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Apple, Lenovo plan cheaper smartphones for India

Last updated on: February 7, 2013 11:31 IST

Apple, Lenovo plan cheaper smartphones for India

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Surajeet Das Gupta and Sounak Mitra in New Delhi


Competition in the country's smartphone market is heating up.

Last week, it was reported in newspapers abroad that Apple Inc is set to introduce a scaled-down version of its iPhone in a bid to attract more budget-conscious emerging market consumers.

The phones, priced between $99 and $149, will be smaller than its available models and will be made of cheaper components.

Apple isn't the only one betting on razor-thin prices to shore up sales. Chinese PC maker Lenovo, the second largest computer maker in the world, which has an aggressive presence in the smartphones market, too, has its eyes set on India.

Last week, it said it wants to sell a million phones in the country from next year. Like Apple, it wants to compete on prices, and the new player - it made its India debut two months ago - is losing no time.

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Image: A man holding Apple iPhone.
Photographs: David Gray/Reuters

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It has already entered into a partnership with Reliance Communications to launch a co-branded phone for under Rs 8,000.

What's driving this clamour for the sub-Rs 10,000 smartphone market? For one, there is a blossoming market for cheap smartphones in the country and the play field will only get bigger after the launch of 4G service and the full implementation of 3G service.

According to some estimates, smartphones will constitute around 17 per cent of all mobile devices sold this year.

It means sales of 34 million smartphones, of which over 62 per cent will be those under Rs 10,000. Obviously, that's a huge opportunity no player wants to miss.

Lenovo wants to take on South Korean giant Samsung head on. "If we can beat them in China, there is no reason why we cannot beat them in India," says Yang Yuanqing, chairman and CEO of Lenovo.

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Image: LePhone by Lenovo.
Photographs: Reuters

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Samsung lords it over the Indian smartphone space with nearly a half of the market. Together with the other big player, Nokia, it has over 63 per cent share in terms of value, the remaining being shared by Sony, Blackberry, HTC and Apple, among others.

So how will they crack the market? Apple might be the second largest smartphone maker in the world after Samsung, but its market share in terms of value still in single digits, say industry analysts.

Its new range of phones retail at over Rs 20,000, a price point that offers limited marker reach - only 1.6 million smartphone devices were sold in that price segment last year.

Also unlike in the US where it could bring down its prices dramatically by bundling the phones with telcos, regulatory framework has prevented it from doing the same in India.

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Image: Samsing Galaxy Note 2.
Photographs: Reuters

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But its disruptive pricing (below Rs 10,000) could upset the applecart and bring it directly in collision with Samsung and Nokia.

Lenovo, which has become the number one PC player in the country, started out in the Indian smartphone market with a product priced below Rs 7,000. Low pricing has helped it sell over 40,000 devices so far, mostly in south India.

The company is now planning to expand its network all across the country. Says Liu Jun, president (business group), Lenovo: "Smartphone penetration is very low in India. We want to replicate our China (75 per cent of the market is now of smartphones) success in India also".

But the sub-Rs 10,000 segment will be a different ballgame for the players. To begin with, Samsung and Nokia not only offer affordable pricing, they also give customers an array of choices, which will be very difficult for Apple to replicate.

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Image: Liu Jun, president (business group) of Lenovo, shows K800 smartphone.
Photographs: Steve Marcus/Reuters

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Distribution network will be another challenge for the newcomers, Apple and Lenovo. They will have to invest huge amounts to match the distribution strength of Samsung and Nokia.

Besides, other smartphone players in the country, too, are gearing up to embrace the lower end of the market. HTC, for instance, has a smartphone priced at Rs 9,499, which is sold as a local language user's phone.

Sony, too, while keeping its premium end focus intact, has entered the sub-Rs 10,000 market with recently launched dual SIM phone Xperia Tipo.

Says Sachin Thapar, business head (mobile division), Sony India: "The Xperia range of Sony Smartphones will be available across multiple price points, to match the expectation of every Indian customer who aspires to own a smartphone."

Sony has 12 models available, priced between Rs 9,190 and Rs 29,990. Consumers, of course, aren't complaining.


Image: Sony Xperia S smartphone.
Photographs: Reuters

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