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Summary:

New, private 3G networks in India combined with mobile adoption and Google’s march towards powering inexpensive smartphones in the Asia-Pacific region could bring half a billion more people to the mobile web in India by 2014. Is this the perfect storm for small, upstart handset makers?

spice-android

New, private 3G networks in India combined with mobile adoption and Google’s march towards powering inexpensive smartphones in the Asia-Pacific region could bring half a billion more people to the mobile web in India by 2014. Handset makers new to the smartphone market are gearing up to soon offer Android devices for $150 to Indian consumers, with hopes of future phones priced below $100, says the Wall Street Journal. If these efforts are successful and gain momentum, the scenario could be a blow to Nokia, which reportedly holds over a third of the handset market in India, down from a 56.2 percent share just two years ago. Indeed a perfect storm may be brewing for upstart mobile device manufacturers in India to bring low-cost Android devices to the masses.

Mobile subscriber growth. With an estimated 1.2 billion people in India, the country is one of the most populous nations on the planet, second only to China. The mobile phone is quickly becoming a staple for nearly every Indian: iSuppli anticipates that by 2014, 97 percent of the country’s population will have a mobile subscription of some sort.

 

Source: iSuppli

 

Based on the current wireless subscriber base in India, such growth represent roughly 500 million new mobile users. Traditionally, inexpensive feature phones have been the device of choice due to hardware costs, so it’s easy to assume that the bulk of these new additions would be low-cost, basic handsets priced at $40 or less. Surely some portion of the population will be constrained to lower-end devices, but what happens when a smartphone operating system is available for free and can offer a reasonably good experience on minimal hardware?

Android is moving down. Although much of the recent focus on Google’s Android platform has revolved around higher-end devices from HTC, Samsung, Motorola and others, the operating system is beginning to trickle down to second- and third-tier handset makers. Just last month, Alcatel-Lucent  introduced a touchscreen Android phone priced at $129 on a pay-as-you-go contract. That’s still too expensive for many consumers, but as handset adoption rises over the next four years, hardware prices are sure to continue their decline, even as capabilities increase. Another possibility that could improve the Android experience on cheaper devices is the re-use of hot hardware. This year’s 1 GHz Snapdragon CPU, which powers many high-end Android phones, could gain a second life in lower cost devices at a reduced price in the next few years, for example.

3G networks are ramping up. As mobile phone component prices decrease over time and consumers in India purchase more handsets, wireless infrastructure is poised to mature. Up until now, only state-owned carriers are offering mobile broadband in India, but that’s due to change soon. Privately owned Tata Docomo plans to launch nine 3G markets next month, focusing coverage on highly populous cities, says the GSMA’s Mobile Business Briefing today. Tata Docomo is just one of many carriers that won 3G spectrum in auctions this year, so other 3G network implementations are sure to follow. Such news corresponds with outlooks from iSuppli, which reports that 2010 investments in India’s wireless infrastructure equipment market will top $10.8 billion, a gain of 29.7 percent from 2009 investment figures.

Millions are getting social. While you don’t need a smartphone or 3G broadband speeds for basic activities, both attributes add value to social networks. Smartphone apps are often more robust and the sharing of user-created content such as pictures or videos greatly benefit from faster networks. India seems ripe for both smartphone phones and speedy mobile broadband as the number of mobile social networking users in the country increased 43 percent from July 2009 to July 2010, says research firm Analysis Mason. Although only 2.2 percent of the total wireless subscriber base in India currently use social networks on handsets, the country is already the seventh-largest user of mobile social services in the world. With better social apps that Android devices can offer, married with new 3G networks, the region is ripe for low-cost smartphone sales.

Local handset makers can compete. Nokia has dominated the Indian handset market, but the tide appears to be shifting, largely due to local handset makers. IDC says that in 2008, phones built in India accounted for a mere one percent of sales in the country. Just two years later, that figure has risen to 33 percent, much to the chagrin of Nokia, who has seen its share nearly halved in the same time frame. So how is that unproven handset makers without years of software experience can even participate in this market, let alone actually compete against Nokia? The answer lies with the no-cost Android operating system, which removes the need to develop smartphone software. Indeed, Google reportedly pays carriers a part of the mobile ad revenues earned by Android handsets, making it a win-win situation for Indian upstarts such as Spice Mobility, Olive Telecom and Micromax, which is expected to launch four Android devices by this spring.

To be sure, mobile market expansion is just starting to ramp up, and traditional or well-known favorites such as Nokia and INQ still rule the roost. But a combination of factors are beginning to open the door for Android to invade India by the most unlikely team of players. With strong mobile adoption expected in a highly populous area, it appears that low-priced Android phones are poised to jump on India’s newest mobile broadband networks over the next four years, welcoming up to 500 million new mobile web users.

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  1. “…the country is one of the most populous nations on the planet, second only to China.

    Why bother with “one of the most…” as if it’s some vague fact. Just go right away with “second most”, and even that is just barely so.

    Anyway, interesting post. I don’t think Nokia is gonna go down that easy, but you raise some interesting points. I’m all for android :)

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  2. Ankur Nandwani Tuesday, October 12, 2010

    Even though the sale of android based phones may increase in India, I think there is a lack of ecosystem to support various apps that make any smartphone attractive. So before launching android based phones in a big way, I think work should be done to develop the apps ecosystem.

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  3. [...] noted that handset makers are going to be offering Android-based smartphones in India soon, anticipating another half-billion new Android users as a result. In addition, some of the [...]

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  4. [...] Android army. India, a place where you could find consumers with a Nokia found everywhere you turn, is starting to see an influx of low-cost Android devices from local handset makers. Google providing Android to these companies at no charge give them a chance to compete against [...]

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  5. [...] than the market overall which grew by 95 percent to 80.9 million shipped units. However Android, as my colleague Kevin has noted, could eat into Nokia’s share in places like India as it moves down market into cheaper [...]

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  6. [...] its development, but with developers more enamored of iOS and Android and cheaper Android phones eating into Nokia smartphone sales overseas, Nokia has to show that it can do more than re-assume control. It has to show it can execute and do [...]

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  7. [...] I don’t think such sentiments are a given when a company such as LG can quickly move a million low-end smartphones that run a modern operating system. With the entire smartphone market growing, there’s room for many hardware makers: Nokia, LG, Apple and the like. But the companies that can build a useful smartphone priced at a good value stand to gain many sales among the current billions of feature phone owners: especially in regions like India, where the next 500 million mobile web users are waiting for such affordable devices. [...]

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  8. [...] Google seems to be working with Indian manufacturers like Micromax Informatics Ltd., Spice Mobility …. This will test the brand loyalty of Nokia which is already strained at the lowest end of the Indian handset market by the local Indian manufacturers. Already a price point of $150 has been reached by the Huawei Ascend in the US. [...]

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  9. [...] we’ve written prior, many manufacturers are looking to the free Google Android operating system to build cheap smartphones. But the hardware requirements of Android are still more rigorous than commodity feature phones, so [...]

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