Mobile Will Switch To ‘Direct To Retailer’ Model In 2014
CEO – Devices, Spice RetailSpice
Home grown Spice Mobile,a subsidiary of Spice Retail is expecting to gain marketshare in the sub 10K smartphone range as the company is looking to double its revenues from Smartphones from last financial year. In an interaction with Channel Times, TM Ramakrishnan, CEO – Devices, Spice Retail shared company’s strategy for mobile.
CT: How is the mobile Internet businesses growing in India and how bullish you are for this growth
Ramakrishnan: India has more than 200 million Internet users, of which over 50% access Internet using their mobile devices. The ubiquitous nature of connected devices such as smartphones and tablets has created a massive opportunity for mobile Internet businesses. India will be key to future smartphone growth as it represents more than a quarter of the global feature phone market. Growth in the India market relies heavily on affordable Android phones. We aim to garner at least 10% of the Smartphone market shares. Over all we are looking to double our revenues from Smartphones as compared to last financial year.
CT: Can you tell us about your existing handset distribution for the Indian market? What are your expansion plans for the same?
Ramakrishnan: We have a strong distribution network across major towns and cities of India with focus on tier 2/3 towns. We are concentrating on the below Rs.8,000 price segment and that makes our focus sharper in these major tier 2/3 towns that have shown nearly 300% growth over the last year. This market is growing steadily in terms of the overall contribution in our total sales. We are well present in online channel, Multi brand stores and organized trade as well. Soon we will switch to direct to retailer model in our stronghold markets to engage with our partners and help them in faster sell out. We have implemented proper processes with right automation to ensure end to end control and tracking of our operations.
CT: How is rural market fuelling the growth for Spice mobile?
Ramakrishnan: The rural market for us has been a big contributor to our smartphone sales. Compared to last year we have seen an astounding 293% growth in the tier 2/3 towns’ smartphones segment. While the overall smartphone growth is at an encouraging 171%, the contribution of the tier 2/3 towns in the overall smartphone sales is 65%. The promise in this segment is evident with the sharp rise in the smartphones contribution coming from it. With our recent marketing campaign, Spice Milaye sapnon se, we have tried to start a unique relationship between spice and small town youth by presenting spice as the only brand that understands their dreams of a better life and spice smartphones as the best way to explore and achieve those dreams. We have identified them as small town youth between 15 and 25 years; keen for personal change but often handicapped by poor education or the lack of opportunity; excited to explore the full potential of life through mobile internet; but on a tight budget of less than Rs. 8,000.
In rural markets, price takes the front seat. We manage to deliver devices in the rural market that are affordable as well as well-equipped with features / apps that they could use to enhance their smartphone experience. Not only this, we seek to enable these small town people achieve their dreams by providing better viewing and internet experience.
CT: More and more high end mobile companies are bringing low end smartphones. How do you see disruption in the smartphone market in terms of high end and low end smartphones? For Spice, what is the focus market?
Ramakrishnan: We are clearly concentrating on the below Rs.10,000 price category. This segment is set to double by next year in terms of volume where as the growth will be starkly low in the above Rs.10,000 price category. Currently, nearly 75% of the smartphones sale is done in the below Rs.7,000 price category while the rest fall under the Rs.7,000 to Rs.10,000 price category. For us the immediate opportunity is to target this segment.
With the presence of innumerable options in the smartphone segment, there is intense competition. Such competitiveness brings along the conviction, among the smartphone manufacturers (majorly domestic brands), of grabbing greater market share by offering low end smartphones.
CT: What technological changes will drive the growth of smartphone?
Ramakrishnan: Smartphones are meant to be smart, be it in the past, present or future. And to keep up to the technological innovations and developments, smartphones, too, require continuous revamping after a certain period. For our consumers in the small towns who may not have experienced a smartphone earlier, there are quite a few features or technological changes that are set to excite them:
a.Language options – customers will now be able to use the language of their choice as the phones will support all Indian languages
b.Motion sensors, Intelligent Answer, Flip to Mute
c.Smart Call – options on your incoming call screen that will allow you to manage the call by selecting either HOLD-ON or GOT-CALL.
d.Cloud storage – upto 2 GB free data storage
e.Flexible Screens- These are the most talked about and debated feature that smartphone manufacturers have recently introduced. Leaving arguments behind, consumers have accepted it with zeal
f.Smartphones replacing the need of cameras- The usual 5 MP camera and 12 MP cameras are now being replaced by 40 – 50 MP cameras. Such a giant leap in the quality of camera makes the use of separate cameras redundant
g.3D Screens- Post the invention of retina display what consumers expected was 3D display, and mobile manufacturers are now at it, something newer and relatively more advanced. Presently, there are a couple of 3D smartphones in the market
CT: With more IT companies like HP, Lenovo getting into smartphones and tablets space, isn’t smartphone market space getting tighter?
Smartphones and tablets business are on the upswing and most of the IT companies are taking greater interest in this segment. With such transition, what becomes inevitable is the market being flooded with smartphones. Such a situation makes the market very competitive, hence companies attempt to grab greater market share by offering devices at cheaper rates.
CT: What is the scope and future of the mobility industry in India after the advent of 4G / 5G technologies?
Ramakrishnan: Being in this sector for quite some time now, I believe that the telecom industry is ever-expanding. Moreover, with the advent of 4G and 5G, it will take the whole of this market segment to a new horizon. It will open the possibility to have several services to be provided to the consumers as well as new roads of revenue for the key players in the segment. We believe that 4G / 5G would open up new possibilities in the mobile communication sphere, which should be optimally utilized. Owing to the fact that it would provide the chance of spreading the internet to places untapped before, it would provide opportunity for the operators to tap into new markets; it will narrow down the digital divide too. Reaching markets, untapped before, will help us empower the consumers in those areas too.