The Indian cellular market appears to be on the verge of an explosion. With a growth rate of 1.5 lakh subscribers each month and a 1000 percent growth rate forecasted over the next five years, the stage is set for handset vendors to flex their muscles in the market place. Over the last month-and-a-half, several cellular handset manufacturers announced their intent to strengthen their presence in India. While the market has, till now, been dominated by the likes of Nokia, Ericsson, Motorola and Siemens, the recent announcements by Alcatel, Sony, Philips and Mitsubishi indicate that the market is set to witness some interesting trends. The move by these vendors assume more significance in light of the fact that they have been dormant even after setting up shop in the country, years ago.

The low-key presence of these players was due to several reasons. Vendors did not expect the stagnation which the sector witnessed until 1999. It was only after the government announced the revenue-sharing formula that things looked bright again for the cellular market. The high license fee that operators had to shell out resulted in passing on the burden to users. Besides, the operators also did not have surplus cash to invest in market-building exercises. The market therefore was sluggish and did not warrant attention by the handset vendors. Other factors like the overwhelming grey market and the price-sensitive Indian buyers added to the woes of the handset vendors. With grey market figures as high as eighty percent, vendors had to take a beating and withdraw their operations.

The New Contenders

Now things have changed and the market appears attractive. Says Bob Pillay, general manager, Philips Consumer Communications (PCC), South and South East Asia, "I can state three reasons why we find the cellular market attractive just now. We see consolidation taking place among operators, the fast roll out of networks and the conducive regulatory environment." While admitting that the last time PCC made its appearance in the country, some of its projections did not materialize, this time round the company is confident of the market growth. As if to prove its commitment, PCC has appointed a new general manager in the country, Bob McDougall, who is expected to spearhead its offensive in the handset market. It has also marked the occasion by launching three handsets targeted at different segments.

Mitsubishi, another market driver in the East, particularly in Japan, and Europe, is also on the offensive. It plans to target ten percent of the marketshare in the current fiscal by focusing on the lower end of the market. The Mitsubishi chief representative in the country, Issac Waldman, has said that the company would emphasize on fighting the grey market and increasing its exposure in the lower end. It would also target the medium and higher end of the cellular phone user segment. French telecom major, Alcatel, which has a six percent marketshare in the worldwide handset market, has negligible presence in the country. According to the recent plans of the company, this anomaly will be corrected with the launch of its three new models and an advertising campaign to create a marketspace for itself.

Sony Corp, the Japanese major in telecom and electronic products, is also planning a re-entry into the Indian market with the launch of its WAP-enabled phones. Despite its presence in the country, Sony had discontinued the sale of its handsets in the country by the end of 1999-2000, in view of the growing demand for cheaper products. At the same time, the tremendous growth of the European market forced the company to rework its strategy to exclude India from its list of destinations.

Samsung, a player which made its appearance in the handset segment sometime in the latter half of 1999, claims to have established its presence in the mid and high-end of the spectrum. This year, the company plans to launch GPRS and WAP-enabled phones. Banking on the growth of the replacement market, Samsung expects the high-end products to do well.