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McClatchy-Tribune  04/26/2014 3:50 AM ET
Newer entrants may spark smartphone price war [Mint, New Delhi :: ]

April 26--MUMBAI -- Gurgaon-based Obi Mobiles, promoted by former Apple Inc. chief executive officer (CEO) John Sculley's Singapore-based Inflexionpoint, hopes to launch six-seven sub-Rs.12,000 smartphone models in India by July and earn Rs.1,000 crore of revenue in the first year of operations.

The target, which translates roughly to sales of about two million smartphones costing an average of about Rs.5,000 each, is "ambitious", said Obi Mobiles CEO Ajay Sharma -- companies such as Samsung Electronics Co. Ltd, Micromax Informatics Ltd, Karbonn Mobiles India Pvt. Ltd and Nokia India Pvt. Ltd (whose parent firm Nokia Oyj has been acquired by Microsoft Corp.) are well-entrenched in the Indian smartphone market and together account for a share of about 80%.

Sharma is nonetheless positive about achieving the target, "given the growth momentum of the smartphone market, and the fact that almost 70% of the smartphone volumes come from the below-Rs.12,000 models".

The Indian smartphone market, according to research firm Convergence Catalyst, doubled from about 21 million in 2012 to 42 million in 2013, and is forecast to grow to 60 million by 2014.

Worldwide sales of smartphones to end-users totalled 968 million units in 2013, up 42.3% from 2012, according to a 13 February report by research firm Gartner Inc. Smartphone sales in China grew 86.3% in that period. In the December quarter of 2013, India recorded the highest smartphone sales growth of 166.8% among countries tracked by Gartner.

According to research firm International Data Corp. (IDC), smartphone sales are forecast to touch 155 million by 2017 in the rapidly growing Indian market.

It's this market potential, coupled with the fact that the US and Chinese markets are reaching saturation point, that has encouraged even Chinese companies such as Xiaomi Inc. and OPPO Mobile to eye the Indian market.

On 15 April, OPPO Mobile India said it plans to have "a diverse product portfolio" of over 10 mobile phones across categories by December 2014. The Chinese manufacturer entered the Indian market in early 2014 with its flagship OPPO N1 smartphone. OPPO currently has four smartphone models available in India.

Xiaomi has announced on microblogging site Twitter that it too plans to enter India in 2014. The company, which has brands such as Redmi and Mi3, did not divulge specifics, but analysts believe that these announcements signal that the battle for a share of the Indian smartphone market is set to intensify.

On 11 March, Idea Cellular Ltd, India's third largest telecom services provider, also launched its own 5.5-inch screen 3G (third-generation) smartphone.

Manasi Yadav, a senior market analyst at IDC India, said the "market has become dynamic, intense and competitive, and going forward, we expect it to become more dynamic than it already is".

According to Yadav, the entry of newer companies will spark fierce competition and "force vendors to lower prices, especially international brands, in order to keep up with the market and make the devices affordable in a price-sensitive market like India".

It's not that market leader Samsung, which has a more than 30% market share, is sitting idle -- the other leading firms are Micromax, which has about 22% share, and Karbonn and Nokia, which account for 12% of the total smartphone sales in India, according to Convergence Catalyst.

Neither are companies such as Sony India, a unit of Japan's Sony Corp., and Apple with about 5% share each (industry estimates) in the Indian market and others such as China's Lenovo Corp. and Taiwanese mobile phone maker

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