are not necessarily just impressed with a foreign name attached to a product, but pay close attention to the relationship between form factors and pricing.

Meanwhile, other companies, like the world's largest PC maker, China's Lenovo (which also has 12.6 percent of its home country's market in smartphones), as well as Japanese giant Sony, are also hungry for traction in India and have announced extremely ambitious plans to storm the Indian market by leveraging their already well-known brands and retail and distribution channels backed by a tsunami of marketing dollars.

Then there are other fast-rising local stars such as Lava, which has rapidly risen to a 4.7 percent share in the three-month period that ended in September 2013, just behind Micromax and Karbonn and abreast with Nokia thanks to its popular Xolo line of phones. Lesser-known brand Intex launched the first octacore smartphone (offering faster processing speeds) recently, and plans to offer smartphones for under $50. Meanwhile, the stumbling and bumbling Nokia has impressed many with its Lumia line of phones, and with Microsoft as parent now, is unlikely to cede ground so easily.

Still, to say that the Chinese are tough customers could be the understatement of the year. Moreover, many have climbed the value curve quickly. Xiaomi, which offers phones that are considered by many to be some of the coolest and most cutting edge globally, could easily give Micromax's efforts a run for their money and upend things in India if it decides to come here. The company recently poached Hugo Barra, vice president of Android product development at Google, to ramp up its international business development.

Of course, success in India means winning the distribution, retail, and marketing game with a convincing after-sales service setup that Indians are increasingly particular about.

Nevertheless, all of this is certainly good news for one cohort — the Indian customer — who for the first time in history, will be able to avail of global products at cut-rate prices.

Topics: Smartphones, Android, Lenovo, India

Rajiv Rao

About Rajiv Rao

Rajiv is a journalist and filmmaker based out of New Delhi who is interested in how new technologies, innovation, and disruptive business forces are shaking things up in India.

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