Rate war of telecom cos moves to handsets

The rate war of telecom companies has moved now to handsets. Contract manufacturing in bulk, by countries like China, has a big role to play. CNBC-TV18 finds out if this could be a threat to the branded mobile manufacturers.

 

Vodafone is expected to enter the Indian market with a Rs 666 handset or at least that is the buzz in the market. But  a handset for Rs 777 and Rs 888 is a reality. Contract manufacturing of handsets, in countries like China, Taiwan and Korea, are helping telecom companies to offer these price points.

 

Reliance managed to sell over a million handsets in a month - business that would have otherwise gone to the big guys like Nokia or Motorola, whose USP is usually great design. But that would cost Reliance at least 25% more for the brand, as the Abhishek Bachchan ads do not come cheap.

 

So, it makes sense for operators to keenly look at contract manufacturers, especially for large orders of low-end handsets. The big guys are not particularly worried. They are convinced that their innovation will continue to draw buyers.

 

"We also sell branded aspiration. We do not entirely want to give up that. People buy Motorola for the design,etc. and we would not compromise on that," said Lloyd Mathais, Marketing Director, Motorola.

 

Experts said that currently of the over 50 million handsets sold in India in a year, unbranded phones account for just about 5% of the market. This could go up to 15% if more telecom players can offer dirt-cheap, feature-heavy phones.

 

But they added that the bulk of the market will continue to be with the branded guys since the look, feel and the cool-factor of a phone are increasingly becoming important for the Indian consumer.