Evolution of Indian handset OEMs

Jayanth Kolla/Convergence Catalyst
28 Mar 2012

In early 2008, there were only six to eight brands operating in the Indian mobile devices market, and almost all of them were global. This number increased to over 180 by 2011.

Young Indian handset vendors such as Micromax, Karbonn, Spice, Lava, Maxx, Olive, etc primarily account for this increase. Some of these Indian brands had an excellent run in 2009 & 2010, with Micromax selling more than a million devices a month and almost displacing Samsung as the No. 2 player by mid-2010.

The success of Indian OEMs can be attributed to multiple factors:

- Many Indian handset brands were started by former national and regional distributors of global OEMs (such as Nokia, Motorola, Samsung, etc). These companies partnered with Mediatek (MTK), a fabless System-on-Chip (SoC) provider and ODMs based in Taiwan and China to source white-labeled devices (with basic Indian market hygiene requirements like long battery life and high audibility)

- Leveraging their strong distribution experience, these companies have incentivized the distribution channel with high margins. By primarily selling white-labeled devices, they were also able to garner high operating margins (in excess of 35%)

- Their strategy of offering feature phones at competitive prices, initially to rural and suburban markets, and providing secondary devices to urban consumers helped them gain a foothold in the market

- The launch of multiple-SIM devices by Indian OEMs when none of the global OEMs had such devices in their product portfolio, coupled with the launch of new carriers offering low tariffs helped increase the demand for these devices. During their peak (in 2009-10) multiple SIM handsets accounted for over 28% of devices sold in India monthly

- Some of these companies such as Micromax, Lava, Karbonn, Spice and Olive have also managed to build nation-wide brands by 2010

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