Electronics and white goods manufacturers such as Videocon, Spice, Usha and Mirc Electronics have begun engaging the services of Independent design houses to take on the likes of global giants including Nokia, Sony Ericsson and LG in the mobile handset space.
An IDH conducts research and development and designs handsets to enable Indian telcos launch their own mobile handset brands. It takes an upfront one-time fee for the purpose.
For instance, B K Modi, chairman of Spice Mobile, was toying with the idea of the 'People's Phone' - a low-cost handset - to bring cellular communication within the reach of the common man. To reduce the costs, the handset manufacturer decided to forgo the screen, text messaging service, bilingual menu and other features.
Spice sought the help of Taiwan-based IDH MediaTek to conduct the R&D and design work according to Modi's ideas. The result was the custom-made $15 (Rs 599) handset, which apart from being the lowest priced GSM handset in the country, is also available only (read exclusive) with the company's retail venture 'Hot Spot'.
"The phone has additional features, which were custom-made for the company. The handset has a hot key that enables the user to access mandi (market) rates for vegetables and cereals, and get information on entertainment services such as radio, jokes and even devotional songs. Moreover, the GSM mobile phone, the S300, has multilingual interfaces (Kannada for handsets launched in Karnataka and Punjabi for Punjab), a facet a low-cost phone cannot afford," Modi told Business Standard.
Spice is simply a case in point. Indian electronics goods makers such as Usha Lexus, Videocon (planning operations under 'Datacom' brand) and Onida (Mirc Electronics) are the other Indian companies venturing into manufacturing of handsets and are in talks with IDHs. The manufacturing will be outsourced to Chinese, Taiwanese or Korean companies.
MediaTek India managing director Grant Kuo said, "One of the major reasons for companies venturing into manufacturing of handsets is to reduce the time to market.
We help the companies (wannabe handset makers) to develop a handset from conception to design and manufacturing within just three months, compared to the existing 1-2 years if the company were to set up R&D facilities and do the designing by itself,"
At present, MediaTek is the only IDH with a presence in India. However, global companies like TI, ZXP and Freescale are exploring opportunities of setting up base in India. A company can launch a feature-packed phone, that too, at least 10-20 per cent cheaper than existing versions in the country.
"However, apart from price and short span of time required for the launch, the exclusivity and features make companies look at IDHs," Kuo adds.
Meridian Mobile, a subsidiary of European handset major Meridian Telecom, is another company utilising IDH services. The company recently launched its 'Hummer' series based on the design provided by MediaTek.
"After you have decided what are the features that you need in your handset, it's then a simple process. IDHs have readymade chips with these features that can be embedded on to the phones, enabling launching of handsets in a couple of months. It's as simple as buying a chip," explains Meridian Mobile India CEO Rajiv Khanna. Once the features are finalised, the IDHs take over the design, which, once approved, is taken to a manufacturer.
French mobile handset manufacturer Bleu chief technology officer Prashanth Gadiyar opines that by utilising the services of IDH firms, a company looking at manufacturing mobile phones can reduce costs considerably, as R&D and designing prove to be costly and time-consuming.