Demand for Value-Added Handsets Soars

The recent growth in mobile telephony shows that India has become a mobile-dominated telecom market. Mobile services have been the flywheel of telecom growth in India, which is the fastest in the world. The number of mobile phones, as on January 31, 2006, was about 83 million – over 63 per cent of the total phones. 

 

The mobile subscriber base in the country crossed the 100-million mark in the month of May, according to the latest estimates. With 100.6 mobile phone users as of May, India is ranked fifth in the world in respect to the number of cellular subscribers. This has put the country in the league of China, the U.S., Japan and Russia. 

 

What is of interest is that not all this growth is in voice. It is expected that, from the current 7–10 per cent, value-added services (VAS) could comprise more than 25 per cent of Indian cellular revenues by 2010. “In India, the mobile data services are estimated to be between 7 and 10 per cent of most operators’ revenues,” says Ajay Vaishnavi, Vice-President & Head – Business Operations, Cellnext. “By 2010, various reports estimate mobile data to be a $5-billion (Rs.20,000-crore) market in India,” says K. K. Kushwaha, Country Head – Sales & Marketing, Kyocera Wireless. 

 

The global VAS market is projected to grow at a CAGR of 22 per cent in the 2005–10 period, from Euro 5 billion to Euro 36 billion. The market for mobile value-added services (VAS) in India has seen a stellar growth over the past few years. From just a trickle of SMSes in the not so distant past, the country’s more than 101 million subscribers are sending text messages at a frantic rate. 

 

According to an estimate by Juniper Research, the global content market will be worth a gigantic $45 billion by 2009, games and gambling overtaking ringtones to claim the lion’s share, taking over 60 per cent. India is an information-hungry country and mobile phones have come as an additional opportunity to those who want to satisfy their appetite for information. Currently, VAS accounts for about 16 per cent of a mobile operator’s total revenues. 

 

Short messaging service (SMS) tends to rule the roost among all comers in the value-added services, accounting for 80 per cent of India’s VAS market. SMS is followed by ringtone downloads, games ranking third. 

 

But, of late, there is a surge in demand for more diversified content, including mobile chatting, exclusive ringtones and picture downloads, location-based services and MMS. 

 

Mobile game is another segment in the Indian VAS market whose growth defies imagination. According to the estimates by Nasscom, the Indian software industry body, and U.S. research firm InStat/MDR, India’s wireless-game market will generate annual revenues of $336 million by 2009. According to a recent Pyramid Research survey of mobile phone users across the BRIC (Brazil, Russia, India and China) countries and the U.K., India ranked as the top mobile game market. 

 

“In the near future when the life of people would be more mobile and with the advent of technologies like HSDPA, Mobile WiMAX, Wibro, etc., a mobile phone will give tough competition to the PC/console games. Users of high-end 3G phones will be able to play live games even when they are mobile – about 60 mph,” says Sutikshan Naithani, Vice-President”– Sales & Marketing, Samsung Telecommunications India. 

 

However, robust growth of value-added services has to be accompanied by value-added handsets. 

 

“In this scenario, the challenge for handset manufacturers is to design handsets that have the capability/platform to support these sophisticated, data-heavy services,” says Kushwaha. 

 

“For an information-hungry country like India, mobile phones have come as an additional opportunity to those who want to satisfy their appetite for information. Naturally, Kyocera is very attuned to the infotainment needs of the consumer which includes things like games, ringtones, mobile imagery, mobile chatting, screen savers, mcommerce, MMS and streaming of audio and video clips,” adds Kushwaha. 

 

According to Gartner, worldwide mobile phone sales reached 224 million units in the first quarter of 2006, a 23.8-per cent increase from the same period last year. These strong results for the quarter have resulted in Gartner increasing its mobile phone sales forecast to 960 million units. According to In-Stat, Wireless handset market totalled $110 billion in 2005. This is estimated to touch $136-billion mark in 2006. This growth will continue through the end of the decade. And by 2011 the Wireless handset market will surpass $250 billion. However, this growth may be in jeopardy if the newer handsets are not equipped with features that are valued by the consumers. 

 

Newer phones will include additional security and be more targeted. The encryption technology is gaining ground. “The same applications are already there with operators like NTTDoCoMo in Japan, while lots of other players are coming up with those features,” says Naithani. “The current technologies in India are not fully secure, but with the coming up of 3G technologies the encryption technology would become more secure. We would be using IP- based services in Mobile phones in the near future, so we can be assured of better encryption technology for such services,” adds Naithani. 

 

Consumers today have become very choosy about purchasing a cell phone as these gadgets have become an extremely personal commodity and are seen as a style statement and an extension of one’s personality. Naturally, form factor takes precedence over almost everything else. However, there are a number of other things that customers consider before opting for a particular handset. 

 

“We see elements such as the ability to quickly and easily download ring-tones, music, news and information, cameras, video and MMS capabilities as vital components often used in the determination of a phone purchase,” says Kushwaha.

 

“Actually, the CDMA platform offers a level of encryption security that is non-surpassed among the other cellphone technologies. In fact, CDMA was originally developed and used for the U.S. military, before the technology was made available for consumer applications.”

 

The Indian mobile handset market is dominated by scores of mobile vendors who continue to introduce innovative and useful features in mobile phones to lure the consumers. 

 

Mobile behemoth Samsung provides a range of value-added services, including Internet access, mobile games, video recording, megapixel cameras, etc. “Apart from this common VAS, we do provide some exclusive services like mobile tracker, Emergency SOS messaging, privacy lock, uGO, TV-out function, document viewer, etc.,” says Naithani. 

 

Kyocera handsets have a number of multimedia features to offer. Besides the basic SMS and ringtones services, Kyocera handsets offer the following capabilities in India – camera, screensavers, MMS, video recording, FM radio, wallpapers, changeable covers, picture caller ID, data cable, PC Sync, calen dar, reminders, clock, and additional memory card slots.

 

In addition to the above, Kyocera’s KZ series phones also offer the RUIM facility to its customers. A RUIM card or’Re-Usable Identification Module is a removable ID chip for cellular phones made for the CDMA network. It provides flexibility to switch phones by simply removing the RUIM card and slipping it into another card-enabled phone. The new phone would then be able to make and receive calls on the user’s account without having to go through the operator for activation. The user has the flexibility of changing to another Kyocera phone at any time without worrying about losing his subscriber number with the RUIM card. 

 

“We also plan to introduce new phones in the near future, which will have capabilities such as Bluetooth, infra-red, etc., MP3 capabilities and other consumer-centric value-added features,” says Kushwaha. 

 

In India, there is a need for more specific, targeted output. Local content is much in demand. “It would be wise for manufacturers and carriers to focus attention on handsets specifically designed for gaming and on the development of gaming content, particularly if it is custom-made for the Indian market,” says Senior Analyst Nick Holland at Pyramid Research. 

 

“Almost a third of Indian mobile data users were restricted from mobile gaming by a lack of sophisticated handset availability,” adds Nick Holland.

 

Taking a step in the direction of catering to the localized content, Kyocera has been offering the Hindi-English texting capability. “We have also pioneered several of the form factors that are now standard, such as the sliding form factor and the swivel-form factor.” “Another example might be the tip calculator which we also include in our phones, which is an easy way to determine the percentage of the tip that one might want to leave for service.”

 

“We also pride ourselves on the ease of use of our phones and the fact that most of our functions are available with just one or two steps, while many other phones require you to drill down numerous steps to get to the functionality, which makes it less likely to be used.”

 

“We have also introduced advanced EV-DO technology which we hope to be able to bring to India, once the 3G spectrum issues get resolved,” says Kushwaha. 

 

Kyocera is the only handset manufacturer in India to stay completely focussed on the CDMA platform as the company believes in its technological superiority. The company believes that the future of the telecom industry lies in CDMA/WCDMA. Some of the handsets available in the Indian market include Kyocera Slider, Kyocera Koi, Kyocera SoHo, Kyocera KZ830, Kyocera KZ860 and Kyocera KZ870. 

 

Since India is a price-sensitive yet information-hungry market, consumers want to get the maximum number of value-added services at the minimum cost possible. Operators keep themselves attuned to these factors and come up with schemes and packages to suit various budgets and requirements. So, bundled offers play an important role in customers’ buying decisions. It helps customers enjoy various schemes and they see value for money in such bundled offers. 

 

Another factor that influences customers includes after-sales support service. “Kyocera is committed to ensuring that any service required is easily and quickly provided. We have numerous service centres throughout India ready to fix any issues and offer a walk-in repair service that pledges to repair most problems within 60 minutes. Apart from these, we have a full–fledged component level Repair Centre in Bangalore,” says Kushwaha. “Customer service is extremely important to us and we continue to expand the ease in which consumers can seek assistance as needed. As part of that, we are planning to double our service network in 2006, B and C class areas, as well as to add 140 collection points in fringe areas,” adds Kushwaha. 

 

It is well known that the Indians have an insatiable appetite for entertainment and recreation. Being the fastest growing mobile market, India is the fertile ground for the mobile handset manufacturers who have to add innovations and features at regular intervals to woo the customers. As our culture becomes more affluent, more and more of consumers’ discretionary spending will be directed towards satisfying their desire to be entertained. And with rapid consumerism sweeping the country, consumers are becoming more sophisticated in their selection of handsets and opt for the most stylish and fashionable mobile phones, which have the maximum features and can support the maximum number of value-added services that they can enjoy.