Operator partnerships most viable for Asia's phonemakers

Less established smartphone brands trying to carve a niche for themselves in Asia's emerging markets would be better off partnering with local telcos to sell their handsets as they lack the necessary funds to build a retail distribution network. They can also leverage the operator's brand and existing customer base to boost sales efforts, note analysts.

Shiv Putcha, principal analyst for emerging markets at Ovum, said that unlike their more established counterparts, emerging smartphone brands are typically regional and small in scale.

"While the China-based vendors are larger, the ones in India and Southeast Asia typically do not ship more than 1 million units a month," he noted.

The manufacturers from the latter two markets typically tap on Google's free Android operating system (OS) and produce their devices in the low-cost China labor market, which allow their products to be more cost-competitive, Putcha pointed out. However, these companies will find it difficult to raise the capital to build a retail distribution network to scale regionally or internationally, he added.

Thus, partnering with local operators to bundle their devices with mobile plans is one inexpensive way to get their products out into the market, the analyst said.

Frost & Sullivan's Asia-Pacific principal consultant, Spike Choo, added that less established phonemakers also find it easier to ride on operators' existing brand and customer base to cross- and up-sell. This partnership allows both parties to pool their marketing and sales resources together to make a bigger market impact too, he said.

Additionally, manufacturers can differentiate themselves by emphasizing on the value-for-money attributes of the bundle, which will also help convince users of the device's legitimacy and help allay consumer fears on product quality, configuration and compatibility issues, he noted.

Distribution strategy depends on market
According to Putcha, building white label devices for mobile operators is still the best way forward for newer, less established brands to grow their businesses.

"It is unlikely that many of these brands will scale up effectively to compete with the big brands on anything other than price so their best bet is to partner with the operators," he explained.

Choo pointed out that the market the handset maker is targeting would determine its go-to-market strategy, too. For instance, in some developing countries in which prepaid mobile subscription makes up more than 90 percent of the user base, operators are less likely to consider phone bundling due to lower demand, he said.

In such instances, vendors will need to consider alternative distribution strategies, which might include partnering with big retailers, chain stores, convenience stores as well as providing affordable ownership plans to encourage device adoption, the analyst suggested.