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The cellphone: Upwardly mobile
Ranju Sarkar in Mumbai | September 18, 2007
Take a ride on the Delhi Metro or Mumbai's local trains and just observe how commuters flaunt their fancy and expensive handsets.
It's a trend across urban India -- consumers opting for the fanciest mobiles their pockets can afford. ''There are some customers who replace their mobiles every six months and know about the next two models a company plans to launch,'' says Vineet Taneja, director (multimedia), Nokia India. While these are probably gizmo freaks, there are millions who go for feature-rich and stylish devices.
What's driving this trend is affordability, increasing travel and the desire to make a statement about oneself. "The mobile is an extension of your personality. If you're using a good phone, you are projecting to your peer group that you are doing well in life," says Taneja. Besides, unlike his Western peers, the Indian consumer has a large circle of professional acquaintances, family and friends.
"You are looking for ways to differentiate yourself," says Sumeet Gugnani, director, mobile communication business, Microsoft. "The mobile has evolved into a lifestyle device. It speaks for itself; it's almost like a badge," says Lloyd Mathias, Motorola's director marketing for southwest Asia.
Increasingly, consumers want mobiles that are stylish, feature-rich and combine elements of their work and lifestyle. "Consumers want to combine features of work (e-mail, office documents) with leisure (camera, music, video, GPS). People want phones which do everything for them," says Gugnani. "They don't want to carry four devices in their pocket and are increasingly seeking all-in-one devices,'' adds Nokia's Mehta.
For the average Indian, a mobile is a significant purchase and he wants to maximise the benefits. ''Even though he may be using only voice and text, he wants other features,'' says Mathias.
''The approach is, if I am paying a good bit of money, let me get as many features as I can.'' So, 60 per cent of the phones in the country have FM radio and there are more camera phones (45 million) in India than digital cameras (25-30 million).
"High-end devices, despite prohibitive prices, are what users aspire to,'' says Carolina Milanesi, research director at Gartner, a global IT research and advisory firm.
''Products like the Nokia N95 and E90, for instance. In many cases high-end phones replace the PC,'' she adds. Reportedly, the N-series and E-series phones account for a quarter of Nokia's revenues in India.
People buying premium handsets (Rs 10,000 or above) still account for 10 per cent of the 90-100 million handsets that will be sold this year, but what's helping consumers upgrade is that they are getting more value at lower prices -- which is, in turn, stoking demand.
Today, you can get an entry-level GPRS handset for less than Rs 3,000, which provides on-the-move internet access. ''The moment you get hooked, you would want better speed, better screen displays and better speakers,'' adds Mehta.
And prices are dropping everyday. For example, that of the HP iPAQ 512 has dropped from Rs 16,000 to Rs 11,999 (minus taxes) today. Touch-screen phones used to cost Rs 25,000-plus, but today you can buy an entry-level one for Rs 14,990 (HTC P3 440).
''A consumer buying a feature phone for Rs 8,000 is saying I might as well spend Rs 3,000 more and get a PDA phone, which offers me the work features I need,'' says a handset marketer. And as price come down, more devices will enter the space.
In the US, in contrast, consumers still go for basic functionality (in Europe they are more style-conscious). ''In the US, people won't buy a feature they don't need,'' says Gugnani.
Besides, handsets in the West come bundled with tariff plans, which restrict choice, and are often subsidised by the operator. India has an open model, which allows customers to choose handsets. Operators don't mind as every upgrade gives them a chance to sell value-added services. But it's unlikely that you will find many customers in the West upgrading from a $100 phone to a $300-$400 phone like in India.
''In markets like western Europe subsidy plays a big role so users do not really 'pay' for the real cost of the device,'' says Carolina. "But in a market like Italy where subsidy is limited, you can see users spending from $250 to $400 for a mid-to-high tier device, she adds.