PC can ride on the phone

Consumer pull swelled the number of emerging handset vendors in India to 68 in 2010. Empowered, these vendors can now rev up growth in tablet PCs and netbook segments

Globally, the first half of 2010 was seen by many as the year of iPad, while the second half of the year turned out to be the year of Android…it remains to be seen if the Consumer Electronics Show this week will be the harbinger of a new trend for 2011. In India, meanwhile, it would be apt to call 2010 as the year of the emerging handset vendors, many of which have been home-grown.

According to IDC India data, the ‘emerging vendor’ category accounted for 41.2 per cent of the total mobile phones shipped during the July-September 2010 quarter. The number of such vendors in the India mobile handsets market had stood at 28 in the October-December 2009 quarter and these vendors put together had garnered 17.5 per cent of the market share during that quarter, as stated in an earlier release by the market research firm. Even earlier, for the January-March 2008 quarter, it was noted that there were a mere five such vendors and that they represented a miniscule 0.9 per cent market share.

The emerging-vendor phenomenon in India is very much of a scale comparable to the Android phenomenon globally. In two-and-a-half years, these vendors have come up and swept away 41.2 per cent share of the India mobile phones market. To draw a comparison, Android’s share of the global smart phone OS market stood at 25.5 percent at the close of third quarter in 2010, according to a Gartner release last November. (Version 1.0 of the Android OS had been launched around September 2008.)

The emerging vendor phenomenon is unique to the mobile phones market in India and has been driven by consumers coming from the lower half of the country’s socioeconomic distribution structure, which as one knows, is pyramidal. The rise in the number of emerging vendors from a mere five to an unprecedented 68 has been prompted by a highly encouraging trend in consumer adoption. It won’t be an exaggeration to say that this is a case of consumers empowering market players, rather than vice versa.

“Handset vendors can grow the PC market too”

Empowered, now these handset vendors can leverage their market position to also help develop a low-cost PC market in the country. The potential of 3G-based broadband uptake aside, a larger installed base of PCs will still be needed to accelerate broadband growth. So far, with PC shipments hovering at around 8 million units a year, the installed base of PCs in India has been insufficient to spur broadband growth in the country.

Emerging handset vendors have indeed come a long way; starting with shipment of basic phones, then graduating to feature phones and now bringing out smart phones as well.

Logically, these vendors can extend their product portfolio to include tablet PCs and possibly netbooks too, at price points that are attractive to consumers in the middle and lower half of India’s socioeconomic pyramid. The vendors can use their use their existing logistics network to reach out to consumers in semi-urban and rural areas.

(As published in Deccan Chronicle on January 6, 2011.)