Strategic Management Report on Indian Mobile Handset Industry

Report on

Table of Contents

World Market 2

Historical Background of Mobile Industry 2

Indian Mobile Market 3

Market Players 3

Latest updates from handset industry 4

Future Estimates 4

Analysis of Mobile industry using Porter’s Five Forces Model 5

Supplier power 5

Buyer Power 6

New Entrants 8

Substitute 10

Rivalry 12

Global Mobile handsets market has seen an exponential growth since its first commercial launch in 1983. There were 12 million global mobile phone subscribers in 1990 and by the end of 2010; the number of mobile phone subscribers reached 5.2 billion. However, the growth had slowed a bit between 2006 and 2009 on the account of economic slowdown and lack of strong telecommunication infrastructure in emerging countries. Smartphone are fast becoming a viable alternative to feature phones, PDAs and laptops, offering phone features such as voice and SMS coupled with mobile internet applications, multimedia functionality, high speed data processing capabilities, and inbuilt GPS capabilities. The smart phone market is currently witnessing high growth due to a host of factors, including lower product cost, improved handset design and functionalities, the expansion of global mobile email and browsing services, the emergence of 3G and 4G network technologies, the rising competition among mobile carriers, and the standardization and upgrades of operating systems. This report will identify the key players in each application market; focusing on their growth strategies and other developments such as geographic expansion and the development of patented technologies. Finland-based Nokia held the maximum share of the global smart phones device market in 2010, followed by the U.S.-based companies “Research in Motion” and “Apple”. Nokia and Symbian command almost double the nearest competitor’s market shares in the devices and OS segments respectively. The emerging companies in these two segments are Samsung (in device manufacturing) and Google’s android (in the OS market).¹

Martin Cooper, a Motorola researcher and executive is considered to be the inventor of the first practical mobile phone for handheld use in a non-vehicle setting, after a long race against Bell Labs for the first portable mobile phone.

The first commercially automated cellular network (the 1G generation) was launched in Japan by NTT in 1979, initially in the metropolitan area of Tokyo. The first 1G network launched in the USA was Chicago-based Ameritech in 1983 using the Motorola DynaTAC mobile phone.

The first "modern" network technology on digital 2G (second generation) cellular technology was launched by Radiolinja (now part of Elisa Group) in 1991 in Finland on the GSM standard, which also marked the introduction of competition in mobile telecoms when Radiolinja challenged incumbent Telecom Finland (now part of TeliaSonera) who ran a 1G NMT network.

In 2001, the first commercial launch of 3G (Third Generation) was again in Japan by NTT DoCoMo on the WCDMA standard.

Indian Mobile Market

• 
  The first mobile phone was launched in India during 1990s
  
• 
  And the first mobile phone company was Nokia.
  
• 
  First Mobile service provider was Modi Groups in 1995 and started in Kolkata, somewhere it was signed that mobile service provider was launched in 1994
  

India has come in a close second in the sale of mobile phones in the year 2006. China has led the race of mobile sales being the highest in the world. In India however the GSM phones rule over the CDMA handsets. Leading the categories are Nokia, Samsung, Sony Erickson while Reliance takes a large size share in the corporate segment.  The Indian mobile phones market had total revenue of $6.1 billion in 2009, representing a compound annual growth rate (CAGR) of 23.1% for the period spanning 2005-2009. In comparison, the Chinese market increased with a CAGR of 16.4%, and the Japanese market declined with a CARC of -2.1%, over the same period, to reach respective values of $23.1 billion and $13.2 billion in 2009. Market consumption volumes increased with a CAGR of 29.8% between 2005 and 2009, to reach a total of 117 million units in 2009. (Source – Data monitor)

Recently till 2009, Indian mobile market was dominated by large global players like Nokia, Samsung, LG and Sony Ericsson. According to latest data available, in the financial year 2009 – 10, the market share of Nokia in India stood at 52.2% versus 64% in the last financial year. Samsung share stood at 17.4% versus 10% last year while LG stood third with 5.9% market share. Fall in share of Nokia was mainly due to the entry of many Indian handset makers whose combined market share was just lurking between 3 to 4% in the previous financial year has grown up to 14%.Micromax mobiles topped the chart (of Indian makers) with 4.1% share followed by Spice (3.9%) and Karbonn mobiles (3%). Recent entrants such as Lava mobile, Lemon mobiles and Max mobile too are hovering around that 1% market share. Success of the new players is mainly attributing to the low price and introduction of dual sim phones whose demand increases as a result of the fall in call rates.³