Samsung and Nokia-Mobile Handsets-Comparative Study

Project Report on Comparative Study between Samsung and Nokia in Mobile Handsets-Consumer Preferences

Case Study on Comparative Study between Samsung and Nokia in Mobile Handsets

Marketing Topic-Consumer Buying Behaviour of Mobile Handsets in India-Comparative Study between Samsung and Nokia

 

Mobile Handsets Market in India

Nokia is leading handset vendor in H110, but its share has fallen significantly since 2007, as local vendors such as Micromax grow stronger Nokia responds to local vendor advance with the release of its first Indian market, dual-SIM phones

The Indian market has become increasingly crowded, with about 350 models available across a spectrum of segments. Multinational vendors such as Nokia, Samsung, Motorola, LG and Sony Ericsson manufacture handsets in India. By H110, Nokia remained the leading handset vendor with a volume market share of about 36%, far ahead of rivals such as Samsung, G'Five and LG, which have shares of less than 10%.

Nokia's share has fallen significantly, from as high as 60% just 2 years earlier. This reflects the fact that multinational vendors face increasing competition from local brands such as Micromax, Karbonn and Lemon Mobile. Meanwhile, multinational and local brands face a strong challenge from Chinese manufactured unbranded and copycat phones.

In contrast to markets such as China where local production dominates supply, the Indian market is still largely served by imports. According to data from the Telecom Equipment & Services Export Promotion Council, around 80% of handsets sold in India each year are imported, although some estimates have put the share closer to 75%. The market share of Indian handset vendors in their domestic market is estimated to have increased from less than 1% in 2007 to above 15% in 2010, with the number of active vendors increasing from about five in early 2008 to at least 25 as of 2010.

The largest domestic manufacturer, Gurgaon producer Micromax, has a share of about 4- 5%. The company, which has phones starting at US$40, was reported in September 2010 to be selling more than 1mn units a month in India. There are about 40,000 Micromax outlets in the country. Despite their success in the low-end tier, some Indian vendors are already moving steadily upmarket to offer affordable smartphones with features such as QWERTY keyboards and Wi-Fi support, as well as radios and cameras.

The growing success of Indian vendors such as Micromax and Spice Mobility has largely been driven by two factors. Firstly, their ability to make phones tailored to the preferences of local consumers, particularly outside the big cities. Features such as dual-SIM support, extended battery life, and even special symbols for the illiterate, all appeal to particular demographics. Secondly, Indian vendors have provided phones which are often 30% or cheaper than equivalent phones from established foreign brands.

The number of Indian handset companies manufacturing in country is expected to grow in 2011. A number of companies that have previously imported handsets from plants in China have announced plans to set up facilities in their home market. Micromax, Lava, Wynn Telecom, and Karbonn are among them. Wynn Telecom, which currently imports from China, is to invest INR270 crore to set up a manufacturing plant in Himachal Pradesh. One development that will be watched closely by foreign and domestic handset makers is the entry of mobile service provider Bharti into the handset business, through its group firm Beetel. In September 2010, Beetel launched eight handsets in the IRS1,750-7000 price range, marking the first major entry into the Indian handset market by a major domestic player. Beetel is already one of the largest manufacturers of landline phones. The company said it would not provide its handsets exclusively with Bharti Airtel mobile services, but would talk to all GSM players about bundling its handsets.

Established foreign handset brands, such as Nokia, have responded to the Indian uprising by introducing their own low-price phones. This indicates a willingness to compete for the low-tier segment, rather than simply cede it to local vendors. In September 2010, Nokia unveiled a 2,000 rupee phone which the company said was its first for the India market to feature dual SIMs. The company admitted it had been rather slow to target the low-end segment.

Nokia's Indian market share has fallen steadily over the past three years and in H110 was estimated at about 36% by market research firm IDC. This share represented a steep fall from 54.1% in 2009 56.2% in 2008 and above 60% in 2007. Nokia disputed some of IDC's figures however. With more than 50% of the market in 2009, Nokia reported revenues of INR150bn (US$3.2mn) in FY2007/08, a rise of more than 30% on the previous year. Its share in the GSM segment was even higher, possibly as high as 74% according to company claims.

Nokia, India's largest multinational by sales, has extensive manufacturing operations in the country and a network of about 700 retail outlets, many of them Wi-Fi enabled. The company strengthened its position in 2008 at the expense of rival foreign brands Sony Ericsson, Samsung, LG and Motorola, but in 2009 faced an increasing challenge from smartphone vendors such as Research in Motion and Apple, as well as local brands. Despite its recent slippage, Nokia is still the clear leader in the Indian market and far ahead of its nearest rival Samsung, which has a less than 10% share.

However, Samsung's share grew significantly in FY2009/10. The company targeted the smartphone segment as a growth driver, with a goal of a 20% share of the Indian smartphone market by end-2010 as it expands its product portfolio. Samsung plans to launch seven to eight new smartphones in 2010, with recent releases of Wave and Galaxy S, based on the Android operating system, retailing at INR19,100 and INR31,500 respectively.

Samsung said it was targeting a 20% share of the Indian handset market in 2009, up from less than 15% in 2008. The company was targeting 30% revenues growth, to US$2.2bn in 2009 from US$1.7bn in 2009, and expected at least 40% of its local handset revenues to come from multimedia models, including 3G phones. Its strategy has two main elements. First, it will aim to grow sales of higher functionality handsets in smaller towns and parts of the rural market in 2009. Secondly, it will partner with state-run telecoms companies BSNL and MTNL to provide high-end handsets for 3G services. Samsung had opened about 300 retail units in 2008, and built on this in 2009 with the launch of its IT Brand Store concept.

In 2007-2008 Sony Ericsson was Nokia's nearest competitor, achieving a share of about 12%. LG and Motorola were the biggest losers, with substantial declines in revenues. LG lost by as much as 50% -- as the CDMA segment shrunk as a portion of new sales. However, LG said it would release about 50 phones in India during 2009 to maintain a market share of about 11%. It claimed close to 50% of the CDMA market, but its share of GSM is only about 5%. In 2008 the company sold only 1.7mn handsets in India, but by October 2009 it had already sold 4mn.

The growing smartphone opportunity is driving mobile phone vendors to set up mobile phone application stores in the country. Nokia, Apple and Research in Motion have all set up stores to help drive revenues from this segment in India. In December 2009 Nokia launched an Indian version of its Ovi stores by December 2009. Research in Motion, the maker of the BlackBerry smartphones, was also getting ready to launch its BlackBerry App World in India.

Camera phones are another vendor focus, with lower prices tempting more consumers to upgrade and buy slightly higher priced camera phone models. The share of unit sales taken by handset retailing at more than INR3,000 has increased significantly in the past year, with camera and music features being a major driver. In early 2009 vendors such as LG were targeting the INR3,000-5,000 segment with new releases. LG launched two models at this price point in Q209. Samsung had more than 30 camera phones on the market. An example of an emerging trend towards more sophisticated and higher value mobile services was Motorola's decision to reverse its previous policy of focusing on low-cost handsets for the Indian market and a move to market multimedia phones in rural parts of the country.

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