Indian mobile handset sales to reach 138.6 million in 2010, says Gartner

Mobile device sales in India are forecasted to reach 138.6 million in 2010, an increase of 18.5% over 2009 sales of 117 million units, according to Gartner, Inc. The mobile handset market is expected to show steady growth through 2014 when end-user sales are expected to surpass 206 million units.

The Indian cellular market is dynamic with new carriers and many new local mobile device manufacturers entering the already crowded mobile device market. This intense competition has led to low call rates and low-cost devices from multiple manufacturers. Previously, the market was dominated by a few vendors such as Nokia, Motorola, Reliance and Vodafone.

“Established global device manufacturers are losing ground due to fierce competition from local and Chinese manufacturers in the low-cost segment,” said Anshul Gupta, Principal Research Analyst at Gartner. “Price remains the main criteria when buying any consumer electronic device in India, including a mobile device. Carrier strategies, lower tariffs and third-generation (3G) data plans will continue to shape the mobile device market in India.”

India, contributing approximately 10% of worldwide sales, is an important market for manufacturers with aspirations to grow their global market share. Due to its sheer size and open market (mobile devices being sold independently of a cellular connection), it has attracted many global mobile device manufacturers. The market is also supported by many local manufacturers. This has led to over 50 brands vying for consumer attention, besides the many brands in the gray market (selling without invoices).

“The entry of Indian mobile handset players focusing on low-end, value conscious consumers has intensified competition in the Indian mobile device market. A large volume of mobile device sales in India come from the low-end device segment. The average selling price (ASP) of a mobile device is approximately $52, with 85% of the devices sold costing less than $100,” said Gupta.

With the growing influence of local handset players in the low-end segment, the traditionally stronger, large global players have had their positions weakened. At the same time, the mid-range to high-end market is becoming increasingly competitive with a greater focus from global players on the Indian market and the launch of competitively priced mid-range and high-end mobile devices.

The Indian cellular market is highly voice-centric with just 10% of carriers' revenue coming from data services. Within that, 85% of revenue comes from SMS, leaving less than 2% of overall carriers' revenue accruing from data access on mobile devices. Another fact that separates India, though not the only one, from other markets is that it is largely a prepaid market, with approximately 95% of existing subscribers on prepaid schemes, and 98% of new subscribers choosing this option. This corroborates the fact that the Indian mobile device market is driven by the lowest call rates in the world and dominated by low-cost devices, which will account for 80% of overall sales in India in 2010.

Although 3G technology has not yet been introduced in India, 3G device sales are expected to account for 16.7% of total sales in 2010, up from 9.2% in 2009. By 2014, 3G devices sales are expected to account for 69% of total sales. Smartphone sales in India made up 5.2% of total device sales in the first quarter of 2010, and Gartner expects this share to increase to 18% in 2014.

“Cellular phone penetration in India stood at 45% in 2009 and the market is entering into a second phase of growth with replacement sales increasing from 45% in 2009 to 50% of total sales in 2010. The move to high-speed 3G networks is resulting in greater challenges in terms of innovation and keeping up with fast changing consumer demand. Shortening product life cycle times and declining sales of voice-centric devices will bring changes to the market during the next five years,” concluded Gupta.