Telecom Lead Asia: S Mobile Devices (Spice Mobiles) has chalked out its strategies for 2013 — to take on Nokia and Samsung.

The company’s plans include launch of 4G/LTE smartphone in July / August 2013; a couple of new smartphones; increase presence to 780 towns across India; and not to expand manufacturing facility capacity to become more cost effective.

The launch of 4G / LTE smartphone assumes significance as Airtel and Reliance Jio Infocom will be spreading their TD-LTE presence in select cities of India. At present, Huawei is the only smartphone vendor in India with a TD-LTE phone — that’s available with Airtel. The new variant of Samsung S4 also will have TD-FD LTE version that will be available later this year.

Expansion of Spice Mobiles, which is primarily focusing on feature phones, is happening at a time when India’s smartphone major Samsung is expanding user base with its new REX series phones — priced between Rs 4,280 and Rs 6,490 to compete with Nokia’s Asha series and cost effective Lumia range.

T.M. Ramakrishnan, CEO of S Mobile Devices, claims that Spice Mobiles has 3.5 percent share in India’s smartphone market, while its share in feature phone space is around 5 percent in Q4 CY 2012.

But the market share of Spice Mobiles does not reflect its revenue that decreased to Rs 429.6 crore in Q3 2012-13 from Rs 556.9 crore in Q3 2011-12. Its net loss reduced significantly to Rs 3.2 crore from Rs 26.9 crore.

Spice’s main challenge is to compete in a market that is dominated by Nokia that held 26 percent share of the 170 million handsets shipped to India in 2012, with Samsung following closely behind with 22 percent of the market, according to Canalys.

The Wall Street Journal reported that India is the single largest market for Nokia, accounting for 13 percent of the 336 million handsets it shipped across the globe in 2012, Canalys data shows. But its market share in India has been dwindling.

“It’s definitely plausible that Samsung’s low-end Galaxy smartphone series will explode even more and cumulatively Samsung will edge out Nokia,” said Jessica Kwee, an analyst with Canalys.

S Mobile Devices CEO is confident of achieving market share growth in India thanks to its strategies.

The company says 30 percent of smartphones are sold through the Spice Hotspot, Spice Group-owned outlets. Its competitors do not have this kind of flexibility. In addition, Spice phones are sold through 17,000 outlets. Around 70 percent of its sales comes from top 20 towns.

“Several Chinese players have exited from India. Indian mobile users are conscious about quality and features. We are adding the best quality phones targeting the youth population who need cost effective phones,” said S Mobile Devices CEO.

S Mobile Devices has around 7 percent market share in 7 markets such as Rajasthan, Kerala, Rest of Maharashtra, Madhya Pradesh, Kolkatta, and Haryana.

Due to competition, S Mobile Devices faces pricing pressure in phone business. That’s why it is still relying much on imports. “We may not expand our manufacturing facility in Badri from the present capacity to produce 500,000 phones. We are making around 100,000 to 150,000 at our Badri unit,” he added.

S Mobile Devices is looking at associating with telecom operators in India for launching bundled handsets. Also, global expansion is on the cards.

S Mobile Devices CEO says the number of internet connections in India is expected to grow to over 400 million by 2016 and it will fuel the growth of phones. Annual shipments of smartphones are likely to reach 301 million by 2016.

Analysts say growth in the smartphone segment will be largely driven by the penetration of 3G in India and further catalyzed by stabilizing ASPs.

S Mobile Devices’ ASP stood at Rs 1,311 during the third quarter, down 4.4 percent vs. quarter ended June 2012 owing to higher proportion of feature phone sales. Its retails business’ smartphone ASP was Rs 13,603 in Q1.

Baburajan K
[email protected]