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Market Research on the size and future prospects of the mobile phones industry in Indonesia
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MOBILE PHONES IN INDONESIA
Euromonitor International
November 2012
M O B I L E P H O N E S I N I N D O N E S I A P a s s p o r t I
© E u r o m o n i t o r I n t e r n a t i o n a l
LIST OF CONTENTS AND TABLES
Headlines ..................................................................................................................................... 1 Trends .......................................................................................................................................... 1 Competitive Landscape ................................................................................................................ 2 Prospects ..................................................................................................................................... 3 Category Data .............................................................................................................................. 3
Table 1 Sales of Mobile Phones: Volume 2006-2011 ............................................... 3 Table 2 Sales of Mobile Phones: Value 2006-2011 .................................................. 4 Table 3 Sales of Mobile Phones: % Volume Growth 2006-2011 ............................... 4 Table 4 Sales of Mobile Phones: % Value Growth 2006-2011 .................................. 4 Table 5 Mobile Phones Company Shares 2007-2011 ............................................... 4 Table 6 Mobile Phones Brand Shares 2008-2011..................................................... 5 Table 7 Sales of Mobile Phones by Distribution Format 2006-2011 .......................... 5 Table 8 Forecast Sales of Mobile Phones: Volume 2011-2016................................. 5 Table 9 Forecast Sales of Mobile Phones: Value 2011-2016.................................... 6 Table 10 Forecast Sales of Mobile Phones: % Volume Growth 2011-2016 ................ 6 Table 11 Forecast Sales of Mobile Phones: % Value Growth 2011-2016 ................... 6 Table 12 Smartphones by Operating System 2008-2013 ........................................... 6 Table 13 Mobile Phones by Type of Contract 2006-2011 ........................................... 7
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MOBILE PHONES IN INDONESIA
HEADLINES Mobile phones sees robust 21% volume growth, to reach 35 million units sold in 2011
Blackberry fever continues in 2011
Smartphones captures all attention with 100% volume growth in 2011
Nokia still hangs on to volume leadership with 30% volume share in 2011
More stable good performance expected in the forecast period at 8% volume CAGR
TRENDS Mobile phones continued to be the star performer of consumer electronics in Indonesia up to
2011. Possession of mobile phones has grown rapidly over the historic period, and it was not
uncommon for consumers to have several mobile phones by the end of 2011.
Amidst the smartphone fever, feature phones still formed the bulk of mobile phone sales in
2011. Whilstmany consumers have been lured by smartphones’ multiple features, the price of
feature phones is still much lower, making it much more accessible for the bulk of population.
In addition, there are also a good variety of feature phones also offering internet access
including access to Facebook, Twitter and other social networking sites. Therefore, middle- to
low-income Indonesians for the most part still find feature phones to be more than sufficient
for their communication and social networking needs.
For feature phones, more local and Chinese brands had presence on the market, with
competitive pricing, in 2011. In particular, the concept of the dual SIM card has taken off well
for feature phones in Indonesia, due to Indonesian consumers’ penchant to have multiple
phone numbers in order to have lower calling costs to their contacts. This habit to have
multiple numbers is also translated into the most common purchase of mobile phones as
“phone only” over the historic period. Pay-as-you-go purchasesare less common, and a
monthly subscription is the least popular type of contract, since a lot of Indonesians find
subscriptions too expensive and unnecessary. Nonetheless, growth in monthly
subscriptionsincreased in 2011, due to growing purchase of smartphones.
The smartphone boom has been largely attributable to consumers’ demand for convenience
in social networking, with secondary reasons including convenience to take photos as well as
play music. For a smartphone operating system, Symbian used to be the most popular OS in
2008 due to Nokia’s past leadership of smartphones. However, over the historic period,
Blackberry has boomed – especially with its instant messaging BlackBerry Messenger (BBM),
which resulted in BlackBerry OS overtaking Symbian by 2011. However, the OS that has
caused the most buzz is the open-source Android, which has grown at an even faster pace
since its debut in 2009, and by 2011 it had already become the second most popular OS,
used by various smartphone brands in contrast to the exclusivity of BlackBerry OS. Android
will likely be the leading smartphone OS in the future, with Samsung Galaxy III also to adopt
Android for its OS.
Within mobile phones, there is growing trend in Indonesia for the product to be sold bundled
with an internet access package, such as offers to buy Samsung mobile phone bundled with a
3-month internet subscription. Due to the growing popularity of various apps such as the BBM
and Whatsapp, more Indonesian mobile phone owners keep changing mobile phone numbers
just to latch onto the cheapest internet offer packages. This trend has been facilitated by BBM
and Whatsapp being the most popular mobile messenger applications in 2011.
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In 2011, CDMA mobile phones were becoming more popular to use for accessing the internet,
although its usage is limited to only within a specific region, except for CDMA phones that use
Smartfren or AHA SIM cards. Over the historic period, there was a significant increase in
Indonesians using their mobile phones to act as internet modems, and usually they use
CDMA phones, as these typically have a faster connection. Therefore, there is a shift away
from using CDMA mobile phones just to make phone calls towards using them for accessing
the internet. In fact, there is also a growing overall trend from making phone calls to sending
Short Messaging Service (SMS) or text messages.
Up to 2011, the price gap between feature phones and smartphones remained quite steep,
with the average feature phone costing only slightly over Rp1 million compared to an average
of over Rp4 million for smartphones. Both feature phones and smartphones have seen their
prices fall considerably over the historic period, but the decline in price of feature phones has
been more significant in terms of making it affordable even to lower-income consumers. In
comparison, the price decline for smartphones has made it more accessible to middle-income
consumers.
COMPETITIVE LANDSCAPE The biggest player for mobile phones in 2011 remained Nokia Indonesia, but the company
continuously lost volume share over the historic period and is in danger of being overtaken by
Samsung within the next few years of the forecast period. In fact, second-ranked Samsung
has also been declining in volume share in percentage terms due to the rapid rise of
Research in Motion’s Blackberry; however, its volume share has declined at a slower rate
than that of Nokia.
In feature phones, Nokia’s leadership weakened notably over the historic period, whilst
Samsung managed to experience a lesser decline towards 2011. The biggest gainer was the
Chinese company Huawei Technologies, which grewits volume share from 11% in 2006 to
15% by 2011. Huawei’s competitive pricing has appealed to lower-income consumers looking
for a mobile phone they can afford. Affordability is also the key reason why local player
Metrotech Jaya Komunika Indonesian withits Nexian brand was also able toincrease its
volume shareover the historic period and in 2011.
Whilst local and Chinese players are growing in importance for feature phones, the opposite
trend is seen in smartphones. Nokia and Sony were the early movers, and Nokia took an
early lead of smartphones by launching more products. However, Blackberry entered with a
bang in 2008, and has taken Indonesia by storm ever since. The Blackberry phenomenon has
eroded Nokia’s share rapidly, and as of 2010 already had closed the gap very much. By 2011,
Blackberry already became the clear leader of smartphones in Indonesia, with volume sales
almost triple of Nokia’s.
Blackberry’s success has been driven by a number of factors. One key factor has been the
use of the QWERTY keyboard, which has proven to appeal to Indonesians more than the
touchscreen from the likes of iPhone. Indonesian consumers use their smartphones largely
for chatting (such as using BBM) and find the physical keyboard more convenient to use. The
other key factor is the success of Blackberry’s instant messaging system, BBM itself, with
consumers finding the chatting feature of BBM to be very convenient way of staying in touch
with friends, colleagues and relatives.
In smartphones, other players growing strongly in volume share are also the higher-end
brands including Samsung. Ever since its entry in 2009, it has been the other key threat to
Nokia and Blackberry. Its Samsung Galaxy series has been a particularly successful launch,
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and the company’s volume share in smartphones has grown from 8% in 2010 to 10% in 2011
thanks to Samsung Galaxy series.
PROSPECTS Mobile phones are still set for a bright future in Indonesia, with the penetration rate expected
to keep improving to reach optimal level towards 2016. Overall volume growth will stabilise to
a single-digit (8%) CAGR, with feature phone sales starting to decline – compared to the still
healthy volume growth up to 2011 – whilst smartphones are set to post a double-digit volume
CAGR of 23% over the forecast period.
Feature phones will remain very important for mobile phones sales in Indonesia throughout
the forecast period. Even with a slight decline in volume sales, feature phone sales are only
expected to be eclipsed by smartphones as late as 2016. As the penetration rate of mobile
phones was not yet saturated by 2011, feature phones sales will come chiefly from new
consumers from middle- to low-income brackets which look for affordable mobile phones. In
addition, with Indonesians’ habit of owning more than a phone, even middle-income
consumers are likely to have a smartphone and a feature phone, with the feature phone
considered to be more as a backup or more reliable in terms of battery life.
Smartphones will, meanwhile, be the star performer over the forecast period, boosted by
continued slashing of prices that will make the product more affordable to bigger proportion of
Indonesians. Whilst the price of the average smartphone will remain several times higher than
that of the average feature phones (as feature phone prices will also keep falling), more
consumers may consider purchasing a smartphone to be more achievable in the forecast
period.
A key uncertainty for smartphones will be the performance of Blackberry. The Blackberry
smartphone itself has proven to be a huge success in Indonesia, which even caused a lot of
buzz when Research in Motion (RIM) decided not to open a factory in Indonesia but to open
one in Malaysia instead. The Indonesian government believes that the huge consumer
demand justified the setting up of a factory to open up new employment opportunities. Whilst
Blackberry’s popularity itself is likely to remain, the troubles faced by RIM globally raises
questions about its ability to maintain brand presence for consumer sales of smartphones,
even in a country like Indonesia where it has been very successful compared to Apple or
Samsung.
With Blackberry’s uncertain future, android-based smartphones are most likely to benefit in
volume share over the forecast period, such as Samsung. As such, the BlackBerry OS is
likely to decline in volume share towards 2013, and Android OS is expected to emerge as the
new leading OS in 2013. Windows OS, previously declining in the historic period, is expected
to make a strong return in 2012 with the launch of Windows 8 OS.
CATEGORY DATA
Table 1 Sales of Mobile Phones: Volume 2006-2011
'000 units 2006 2007 2008 2009 2010 2011 Feature Phones 10,811.8 14,055.4 18,272.0 22,840.0 24,500.0 26,000.0 Smartphones 480.7 672.9 1,076.7 1,938.0 4,500.0 9,000.0 Mobile Phones 11,292.5 14,728.3 19,348.7 24,778.0 29,000.0 35,000.0
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Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 2 Sales of Mobile Phones: Value 2006-2011
Rp billion 2006 2007 2008 2009 2010 2011 Feature Phones 19,114.7 23,606.7 29,154.2 27,768.6 27,002.5 26,752.1 Smartphones 3,414.7 4,063.5 5,851.4 9,690.0 20,271.5 39,525.9 Mobile Phones 22,529.4 27,670.2 35,005.7 37,458.6 47,274.0 66,278.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 3 Sales of Mobile Phones: % Volume Growth 2006-2011
% volume growth 2010/11 2006-11 CAGR 2006/11 Total Feature Phones 6.1 19.2 140.5 Smartphones 100.0 79.7 1,772.4 Mobile Phones 20.7 25.4 209.9
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 4 Sales of Mobile Phones: % Value Growth 2006-2011
% current value growth 2010/11 2006-11 CAGR 2006/11 Total Feature Phones -0.9 7.0 40.0 Smartphones 95.0 63.2 1,057.5 Mobile Phones 40.2 24.1 194.2
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 5 Mobile Phones Company Shares 2007-2011
% retail volume Company 2007 2008 2009 2010 2011 Nokia Indonesia PT 38.8 37.7 35.9 33.4 29.8 Samsung Electronics 30.1 29.6 29.5 27.2 25.7 Indonesia PT Huawei Technologies Co 11.5 12.3 12.9 12.6 10.9 Ltd Research in Motion Ltd - 0.4 1.2 3.1 10.6 Metrotech Jaya Komunika 7.6 8.3 8.3 7.7 7.1 Indonesian PT LG Electronics 5.7 5.4 5.3 4.7 4.1 Indonesia PT High Tech Computer Corp - - 0.5 0.9 1.5 Sony Indonesia PT 1.4 1.4 1.2 1.2 1.2 Motorola Indonesia PT - - - 0.0 0.4
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Apple Computer Inc - 0.2 0.2 0.3 0.2 Others 5.0 4.7 5.0 9.0 8.6 Total 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 6 Mobile Phones Brand Shares 2008-2011
% retail volume Brand Company 2008 2009 2010 2011 Nokia Nokia Indonesia PT 37.7 35.9 33.4 29.8 Samsung Samsung Electronics 29.6 29.5 27.2 25.7 Indonesia PT Huawei Huawei Technologies Co Ltd 12.3 12.9 12.6 10.9 Blackberry Research in Motion Ltd 0.4 1.2 3.1 10.6 Nexian Metrotech Jaya Komunika 8.3 8.3 7.7 7.1 Indonesian PT LG LG Electronics 5.4 5.3 4.7 4.1 Indonesia PT HTC High Tech Computer Corp - 0.5 0.9 1.5 Sony Ericsson Sony Indonesia PT 1.4 1.2 1.2 1.2 Motorola Motorola Indonesia PT - - - 0.4 iphone Apple Computer Inc 0.2 0.2 0.3 0.2 Others 4.7 5.0 9.0 8.6 Total 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 7 Sales of Mobile Phones by Distribution Format 2006-2011
% retail volume 2006 2007 2008 2009 2010 2011 Store-Based Retailing 100.0 100.0 99.8 99.7 99.6 99.5 - Grocery Retailers 14.6 14.7 14.8 14.9 15.0 15.1 -- Discounters - - - - - - -- Hypermarkets 14.6 14.7 14.8 14.9 15.0 15.1 -- Supermarkets - - - - - - - Non-Grocery Retailers 80.0 79.5 77.5 76.0 75.5 75.0 -- Electronics and 80.0 79.5 77.5 76.0 75.5 75.0 Appliance Specialist Retailers -- Mixed Retailers - - - - - - - Other store-based 5.4 5.8 7.5 8.8 9.1 9.4 retailing Non-Store Retailing 0.0 0.0 0.2 0.3 0.4 0.5 - Direct Selling - - - - - - - Homeshopping 0.0 0.0 0.0 0.0 0.0 0.0 - Internet Retailing - - 0.2 0.3 0.4 0.5 Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 8 Forecast Sales of Mobile Phones: Volume 2011-2016
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'000 units 2011 2012 2013 2014 2015 2016 Feature Phones 26,000.0 26,930.0 27,564.4 28,024.3 27,033.8 25,276.4 Smartphones 9,000.0 13,500.0 17,550.0 20,182.5 23,008.1 25,769.0 Mobile Phones 35,000.0 40,430.0 45,114.4 48,206.8 50,041.8 51,045.5
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
Table 9 Forecast Sales of Mobile Phones: Value 2011-2016
Rp billion 2011 2012 2013 2014 2015 2016 Feature Phones 26,752.1 25,082.5 23,093.7 21,199.6 19,470.5 17,248.3 Smartphones 39,525.9 53,360.0 64,032.0 67,873.9 70,131.9 72,580.3 Mobile Phones 66,278.0 78,442.5 87,125.7 89,073.4 89,602.4 89,828.6
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
Table 10 Forecast Sales of Mobile Phones: % Volume Growth 2011-2016
% volume growth 2015/16 2011-16 CAGR 2011/16 Total Feature Phones -6.5 -0.6 -2.8 Smartphones 12.0 23.4 186.3 Mobile Phones 2.0 7.8 45.8
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
Table 11 Forecast Sales of Mobile Phones: % Value Growth 2011-2016
% constant value growth 2011-16 CAGR 2011/16 TOTAL Feature Phones -8.4 -35.5 Smartphones 12.9 83.6 Mobile Phones 6.3 35.5
Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources
Table 12 Smartphones by Operating System 2008-2013
% retail volume 2008 2009 2010 2011 2012 2013 Windows 30.0 25.0 24.0 10.0 20.0 22.0 IOS 3.5 3.0 1.7 0.9 0.8 0.8 Android 15.0 24.0 25.0 33.0 35.0 Symbian 50.0 35.0 21.0 15.0 BlackBerry OS 8.0 15.0 20.0 41.4 37.0 32.5
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Others 8.5 7.0 9.3 7.8 9.2 9.8 Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources
Table 13 Mobile Phones by Type of Contract 2006-2011
% retail volume 2006 2007 2008 2009 2010 2011 Monthly subscription 0.8 0.6 1.0 1.5 2.5 2.9 Pay as you go 12.5 13.0 13.5 14.0 14.5 15.0 Phone only 86.8 86.4 85.5 84.5 83.0 82.1 Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources