The rise of the indigenous smart phone
February 28, 2012

Indigenous producers of smart phones in China and India are adopting user-friendly technologies of the West, coupling them with Eastern cultural interfaces and branding them for the masses. As smart phones lead mobile phone sales in two of the worlds largest telecom markets, domestic brands are seizing the market opportunity. Huawei and ZTE from China and Karbonn and Micromax from India are giving a Samsung and Nokia a run for their money.

In countries such as India and China, where the average salaried employee has two mobile phones, one for personal the other for official use, the second option is always the more economical for a domestically produced smart phone can be easily replaced and weathers higher wear and tear. The indigenous smart phone is also designed for keeping the requirements of the user in mind – a longer battery life, a louder volume, a variety of ring tones, customised games and wallpapers. As a result of this, the domestically produced smart phone market has seen a substantial rise in both China and India.

“Mass market smartphones represent an important opportunity,” said Steve Mollenkopf, Qualcomm’s president and chief operating officer. “The mass market smartphone segment is very competitive and device manufacturers need to launch products faster at lower engineering costs.”

Growth in the global smartphone market is expected to slow in 2012 from around 60 percent growth seen in 2011, but it will still expand around 40 percent this year, helped by falling prices, research firm Gartner said.

Clearly nudging incumbent Nokia out of the market, Indian and Chinese brands have come a long way. From a market share of nil in 2008, they’ve managed to grab atleast 35-40 percent of the market. While price continues to be their trump card, the future depends on newer features and building brand equity. Nokia saw its global market share in smartphones falling to 12 percent in the last quarter from 30 percent a year earlier.

“Indian brands have upset Nokia that used to be very strong in the feature phone space having 2G and 2.5G capabilities. LG and Samsung have also taken a hit,” says Anshul Gupta, principal research analyst, Gartner. The advantage of having all its teams — from sales to R&D right next door has helped Indian brands’ speed to market.

Meanwhile at the Mobile World Congress in Barcelona this week, Huawei said it aims to sell more than 60 million smartphones this year, a three-fold increase from 2011. Retailing at 15 – 20 percent less than the average foreign branded smart phone, domestic smart phone makers are benefiting from housing their R&D base and manufacturing base close to the market enabling faster innovative product turnouts.

“Having the infrastructure business is a great benefit for us,” He Shiyou, chief of ZTE’s phone business, told Reuters, adding the company was packaging phones together with network gear when approaching carriers. ZTE expects operator-partnerships to help it to double its smart phone sales to 30 million handsets this year.


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