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Gadget sales get into top gear
Cost-conscious India has never been a gizmo-friendly country,
except for cheap mobile phones. However, things seem to be changing now—from
a slow start, the market for handhelds and digicams is poised to take off, says
Akhtar Pasha
PDAs—Choice of corporates
The Smart Handheld Devices (SHD) market of pen-based and converged (data and
voice) devices grew by 108 percent in unit terms in 2003 to reach 54,000 units.
There are two different markets emerging for handhelds. Sales of pen-based devices
are being driven by enterprises. Ajay Sindhwani, senior analyst, Computing Products
Research, IDC India says, “Pen-based SHD devices are primarily driven by
applications such as data collection for enterprises.” The government is
another big purchaser of these handhelds; government departments use handhelds
for collecting data in far flung remote areas.
Though Casio India Company sold only 3,000 units of its popular PVS 1600 in
2003, the outlook of the company in the current year is far more positive. According
to the company two deals are expected to close by H1 2004 and are worth 6,000
units. It expects to sell 25,000 to 30,000 units in 2004. According to market
sources, Casio is expecting a second round of buying from government of Andhra
Pradesh for monitoring school students’ attendance in government schools
to check dropouts. In 2002, Casio sold 4,700 units in the first phase for the
same project. Additionally, Casio is expecting bulk buying from another e-governance
project—to be used by Primary Health Centres (PHC) in Andhra Pradesh for
antenatal and postnatal services, for vaccinations and distribution of medicines
to women folks. Additionally, the company is talking to e-governance projects
in Karnataka too (for e-Bhoomi projects)
While PalmOne will be going strong in corporate sales. PalmOne has a range of
offering for the enterprise market, ranging from the entry-level Zire, M500
and Zire 71 to the high-end Tungsten E. Tungsten W (a mobile with a PDA application)
will be announced in H1 2004. In the recent past PalmOne has made some important
inroads in enterprise sales and has bagged orders from the Indian Army, Nova
Nordis, ING Vysya Bank and Godavari Sugar Mills. Umesh Tiwari, product champion
for Karnataka region, Tech Pacific, which distributes PalmOne products says
they are expecting some repeat orders from existing customers along with some
new contacts to close in H1 2004, which will fetch them 1,200 units in Bangalore
alone. He however refuses to provide details because of competition. He says,
“Besides banking and insurance, our [PalmOne] focus will be pharma, courier
agencies and FMCG companies in 2004.
Smartphones sales to swing
Large colour screens, multimedia playback, wireless access and endless expansion
options—so much technology has been thrown into the once-humble phone and
handheld that one wonders what this Swiss Army knife of gadgets will offer next.
For a PDA aficionado the answer is colour and wireless. Tiwari, says, “Banks
are buying colour handhelds. ING Vysya Bank has bought Tungsten E for 200-odd
employees to maintain daily schedules and keep track of meetings. Some enterprises
are asking for connected SHD and smartphones, and we have positioned our Tungsten
W (SDH with mobile phone) for this segment.”
Taking a cue from enterprise demand for connected SHDs, Encore Simputer has
announced its wireless-ready Simputer. Mark Mathias, vice president-Mobile Computing
Products, Encore Software says, “We have developed a wireless Simputer
(priced in the range of Rs 20,000 to Rs 22,000) with an in-built wireless LAN
CF (Compact Flash) interface for the Tobacco Board. The pilot project will see
bidders using a Simputer for online bidding.”
In 2004, entry-level phones with organiser like features such as appointment
reminders and calendars are going to
be a major attraction for professionals. These are priced very competitively,
starting from Rs 3,000 onwards (E.g. Sony-Ericsson T101).
The high-end SHD market is dominated by models such as Sony-Ericsson’s
P800/900, Nokia’s Communicator and Motorola. Motorola has some aggressive
plans this year as it is introducing two models (A760 and V878 priced at Rs
24,495).
These smartphones have become popular with senior management executives due
to the prestige value attached to these devices. They are considered as a fashion
statement by early adopters. Kobita Desai, principal analyst with Gartner says,
“Real smartphones are yet to find traction in India even in 2004 and will
be limited to high net worth individual (HNWIs).”
Digicam sales shift to consumers
The digital camera (digicam) market doubled in 2003 to reach 75,600 units. Analysts
predict similar growth in 2004. Though corporate buying was a big factor in
this market segment last year, industry punters feel that the market will shift
towards consumer purchases in 2004. Digicams are becoming more affordable. Prices
are dropping 30 to 35 percent year-on-year. A 2-megapixel digicam from Kodak
(CX6200) is priced at Rs 6,900. Though the initial investment is higher than
in the case of a film-based camera, key features such as instant photography
(click, print and share), transportability (digital images-CD/Web), better picture
quality and image manipulation will drive consumers to shell out money for digicams.
Printing costs are now comparable to those of film-based cameras. Getting prints
from a film roll costs about Rs 315 (including the cost of film, washing and
development) and the effective price per print is roughly Rs 9. In the case
of a digicam that’s about Rs 10 (4x6 paper plus colour printing). The price
of digital prints is expected to fall further in 2004.
Kodak is offering digicams on monthly instalments for its entry-level product,
the CX6200, in association with Citibank. Manisha Sood, country business manager,
Digital and Applied Imaging at Kodak India says, “Consumers are required
to pay as low as Rs 1,200 for six months to own a digicam. This will not only
boost digicam sales, but to some extent halt grey market sales.”
3-megapixel becomes entry-level
Of the estimated sales of sales of 1,63,000 units of digicams in 2004, 60 percent
are expected be of 3-megapixel models. Alok Bharadwaj, director and general
manager, Canon India says, “For Canon, our entry-level product (the 3-megapixel
A300) priced at Rs 14,995 will account for 70 percent of our sales.” 2X
optical zoom, which lets users zoom twice and capture fast moving objects without
losing resolution in the mid-level digicam will be another driver.
Set up digital studios at Rs 20,000
Setting up a digital studio with an investment of Rs 20,000 will become a reality
for small time businessmen who are into the passport photo business. A digital
studio that does not require a PC, but allows a photographer to simply click
and print directly is now a fact of life. India has an estimated 100,000 photo
studios of which only 3,000 are digital. Studios can use a Kodak Printer Dock
6000 series that’s priced at around Rs 12,000 with a entry-level digital
camera such as Kodak’s CX6200 (Rs 6,900). HP, Epson and Canon have photo-printers
for this market. Canon’s i455 is priced at Rs 9,995.
Canon and Nikon lead in the digital SLR market. Bharadwaj expects to double
Canon’s sales of digital SLR camera in 2004. He says, “Features such
as high-speed optical zoom (40X and above) allow professionals to optically
zoom in seconds to capture moving pictures/objects from far distances. (Professionals
in sports wildlife use this features). This technology magnifies the picture
twice (2X Optical Zoom) or more without distorting the picture quality as in
case of digital zoom.”
Mobile phones will top fixed phones
One clear market trend that will be visible in 2004 is the rapid expansion of
mobile phones in the country, topping the number of fixed phones. This could
happen as early as Q3 2004. Gartner says that the cellular penetration in India
was 2.7 percent in 2003 and is expected to double to 5.2 percent by end-2004.
TRAI’s recent report says that fixed line numbers, including WLL fixed
lines, have crossed 42 million or 4.2 percent in 2003-end.
Going forward, the mobile subscriber base is expected to grow from 30 million
in 2003 (Source: TRAI) to the 55 million mark in 2004 at an average new subscriber
base of 1.5 million per month. Additionally, we need to add another 2 percent
to 55 million for second-hand sales and upgrades. The mobile market is expected
to be in the range of 65 million by end-2004.
The carrier sets the pace
Mobile phone consumption is primarily driven by network operators or carriers
(GSM/CDMA) and not by any manufacturers,” says Percy P Batlivala, general
manager-South West Asia, Personal Communication Sector, Motorola India. What
this means is that mobile penetration is dependant on how operators drive their
strategy to increase their customer base.
Kobita Desai, principal analyst with Gartner says, “Three major factors
are driving this trend. Reliance Infocomm’s strategy of subsidising the
handset market and bundling the CDMA connection at a much lower price (Rs 500)
has reduced the barrier to entry significantly.” BSNL’s entry into
the market by providing connections across a wide geography, getting into areas
where other carriers have not ventured, has also helped capture untapped potential
in these markets. The second major factor today is that a cellular network is
cheaper to deploy and maintain than a wireline network. Cellular networks cost
around Rs 5,000 per line to deploy. For wireline networks that can be as much
as five times higher. In fixed networks, a significant portion of expenditure,
around 50-65 percent of the cost of laying a fixed line, goes in providing last-mile
access to customers. Desai adds, “For increasing teledensity, carriers
need to expand their networks across India. In this context, cellular is probably
the optimal technology keeping in mind the ease of deployment and low cost.”
Colour screen with camera to click
The third factor, which will be a major trend in 2004, is that growth in new
connections will come from the mass market consisting of subscribers with low
disposable incomes. This segment wants basic phones. Kobita Desai says, “We
do see significant demand for enhanced handsets with colour screens and embedded
cameras coming from this segment where customers are in their teens or early
twenties. This is a segment that is willing to experiment with new entertainment
driven applications such as ring tones and messaging. They have a fair amount
of disposable income. With the call centre market booming a large number of
youngsters earn well. Since most of their basic needs are taken care of since
they are living with their families, whatever they earn is disposable.”
Kunal Ahooja, country head-Telecom, Samsung India Electronics adds, “We
see a tremendous growth in camera phones with colour screens. The key driver
for these phones is the replacement market of consumers going for upgrades.”
Narendra Nayak, director (Sales & Distribution), South West Asia, Personal
Communication Sector, Motorola India says, “The C550, launched in February
2004, is the first camera phone to break the Rs 10,000 price barrier.”
Lastly, a 5 percent duty cut by government on mobiles during the pre-budget
session could push sales. Ahooja says, “The duty cut will definitely put
pressure on grey market sales and help operators increase their share of the
legal market. The balance 5 percent duty will be abolished in 2005 when the
WTO norms comes into effect.” But a cut in the import duty may not have
a significant impact as domestic duties (SAD) and octroi are still applicable
and are as high as 25 to 28 percent in different cities. Desai says, “The
government should rationalise the domestic tax structure to stop grey market
sales.”
akhtar@expresscomputeronline.com
| Motorola: Breaking the smartphone price barrier
Motorola has become the first vendor to break the smartphone price barrier;
usually they cost about Rs 14,000-15,000. Its C550 launch in February brings
camera phones below the Rs 10,000 price-point. Percy P Batlivala, general
manager-South West Asia, Personal Communication Sector, Motorola India says,
“It will change the affordability expectations of the consumer on camera
phones.”
New products in 2004: Motorola has a series of aggressive products lined
up for this year in the smartphones category. The A760, a Linux-based Smartphone,
was launched this February. Up next is the MPX200 with PC like functionality
(Outlook, MSN). Motorola is yet to decide on the price but the product is
due in March 2004. [See table: Some interesting phone models]
Business strategy: Motorola has tied up with content providers such as Yahoo.
Motorola customers can download ring tones and wallpapers from a Yahoo site
called Motozone. To support its new product (GSM/CDMA) initiatives by Q1
2004 Motorola would have added 108 service centres. It will make available
its GSM/CDMA products through a distribution network of 18,000 retail outlets
by Q1 2004. This will be backed up by an aggressive ad campaign to create
awareness about its new products throughout 2004.
Batlivala says, “Nokia has the lead in the mobile handsets market,
but in 2004 we expect to close the gap with marketing and product strategies.
We are here to win.” The company’s top selling brands, the C350
and C375, both colour phones introduced in Q3 2003 and Q4 2003 respectively,
are aggressively priced, starting from Rs 5,500.
Nokia: Leader of the pack
The undisputed leader in the mobile handset market in the GSM space and
number three in CDMA, Nokia sells 25 models catering to every price point,
starting from the 3310 priced at Rs 3,750 to the high-end 9210i Communicator
that retails for Rs 32,000.
New products in 2004: Market sources says that Nokia is planning to introduce
three new models in Q1 2004—the 7600 with an integrated VGA camera
(640X480), video capture, MP3 player, video capture at 15 frames per second
and Bluetooth support. Priced at Rs 26,000, it was recently launched in
India. Up next is the 7700 (camera phone) and the 6108 (triband, touchpad,
adjustment display for brightness, handwriting recognition—both will
be available in Q2 2004.
Samsung: For high net worth individuals
Samsung India Electronics (SIEL) is a leading consumer electronics products
in country and has been operating in India since December 1995. The company
has an equal focus in GSM as well as CMDA (with Reliance). SIEL has been
able to create a premium for its products because it believes in delivering
value to its customers. For example, its entry-level product R220 comes
with WAP, blue LCD display and headset.
New products in 2004: For the year 2004, it has some interesting products
lined up, which will hit the market before H1 2004. SIEL plans to launch
the first 1-megapixel camera phone before H1 2004 but is yet to decide on
the price. For the first time consumers will see camera phones with built-in
flash. The product, X600 is due in March 2004. Following that are another
three products (GSM)—X600 (128x128 pixel, VGA camera (640x480), X100
(GPRS, MMS) and X430 (128x128 pixel calendar and WAP) with a starting price
of Rs 10,000 to Rs 15,000. [See table: Some interesting phone models]
Business strategy: To create awareness about its products in the country,
SIEL is taking the retail route. Kunal Ahooja, country head-Telecom, SIEL
says, “We have recently opened our first Samsung Mobile Plaza in Mumbai
and will house all Samsung handsets there. In 2004 our plan is to set up
more such plazas in major metros across the country.” Additionally,
the company is undertaking a major branding exercise by associating itself
with sports (especially with cricket) and fashion shows. |
| Encore Simputer: Getting innovative
According to IDC, Encore Software is ranked in the top three in SHD category.
In the last two years the company has emerged a strong player in government
sales. Encore has two manufacturing plants, one is in Singapore and the
other is in India. It has appointed TVS Electronics to manufacture Simputer
PDAs running Linux OS and has a capacity to manufacture 300-400 units per
month.
Business strategy and new products in 2004: Encore has positioned its products
to target various state government’s e-governance projects like land
records, data collections and police departments. Mark Mathias, Vice President-Mobile
Computing Products, Encore Software says, “Besides, e-governance, larger
enterprise are showing interest in buying our products as ‘sales force
automation’. For examples its products are used by large mining company
in Goa (Dempo) for managing movements of materials.”
There are some exciting wireless products Encore plans to introduce by H1
2004. Encore has made a Simputer integrated with a wireless LAN CF (Compact
Flash) interface for a pilot project for the Tobacco Board. The pilot project
will help bidders place their bids online. The product is priced in the
range of Rs 22,000, depending upon the configuration. Another wireless project
will see Simputer using RF (Radio Frequency) for remote reading of electric
meters. RF-enabled Simputer can read an electric meter (the meters will
be retrofitted with RF manufactured by Namtech) from a distance of 10 meters.
Mathias says, “It will help meter readers collect data without entering
customer premises. The product will be ready by May 2004 and will be priced
between Rs 10,000 to Rs 12,000.” Private power distribution companies
such as Tata Power (TPL) and Reliance Energy (formerly BSES) and other government
distribution companies have expressed interest in Encore Simputers.
In the pipeline is a Simputer integrated with GPS receivers, which will find
applications in creating digital maps for the Survey of India. Mathias
says, “We have done dozens of pilot projects which are expected to
be executed in 2004. These pilot projects will generate 20,000 units for
us in 2004.” Encore is also strong in PSUs and the enterprise market.
Casio: Going strong with government projects
Casio seriously needs to increase its product offerings if it wants to retain
its leadership of SHD in India. In the past the company has stopped selling
earlier models such as Pocket viewers PVS—the PVS 460 (4MB), PVS 660
(6MB) and PV750 (2MB with Internet mail).
Business strategy: Though Casio is pretty strong in government projects
it has just one model PVS 1600 (16 MB) priced at Rs 8,500 in 2004 whereas
its competition has half a dozen. But nevertheless Kulbhusan Seth, chief
manager-Market Planning at Casio India is optimistic about the company doing
well in 2004. He says, “Though we have only one model we have three
government projects that are expected to materialise and these deals will
be worth 25,000 to 30,000 units. One deal, which is expected to close in
H1 2004, is worth 6,000 units. The bulk of deals is expected to come from
e-government projects in Andhra Pradesh.
PalmOne to close gap with Casio
PalmOne, the number two vendor in the SHD market after Casio is fast making
inroads into the country. Palm sells its products through Tech Pacific—Palm
is selling in products such as Tungsten E, Zire 71, M500 and others to enterprise
users. The Indian Army is using the M500, ING Vysya Bank is using Tungsten
E and Godavari Sugar Mills is using the Zire 71. PalmOne opened its sales
office in February 2004.
New products in 2004: Though the company spokesperson refuses to share their
product roadmap for 2004, market sources say Palm is planning to introduce
Tungsten W in March and Treo600 in H1 204. [See table: Key products in handhelds]
Business strategy: In the current year the focus will be pharma, courier
agencies and FMCG companies. Tiwari says, “PalmOne is working with
half a dozen third-party software developers in Bangalore alone who develop
task-based custom applications for large enterprises. These include ReadiMinds,
ITTI (for a FMCG company), Win Win Solution, All Soft and Stump Vision.”
It plans to add another developer, AZI KEWE Systems in March 2004. |
| Kodak India: Digicams for consumers
Kodak India is a subsidiary of Kodak UK, and was established in India back
in 1913. Today, it is a leader in the Indian digicam market with a market
share of 47 percent. Kodak has four regional sales offices in the metros
and has three manufacturing plants located in Goa, Bangalore and Malanpur.
New products in 2004: The company is adding 10 new products to its existing
range. This year its focus will be on ‘Life Style (LS)’ products
targeting the 20-25 age group. [See table: Key products in digicams] Additionally,
the company plans to focus more on the CX range where it plans to introduce
a 3-megapixel digicam at the entry-level—the CX 7300 priced at Rs 8,900.
It’s second focus will be on selling the Printer Dock 6000 series (photo-printer)
priced at Rs 12,000, which can print directly from a digicam (CX6200), eliminating
the need for a PC. Sood says, “Bundling (CX6200 with the Printer Dock
6000 series) will help studios go digital at Rs 20,000.”
Business strategy: Kodak is making its products more affordable to consumers.
It has tied up with Citibank Finance for making its products available in
six easy instalments. The scheme is open from March 2004 for consumers.
Strategy two is go offer customers a service that lets them print their
digital photos taken from digicam online——online printing site.
Customers can upload their digital pictures, select the size of the prints,
pay online and have the prints delivered at their doorsteps in 24 to 48
hours at no additional cost. Interestingly, cameras with phones can also
take advantage of this service—Orange, the Hutchison cellular brand
in Mumbai, has already started this service with Kodak. Sood is optimistic
that with the gamut of offerings and a host of services, Kodak will be able
to increase its market share from 47 percent to 55 percent in 2004.
Canon: Lensmans delight
Canon India is an aggressive digital imaging solution provider with a market
share of 5 percent in the digicam space. The company offers eight digital
camera models, four video camcorders and three camera direct printers. Canon
is also offering an entire range of digital imaging products ranging from
cameras and printers to consumables.
Offerings: Currently, it offers models ranging from the entry-level A300
to the digital SLR EOS 300D for professionals.
New products in 2004: Canon wants to double its market share. It will roll
out eight new products in H1 2004 and another eight by November. Two new
products of interest are what Canon claims is the world’s fastest camera,
the EOS ID Mark II. [See table: Key products in digicams]
Business strategy: Canon intends to pump Rs 10 crore into its advertising
and marketing budget for 2004 to increase brand visibility. The company
wants to curb grey market sales and to this end it plans to appoint 25 distributors
(Canon has seven distributors currently) by Q1 2004. Additionally, it plans
to open 40 retail points in the country. Lastly, it will focus on converting
traditional photo studios to go digital. Canon has a target of converting
2,000 studios to digital by end-2004.
Sony India: Focusing on the high-end
Sony India’s digital imaging division is a Rs 70 crore division that
sells digital still (digicam) and video cameras (Handycams). The company’s
product strategy has been to cater to all market segments.
Offerings: Sony offers nine different products, starting with the DSC P
32 and P 72 at the entry level. DSC P 10 is for amateurs and the DSC F 717
and DSC F 828 are targeted at professional photographers.
New products in 2004: Sony has deferred its plans to introduce two out of
three products in Q1 2004. In the current year Sony is launching just one
product, the F828 an 8-mega-pixel digicam priced at around Rs 69,990.
Strategy for 2004: Sony India sells its products through specialised channels—35
Sony Worlds are present in ‘A’ class cities. It has another 30
Sony exclusive stores across the country equipped with the resources and
trained personnel to educate and demonstrate products to consumers. Ranvijay
Singh, product head-Digital Imaging, Sony India says, “Sony expects
tremendous growth in the market—both in terms of first-time buyers,
amateur and professional photographers who are looking at upgrades to get
better picture resolution and more features.” |
| Device |
Vendor |
Availability |
Features |
Price (Estimated)
|
|
Tungsten W
|
PalmOne |
Q1 2004
|
SDH with mobile phone; supports Bluetooth
and GSM/GPRS, 320x320 pixels resolution with brightness control |
Rs 31,000
|
| Treo Wireless |
PalmOne |
Q2 2004 |
|
Not available |
| Simputer |
Encore Software |
H1 2004 |
Wireless Simputer integrated with wireless
LAN CF (Compact Flash) |
Rs 22,000 |
|
RF-enabled
|
Encore Software
|
Q2 2004
|
Simputer uses RF (Radio Frequency) and
will be used for remote reading of electric meters. |
Rs 10,000 to
Rs 12,000
|
| Model |
Vendor |
Availability |
Features |
Price (Estimated) |
| LS 743 |
Kodak |
|
6-megapixel |
Rs 20,000 |
| DX6490 |
Kodak |
Available |
4-megapixel camera with CCD sensor, Schneider-Kreuznach
Variogon 10x optical zoom lens |
Rs 31,900 |
| F828 |
Sony |
|
8-mega-pixel digicam |
Rs 69,990 |
| EOS ID Mark II |
Canon |
|
8-megapixel capable of capturing 8.3 frames/second,
makes it world’s fastest camera.
|
Rs 2,00,000
|
|
