The SMART Phone

BLUE turtles

Mobile phones in INDIA

Mid nineties, INDIA saw its first mobile

Maker: MICROMAX

Modi TELSTRA was the first service provider in

India

First city to receive mobile network: KOLKATA

Some numbers…

Total number of Smartphones: ~30 Mn.

Smartphone share as a % of total mobile

sales: 12-15%

Leading smartphone operating system:

Android

Share of android : 56.4%

Leading local brands : Micromax, Karbonn,

Spice

Share of local brands in total smart phone

sales: 20-25%

Major players in the Market

APPLE

SAMSUNG

BLACKBERRY

NOKIA

SONY

MICROMAX

LG

HTC

Mobile phones in the market

Total mobile revenue – 1.5 trillion, over 2% of

global GDP

42% of the revenue from Top 10 operators

Samsung and Apple account for close to 50%

of smart phone unit share

And they also account for 90% of smartphone

revenues.

Competition is Cut throat.

Latest smart phones

Apple : Apple iPhone 5

Samsung: Samsung galaxy s4

Micromax: Micromax canvas 4

Sony: Sony Xperia Z

HTC: HTC Butterfly, HTC one

Nokia: Nokia Lumia 1020

Blackberry: Blackberry Z10, Q10

Segments in the market

A. Ultra low cost mobile handsets (INR 3000-

7000)

B. Medium cost mobile handsets (INR 7000-

20000)

C. High cost mobile handsets (INR 20000+)

Segments in the market The below table gives details of number of

phones of each brand in each segment  A B C

Samsung 9 10 10Apple 0 0 3

Micromax 11 9 0Nokia (WINDOWS) 1 10 2Nokia (SYMBIAN) 14 10 0

Sony 1 11 7HTC 1 11 6

KARBONN 15 9 0

Market share of OEMs in India

42.3

17.18.4

5.6

5.1

21.5

Smart phone market share in India

SamsungMicromaxKarbonnNokiasonyothers

Market share of OEMs globally

Market share based on Mobile OS

56.4

17.4

3

2.6

20.6

Market share of Mobile OS

AndroidSymbainiOSWindowsothers

Major challenges faced by the industry

Raw materials

Integrating cloud

Recycling the unused mobiles

Government regulations

ANALYSIS OF THE INDUSTRY

DEMAND The demand for a smart phone follows the

normal demand curve. As the price decreases, the demand for the good increases.

Quantity

Pri

ce

D

Demand & Market Demand As there are many factors that influence

demand, we assumed the demand equation to:

Q= 5P + 1C + 1.5F+2S+3B+4Ad+7U+2(DoI) + 1.5Se [for 3000<=P<=20000]

For the price above 20000, some of the above said factors do not matter. Hence,

Q= 2P + 1C + 2F+5B+6Ad+ 1 Se [for P>20000]

Elasticity, Inelasticity and Cross elasticity

A smart phone follows all the rules of normal

commodities excepting for a few exceptions. A normal

smartphone has price elasticity which is above unity.

Eg: demand for phones like Samsung S4, HTC one etc.

Exceptions being iPhone 5. Even though priced extremely

high, the demand of the iPhone 5 was so high, that they

fell short of supply as soon as the phone was released.

Being a luxury commodity, it is a fairly inelastic good.

Cross Elasticity Due to the high number of complementary goods,

this concept can be seen often

Acquisition of Motorola by Google

Merger with LG and Google

Acquiring Android finally name changed to Google play

Apple releasing their locked phones exclusively with

network providers like Airtel in India.

Same was done by Blackberry and Vodafone.

The decline of Nokia from being the top brand. This

explains the concept of cross elasticity among substitutes.

Market Power A Smart phone industry: An Oligopoly Being an Oligopoly, fight for more market

share is always present. Some examples are

Micromax Canvas: strikingly similar to Galaxy S2,

S3 Note 2 phones from Samsung, but almost at

half the price.

Aggressive marketing by every player including

Apple.

Blackberry, a brand known for QWERTY. Releasing

a full touchscreen phone with Z10

The famous case of Apple v/s Samsung

THANK YOU