INDIAN MOBILE

INDUSTRY ANALYSIS

By :Dethe Amit Bhagwan

1610010

Madhuluck Kumar

1610020

Shivi Jain
Arun Karthik
Manoj Katam
CURRENT MARKET STANDING
Market value
The Indian mobile phones market grew by 22.4% in the year 2015 to reach a value of $15,595.3 million.

Market value forecast

In 2020, the Indian mobile phones market is forecast to have a value of $28,647.1 million, an increase of 83.7% since
2015.

Market volume
The Indian mobile phones market grew by 10.8% in 2015 to reach a volume of 131,984.2 thousand units.

Market volume forecast

In 2020, the Indian mobile phones market is forecast to have a volume of 259,622.8 thousand units, an increase of
96.7% since 2015.

Category segmentation
Smart phone is the largest segment of the mobile phones market in India, accounting for 83.3% of the market's total
volume.

Geography segmentation
India accounts for 11.8% of the Asia-Pacific mobile phones market value.

Market rivalry
The Indian market has traditionally been dominated by a small number of large, well-known companies such as
Samsung. This intensifies rivalry as they can harness greater resources for research and competition, although a
number of smaller, budget manufacturers, such as Micromax and Karbonn, also enjoy success in India.

TABLE OF CONTENTS

MARKET OVERVIEW
Market definition
The mobile phone market consists of all cell phones used for mobile telephony. The market is split into two segments:
feature phones and smartphones. Smartphones are defined as advanced cell phones that serve as computing devices in
addition to being mobile handsets and that run on an advanced mobile operating system. Key examples of smartphones
include the Apple iPhone range (which run on the iOS operating system), Samsung Galaxy S6 (which runs on the
Android operating system) and Blackberry and Windows Phone handsets. Feature phones are defined as cell phones
that are not considered to be smartphones. Feature phones may still offer some features that smartphones do, such as
the ability to browse the Internet, listen to music or take pictures, but have significantly less computational power than
smartphones. Key examples of feature phones include the Nokia 105 and the LG Cosmos 3. The market does not
include other types of handset, such as cordless phones in which a short-range radio link is used to communicate
between the handset and a fixed-line base station, or those used for specialized applications such as two-way radio, etc.
Market volumes for a given year are defined as the number of shipments to end-users, including both new uptake and
renewal purchases and market values have been calculated using average selling prices before the impact of carrier
subsidies. The units in the report represent number of phones delivered to users each year, not the total number of
phones in existence. All currency conversions are carried out at constant average annual 2015 exchange rates.
For the purposes of this report, North America consists of Canada, Mexico, and the United States.
South America comprises Argentina, Brazil, Chile, Colombia, and Venezuela.
Europe comprises Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom.
Scandinavia comprises Denmark, Finland, Norway, and Sweden.
Asia-Pacific comprises Australia, China, Hong Kong, India, Indonesia, Kazakhstan, Japan, Malaysia, New Zealand,
Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand, and Vietnam.
Middle East comprises Egypt, Israel, Saudi Arabia, and United Arab Emirates.

MARKET DATA
Market value
The Indian mobile phones market grew by 22.4% in 2015 to reach a value of $15,595.3 million.
The compound annual growth rate of the market in the period 201115 was 20.5%.

Market volume
The Indian mobile phones market grew by 10.8% in 2015 to reach a volume of 131,984.2 thousand units.
The compound annual growth rate of the market in the period 201115 was 9%.

MARKET SEGMENTATION
Category segmentation
Smart phone is the largest segment of the mobile phones market in India, accounting for 83.3% of the market's total
volume.
The Feature phone segment accounts for the remaining 16.7% of the market.

Geography segmentation
India accounts for 11.8% of the Asia-Pacific mobile phones market value.
China accounts for a further 44.9% of the Asia-Pacific market.

Source : https://www.statista.com

MARKET FORECAST
Market volume forecast
In 2020, the Indian mobile phones market is forecast to have a volume of 259,622.8 thousand units, an increase of
96.7% since 2015.
The compound annual growth rate of the market in the period 201520 is predicted to be 14.5%.

FIVE FORCES ANALYSIS

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Summary
Figure 7: Forces driving competition in the mobile phones market in India, 2015

SOURCE: MARKETLINE

MARKETLINE

The Indian market has traditionally been dominated by a small number of large, well-known companies such as
Samsung. This intensifies rivalry as they can harness greater resources for research and competition, although a
number of smaller, budget manufacturers, such as Micromax and Karbonn, also enjoy success in India.
Buyers tend to be large, and are therefore able to negotiate favorable contracts, although they will find it necessary to
stock the latest handsets to meet end-user demand and this reduces their power. Suppliers provide technology,
equipment and parts for mobile phone manufacturing. Such technology is often highly specialized, leaving suppliers
reliant on this supply agreement, particularly as some parts can be unique to a certain manufacturer. The rise of the
smartphone allows for new entrants to exploit a burgeoning position in the market, and the Indian smartphone segment
still has significant room for growth. Despite very strong overall historical growth, newcomers may be put off by high
capital outlay, the scale economies necessary to compete with incumbents who have excellent brand reputations, and
strict regulations regarding health and safety and the environment.

Buyer power
Figure 8: Drivers of buyer power in the mobile phones market in India, 2015

SOURCE: MARKETLINE

MARKETLINE

This market is made up of two categories of buyers. Firstly, there are big store and specialist retailers such as The
MobileStore in India, which purchase handsets to sell on to end-users. The second category of buyers is mobile network
operators, such as Bharti Airtel Limited and Vodafone, many of whom now conduct their own retail operations. There are
a small number of large mobile network operators, strengthening their position when bidding for contracts with market
players, although the size of the market players themselves may negate this advantage. However, their position is
precarious, as the rise of the smartphone and rapid technological progress mean buyers are required to stock the latest
innovative products in order to meet end-user demand. Buyers are also open to exclusive deals with manufacturers.
Furthermore, some market players, most notably Apple, are capable of forward integration by conducting their own retail
operations, thus diluting buyer power, although the company does not have any physical retail outlets in India as of time
of publication.
Overall, buyer power is assessed as moderate.

Supplier power
Figure 9: Drivers of supplier power in the mobile phones market in India, 2015

SOURCE: MARKETLINE

MARKETLINE

As manufacturers are typically much larger companies than suppliers, they are able to better influence supply contracts.
One example was Nokia, which carried out assessments on its suppliers to make sure they met certain standards. This
has increasingly come into focus in recent years following damning revelations about working conditions at Foxconn, a
Taiwanese supplier of components to the likes of Apple, BlackBerry, Dell, Motorola, and Sony. Market players are heavily
reliant on the quality and efficiency of the software and products provided. Moreover, some of the hardware, such as
integrated circuits, can be specific to an individual supplier, which strengthens their position. Manufacturers have to be
careful over whom they choose to supply them as unethical suppliers could result in negative connotations with their
brand image. Examples include the usage of tantalum purchased from the Congo, which is believed to help fund conflict
in the region, or the alleged poor treatment of factory workers at companies like Foxconn.
Revenues to suppliers that are generated from supply to mobile phone manufacturers are not essential to them, as
suppliers provide services to a wide range of industries, particularly in the electronics field. This may also be said for
marketing and advertising companies that provide services to the mobile phone market. There has been instability in raw
material prices, with the uncertainty generated adversely affecting manufacturers' margins. The trend for smartphones
has strengthened supplier power, as more complex components require further rare earth materials for their production.
However, in India, sales of smartphones continue to be eclipsed by feature phones, although the smartphone segment is
growing rapidly and is set to overtake the feature phones segment in terms of volume during the forecast period.
Operating systems such as Windows Phone, BlackBerry OS, Android and iOS (used in Apple products) are essential
components for smartphone manufacturers, although in the case of Apple and BlackBerry these are developed by the
manufacturers themselves. As entry barriers fall in markets throughout the world it is likely that profitability is likely to flow
away from handset manufacturers to manufacturers of key performance enhancing components and modules (both
hardware and software).
The supply chain of this market is made more complicated by the fact that some players also act as suppliers. For
instance, Samsung which enjoys a greater degree of diversification than some of its rivals in the market

manufactures a proportion of Apple's iPhone processors. Furthermore another rival, LG, is said to supply Apple with
screens for its iPhone 6. While Apple is seeking to reduce its reliance on Samsung in the wake of increased competition
and animosity between the two, this level of integration increases supplier power in Samsung's case. Samsung's
vertically integrated position also gives it a further competitive advantage as far as access to components is concerned.
Overall supplier power is assessed as moderate.

New entrants
Figure 10: Factors influencing the likelihood of new entrants in the mobile phones market in
India, 2015

SOURCE: MARKETLINE

MAR K E TLI N E

The increasing popularity of smartphones means several newcomers have successfully entered the market in recent
years, with examples including Apple and HTC. Smartphones offer the basic functions of a regular mobile phone along
with, for example, touchscreen, cameras, GPS navigation, Wi-Fi and mobile broadband access. Smartphones have
begun to dominate the Indian market, accounting for 83.3% of all handset sales in 2015. As such, it is likely that the
rapidly growing and higher-value smartphone segment will be of major interest to prospective new entrants, although
opportunities still exist with regard to feature phones in India.
Many of the established mobile phone manufacturers offer their own smartphones, with this section of the market
experiencing strong growth, this trend is likely to increase over the next few years. This offers an attractive outlook that
may lure potential entrants. It is expected that, just as with the PC industry, as the world of mobile handsets moves
towards a higher degree of specialization, the barriers to entry for new entrants will fall.
However, entering the market as a completely new entity proves problematic due to the presence of large incumbents.
Capital outlay involving research and development in new technology and production facilities is costly and competing
with the likes of Samsung on this front is virtually impossible for a new entrant. However, localized players, such as
Micromax, have had significant success in India, targeting the budget end of the market. Furthermore, Chinese new
entrant Xiaomi has successfully challenged the dominance of global incumbents, overtaking Samsung as the number
one smartphone manufacturer in terms of device shipments in China in 2014. Crucially, Xiaomi has entered the Indian
market, operating an online retail store in the country, and, in April 2015, the company announced that its products would
be sold by a number of other online and offline retail outlets in India.
There are restrictions in this market, most of which relate to human health and safety and environmental issues. There
are stringent laws relating to science-based regulation and the adoption of emission guidance by the International
Commission on Non-Ionizing Radiation. Furthermore, the effect of the use of mobile phones on health is closely
monitored, with studies being conducted on the possible side effects to the electromagnetic radiation produced by mobile

phones. Intellectual property rights can also serve as a strong barrier to entry, as the prolonged dispute between
Samsung and Apple over patents demonstrates. In 2013, Samsung was ordered to pay Apple $1.05bn in relation to
mobile phone software patents as part of a case that began in 2011. Patenting forces competitors to innovate, but
success is not guaranteed and other platforms, such as Windows Phone or Blackberry, have floundered in the market.
The increasing adoption of Android as the operating system (it has a global smartphone market share of around 80%,
and is extremely popular in India) of choice for many manufacturers has played a key role in this and illustrates how
important an agreement with a sought-after OS system developer is. Very strong growth in this market serves as an
attractive prospect to new entrants, although declining handset prices and slowing smartphone sales may mean that
profitability in the future may prove elusive, especially for new players looking to corner the budget end of the market. In
fact, Xiaomi only enjoys a profit margin of around 1.3%, according to figures published in 2014. Critically, Xiaomi offers
highly specified devices at significantly lower prices than its incumbent rivals which, although a key driver of unit sales
and revenues does little to boost profitability as far as hardware is concerned. A direct distribution model is key to
Xiaomi's strategy in keeping costs down, although this is set to change in India following the company allowing its
products to be sold by other retailers. However, the company's main intention is to bolster device penetration in order to
build a substantial customer base that it can monetize on a recurring basis through the sale of applications and software;
Xiaomi essentially sees itself as a software company, not as a hardware manufacturer. Attempts at customer base
monetization have also been made by main players in the market - such as Apple's App Store and Samsung's App Store
- to varying degrees of success, although such players typically accrue revenues by taking a cut of the proceeds from the
sale of apps produced by third parties through their respective digital distribution platforms, rather than their own
software.
Overall, the threat of new entrants is assessed as moderate.

Threat of substitutes
Figure 11: Factors influencing the threat of substitutes in the mobile phones market in India,
2015

SOURCE: MARKETLINE

MAR K E TLI N E

One possible substitute for mobile phones is fixed line telephones. However, this threat is seen as minimal, as mobile
phones offer the advantage of usage in a much wider geographical area - wherever they pick up a signal. Moreover,
many mobile phones now offer such benefits that they have become substitutes for many other electrical appliances,

including laptops, televisions, MP3 players and cameras. Whilst laptops also offer many of the features that mobile
phones are marketed on, such as internet access, video calling through programs such as Skype, email, TV, GPS, music
and portability, they are not a strong substitute, as they also do not possess many of the benefits of a mobile phone,
such as size, weight and the seamless ability to call others. Tablet computers could be seen as a substitute for
smartphones, but large-screened smartphones (known as "phablets") negate this threat to a large extent.
Overall, the threat of substitutes is assessed as weak.

DEGREE OF RIVALRY
1. NUMBER OF COMPETITORS

Source: https://dazeinfo.com/2016/05/04/smartphone-market-india-q1-2016-samsug-micormax/

Number of Competitors is very large :- Increase in rivalry

4 Firm concentration ratio shows that market is dominated by

Samsung , Micromax & Intex
Growth Rate Product Life Cycle 15- 24 months therefore product
renewal rate is higher when compared to other sectors. This
implies mobile industry has high growth rate.
PRODUCT DIFFERNTIATION
Various mobile phone Companies produce phone under 3 major
categories
1 Economic

2 mid rang-e
3 High end