The Indian smartphone market has gone through several disruptions over the past 2 decades. At the turn of the millennium, Nokia seized the moment of the cell phone boom in India and ruled the market for a decade enjoying the lion’s share of the market and being one of the most loved brands in the country. However, with the launch of the iOS and Android ecosystems, the industry saw a seismic shift towards smartphones and suddenly the feature phones of Nokia, running a dated OS, became obsolete. The once undisputed king of the market was reduced to single digit shares of the market as players like Samsung, Micromax, Motorola etc. seized the initiative with the smarter and more feature rich androids. Apple meanwhile found a niche of its own, establishing itself as the country’s favorite premium smartphone brand. Speaking on what went wrong for the Indian brands Jabong Co Founder and Pincap MD, Praveen Sinha said, “While the foreign brands were breaking ground, the Indian counterparts found themselves reduced to an after thought, showing inability to compete with innovation, pricing distribution or marketing. After the end of Nokia’s dominance, Indian OEMs failed to build a brand that resonated with India like Nokia did. Unconsciously, they made the market hungry for a better product and hence, ended up doing a big favour to the foreign players.”
The Chinese smartphone boom in India
Up until around 2012, Chinese phones were considered cheap copies of flagship models which had no reliability. They were not being sold online or through expansive retail stores and were mostly available in street markets like Gaffar Market and so on. Whilst there was no major Chinese brand in the market, phones made in China imported and rebranded by Indian manufacturers like Micromax, Lava and Karbonn were all over the market during these times. Apple iPhones were too imported from China. In July 2014, the market went through the most significant disruption when Xiaomi decided to launch the Mi3 via a flash sale on Flipkart. Not only was the brand unheard of back then, the online flash sale method was an untested mode of distribution back in the day. 100,000 users registered for the sale and 10,000 devices sold out in just 5 seconds. From this moment on there was no looking back for Xiaomi and this also paved the way for other Chinese brands like Leeco, Oppo, Vivo, OnePlus, Coolpad, Honor etc. to enter and compete in the market. Commenting on the success of Chinese smartphone OEMs in India, Praveen Sinha Jabong Co Founder said that “The Chinese OEMs had a fair idea of what the Indian market was even before they entered the market because of the types of devices they were supplying to Indian OEMs. They knew what the market demands were and what price points to enter into the market. Capitalizing on the e-commerce boom back then in India, these brands offered never before seen specs under the 10k price point making them instant hits in the market and effectively ending the reign of Indian brands such as Micromax, Lava, Spice and Karbonn.”
How the Chinese consolidated their good start
Buoyed by a disruptive start in the market, most Chinese players didn’t sit back and constantly stayed on their feet to increase their market share in the market. Xiaomi for example launched phones across price points starting from 5k to 15k and completely revolutionized the market. The budget phone segment (9k-12k) became the most interesting battleground in the tech space and Samsung which was the market leader suddenly was losing its market share to players which did not even have an offline store yet. Some Chinese brands like Coolpad, Leeco, Nubia couldn’t make much of an impact and eventually had to shut shop in India but the likes of Xiaomi, Oppo, Vivo and Oneplus continued to grow. Oneplus for instance, started out in the budget range with the OnePlus 1, but when the company realized that there is severe competition in that price segment, it slowly positioned itself in the premium/flagship price segment and emerged as India’s most sold premium smartphone brand in 2019. Xiaomi continued to expand their product portfolio from smartphones to fitness bands, laptops, vacuum cleaners, air purifiers, power banks, hair trimmers and televisions etc. to make the most of their brand affinity in the market. They also consolidated themselves well in the offline space with an excellent presence in all major cities and towns in the country.
What Indian OEMS can learn from the past and the road ahead
“Historically, the window of opportunity doesn’t last too long and Indian OEMs will have to make their moves soon in order to make inroads in the market currently dominated by chinese players”, feels Praveen Sinha. The recent backlash against Chinese brands has hit sales to an extent but the likes of Xiaomi, Realme and OnePlus are still going ahead with new product launches which continue to sell online. Samsung too is ramping up its offerings in the budget segment and looking to capitalize on their non-chinese background to make up lost ground. The likes of Lava and Micromax did announce plans of a comeback a month or so ago, but nothing much has materialized since then.
There are a host of challenges Indian brands face in this quest to regain lost territory. For starters, technologically Indian OEMs cannot match their Chinese and Korean counterparts in the market. Till date there is no Indian phone which has been made with indigenous components and we are yet to produce a chipset that is the core of a smartphone. The OEMs took the easy way out all those years back in importing Chinese phones instead of spending on R&D and setting up their own manufacturing base here. To beat the major players in the market, the OEMs will have to start from scratch and this would require heavy capital infusion, which they may consider a risk considering the India-Chinese tensions may de-escalate at any point of time and things may go back to normal over the next six months or so. After moving production back to India, and launching the Z61 Pro at an entry price of 5999, Lava tried to capitalize on the ‘Atma Nirbhar Bharat’ movement. However, the device offers very little in terms of value and uses components that most of the smartphone buyers will not consider given the variety of options they have.
The consumer today has lots of choices across various price points and is well informed, thanks to the information available on the internet. They are not only looking at the looks of a mobile phone but are equally invested in factors like cameras, battery life, performance, system updates, service and longevity of a device. “The nationalism factor will work in the short term to an extent but, in the long term Indian manufactures will have to take a leaf out of the Chinese playbook and develop indigenous devices which can prove to be as good or better than the devices they offer. This may take a long time to achieve but the investment and effort could be well worth the wait in the end”, concludes Praveen Sinha.