The Hindu Business Line : Low-cost handsets driving mobile market: Yankee Group study

New Delhi, March 25 With operators rolling out cellular services in rural and semi-urban areas, low-cost handsets are driving the country’s mobile growth story. According to a report from the Yankee Group, mobile handsets costing less than $50 account for 62 per cent of all imported units. The study points out that low-cost CDMA handsets were more popular than GSM in this category.

“Very low-cost (defined as sub-$50) handsets have become integrally important to the Indian cellular market’s astonishing growth. Sub-$50 models accounted for 62 per cent of all imported units between January and October 2007. CDMA models from 13 vendors dominate this category, comprising 78 per cent of all sub-$50 imports,” said the Yankee Group.

The country’s cellular market continues to add new subscribers at a world-leading rate of 7-8 million users per month. “A number of factors including, but not limited to, service provider competition, service quality, brand affinity, effective marketing and distribution, device vendor competition, increasing per-capita GDP, and general demand factors such as choice, are driving growth. The broadening availability of ultra low-cost handsets (defined as sub-$35) is also becoming one of the key drivers to subscriber growth,” the study pointed out.

A comparison of import volumes for GSM and CDMA sub-$50 handsets shows that the latter was at least 3.5 times higher during the period. In terms of average selling price, CDMA handsets were found cheaper than GSM low-cost handsets. There are around 60 very low-cost CDMA models from 13 vendors, making it a highly competitive sector. This price gap between CDMA and GSM has, however, narrowed with the introduction of sub-$30 GSM imports from August to October.

“Total market leader Nokia’s contribution to sub-$30 GSM volumes increased from 15 per cent from January to July, to 22 per cent from August to October,” said the study. The Yankee Group did not include handsets manufactured in the country. About 44 per cent of the handsets sold in the marker are locally manufactured.

Yankee Group expects this trend to continue, transforming communications in developing markets.

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