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Panasonic! Welcome back to the India smartphones market space

Faisal Kawoosa, Senior Manager, Telecoms & SemiTronics — Fri, 17 May 2013 15:07:48 +0000

With contribution from Vishaal Bhatnagar, Associate Vice President, Marketing, Public Sector and New Initiatives

Panasonic launched P51, a 5 inch Android 4.2 Jelly Bean OS-based 1.2 GHZ quad-core smartphone (phablet) for INR 26,900 in India, yesterday. This formally marked the brand’s re-entry into the country’s mobile device market after five years. How the handset will perform and whether the company will be able to establish itself as a significant player in the country are questions we should be able to find answers to after observing the shipment numbers and user reviews over the next couple of quarters. So, I won’t attempt to pass judgment on that.

However, I have three observations to make:

1) Product: Surprisingly, Panasonic has relied on Mediatek for the chipset, a company that is not very well known for solutions in the smartphone category but is a very strong player in entry level feature phones. I am not sure how this is going to be received by prospective smartphone customers. Processor speed, smoothness in running multiple applications simultaneously, online gaming etc. are factors that determine brand perception for smartphone owners. In the case of the Panasonic P51, this can be truly judged only after the handset (and other new Panasonic smartphones) hit the market and gain a substantial user base. This process could well take 3-4 quarters to play out. But given the stiff competition from established players, it may be a good tactical move if the company were to appoint a limited number of carefully chosen, popular public figures as ‘Panasonic Smartphone Ambassadors’ to experience the new handset first hand. Over 3-4 months, these ambassadors could potentially become advocates for the iconic Japanese brand amongst India’s smartphone hungry youth population.

2) Price: Panasonic has priced its new offering at the entry level of the high-end, large screen size smartphone category of ‘phablets’. The Japanese vendor has tried to use pricing to position the product in this ‘elite’ category while at the same time tactically priced it lowest vis-à-vis competitor offerings from Samsung, Apple, BlackBerry, HTC, Sony Mobiles, Micromax and others. The apprehension I have here is whether this is sustainable? If Panasonic goes by this strategy of having a phone model for each category and offers it at the lowest price point that might not be a feasible business over an extended period of time. We believe an alternate strategy could be to offer a limited period introductory price, promote heavily through TV, radio and social media to build brand preference in the category and then go ‘mainstream’ with EMI-based purchase schemes, subsidized data plans et al.

3) Place: Panasonic has selected Jaina Marketing for promotion, distribution and customer support for its smartphones in India. Here too I have issues. Jaina Marketing has its own brand ‘Karbonn’ out in the India market and may find it challenging to promote both. Though unintentional, there could be an overlap in portfolio and conflict of interest amongst the trade and distribution channel partners. Panasonic’s consumer electronics arm already has an established network throughout the country. They could have exploited the same route for the smartphone category as well as they have only one handset model to sell and for a few more months I don’t see this number changing significantly.

Based on the above analysis, I feel Panasonic needs to re-strategize its entry into the India smartphones market. This fine tuning of approach and tactics should not be an issue for the Japanese major. After all, it’s not only about garnering 8% of the market share. It’s about a bringing to millions of potential India consumers a wholesome and infotainment-rich smartphone-enabled lifestyle.

CMR Live Webinar-Transform Your Enterprise Operation

cmri — Thu, 16 May 2013 07:36:54 +0000

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CMR Live Webinar-Transform Your Enterprise Operation-Register

cmri — Thu, 16 May 2013 07:34:07 +0000

CMR Live Webinar-Transform Your Enterprise Operation-Speakers

cmri — Thu, 16 May 2013 07:32:55 +0000

Apalak Ghosh

Lead Consultant, Emerging Technologies Research, InfoTech Practice, CMR

Apalak is a lead analyst with CMR’s software and IT services research practice, based out of Gurgaon (near New Delhi). In this role, Apalak is responsible for overseeing development of reports, carrying out in-depth market assessments and forecasts on new and emerging technologies like Cloud Computing, Virtualization, Green IT, DataCenter adoption amongst others. Apalak has led new research initiatives to study adoption of Cloud Computing and Virtualization amongst Indian enterprises. He is frequently quoted in the media on the subject of Cloud Computing and DataCenters on popular TV channels such as NDTV and in leading business publications such as The Economic Times and The Hindu Businessline. He also writes a blog on the theme of Green IT/Virtualization/Cloud Computing. In this capacity he carries forward his rich experience as Manager, Software and Services Research and Consulting Practice, IDC India. Prior to his current role, Apalak has worked with TNS India as a research analyst for two years, before which he was with TransAsia Solution Seekers, Indonesia as a consultant for a year. His experience spans across key research areas such as brand tracking, product / concept testing, quantitative and qualitative research, and consulting. He has a rich exposure to research techniques such as face-to-face and telephonic interviews, profiling and discussions with stakeholders across diverse industry verticals such as IT and Telecom, Consumer Packaged Goods and Automotive. Apalak completed his Master’s program in Business Administration from the ICFAIBusinessSchool, Bangalore, specialising in Marketing. Apalak also holds a Bachelor’s degree in Computer Engineering from the Birla Institute of Technology (BIT), Ranchi capital of the eastern Indian state of Jharkhand

CMR Live Webinar-Transform Your Enterprise Operation-Partners

cmri — Thu, 16 May 2013 07:30:33 +0000

CMR Live Webinar-Transform Your Enterprise Operation-Agenda

cmri — Thu, 16 May 2013 07:27:56 +0000

WILL UPDATE SOON

Reliance Jio Infocomm (RJIL) inching towards victory in the India 4G services market

Faisal Kawoosa, Senior Manager, Telecoms & SemiTronics — Mon, 13 May 2013 14:18:51 +0000

State-owned TSPs forced to give up without a fight?!

The likely decision of a group of ministers (GoM) to refund state-owned BSNL and MTNL their 4G spectrum fees of INR 12,846 crore, after the same was recommended by the Department of Telecommunications (DoT) is going to pave ways for RJIL to become the ‘leader’ in a market that hasn’t yet taken off in India. Currently, the 4G services market in the country exists on a limited scale because of the launch by Bharti Airtel in select cities such as Kolkata, Bengaluru and Pune. However, the real take off for 4G services in India is expected only after RJIL announces the commercial launch of its 4G services.

RJIL has two key strengths that are going to make its 4G story a success – a) A pan-India licence and b) ‘Paper fuel’ (marketing budgets) to propel growth. RJIL can pump in a lot of money as compared to other existing telecom operators, who are facing huge cash flow issues. In addition, the recent decision allowing unified licence holders to offer voice services opens up a wider potential revenue stream for RJIL. Therefore, RJIL has all that it takes, some of it due to internal strengths of its parent group, and some because of market conditions becoming favourable to the company, supposedly unwittingly.

While the decision to refund 4G spectrum fees to BSNL and MTNL is likely to get the nod of the GoM, for the state-owned service providers this is going to be detrimental in the long term, as it would limit their ability to provide new generation services to the consumer. For MTNL, there could be a case for staying put with its existing bouquet of services, as it enjoys a relatively better network footprint along the geographies it serves. However, for BSNL, going wireless and enabling BWA is the only way to survive. It needs to be able to reach out to the farthest corners of the country to potential consumers in the heart of rural India. Thus provision of 4G services is not only a business case for BSNL but being a state-owned operator the company has a strategic and moral responsibility to fulfill the agenda of the government, by improving connectivity and reducing the digital divide.

Collectively BSNL-MTNL was the only competition to RJIL in terms of geography as both have pan India 4G licence. However, if this recommendation of DoT is accepted by the GoM, RJIL will be left as the sole ‘national’ 4G operator, thereby resulting in increased business opportunities for the private player. Paradoxically, it would also imply increased ‘reliance’ of the government on RJIL for roll-out of various m-governance projects, giving the service provider an edge in terms of existing infrastructure and reach.

What is further worrying is that by allowing a refund to BSNL and MTNL, the government will allow them to forego upgradation and rolling out of the next-generation wireless services. Therefore, in the long run, these state owned players are going to become irrelevant to the market. In such a scenario, how can the state-owned Telecommunication Service Providers (TSPs) undertake the transformation to become converged operators? Although the premise of giving this ‘concession’ to these state-owned operators is their consistent poor financial performance, but allowing them to go off track from the natural evolution demanded by the market does not augur well for the Indian Telecommunication Services industry.

If the government is of the opinion that BSNL and MTNL must be refunded their share of the 4G spectrum licence fees, then the initial proposal by these operators for obtaining 4G spectrum was not based on the correct business premise either. This calls for a long, hard look by the DoT (and in fact the Govt. of India) at the ‘business management’ aspects of running state owned utilities. Any decision that effectively downgrades the viability and long term competitive strengths of BSNL and MTNL needs a wider and deeper public debate. Moreover, perhaps the current DoT recommendation is not the only solution to help bring the two state-owned operators out of their financial morass.

What is needed is ‘out of the box’ thinking that goes beyond just merging the two entities into one to reduce duplication of cost overheads. With changing technology and subscriber demand patterns, the business strategy and reporting structures need to be changed, to better serve the needs of the Indian consumer. Current market dynamics show a definite demarcation in terms of requirements and expectations amongst urban and rural telecom subscribers. Therefore, it might make sense to reorganize BSNL and MTNL to serve the needs of these two distinct market segments and compete on technology and quality of service (QoS).

The urban Indian consumer of the future may well want to download her favourite entertainment show on her Tablet via high speed, wireless broadband services provided by the ‘National Urban Telecommunications Corporation’, while students in a girls’ high school in a remote corner of the country animatedly participate in an expert session in genetics, delivered via high speed, wireless broadband services delivered by the ‘National Rural Telecommunications Corporation’.

Expect the sunshine era of India’s Semiconductor & Electronics industry…!!!

Rajat Kharbanda, Analyst, SemiTronics — Mon, 13 May 2013 12:04:17 +0000

The road to emerge as another semiconductor giant has begun for India. Although, India has the requisite expertise in software and design, it significantly lags capacity in electronics hardware manufacturing.

If we compare India with Asian countries like China, Taiwan, Korea, Japan etc., India still has to travel a very long distance. These countries have positioned themselves as experts in the semiconductor value chain, starting from design, manufacturing and right up to packaging, etc.

India, at present contributes less than 5% of the total global semiconductor market revenues; however, this share is expected to reach 11% by the end of 2015. Initiatives taken by the Government of India to promote this sector are expected to spur the market in the coming years.

To speed up the foundation of India’s semiconductor & electronics industry, the Union Government has proposed to provide a sum of INR 10,000 crore as an ‘Electronics Development Fund (EDF)’ to promote electronics hardware manufacturing in the country.

Other initiatives include, setting up of the National Electronics Mission, semiconductor wafer fabs, favourable policies to procure electronics goods manufactured domestically, manufacture of high priority products such as digital set top boxes, smartphones, tablets, etc., and creating electronic manufacturing clusters.

Foundry vendor, TowerJazz has reportedly shown interest in setting up a semiconductor fab in India, which will have the capability to manufacture 300mm wafers, 90nm analog technology and companion chips from 65nm to 45nm.

To build ‘greenfield’ and ‘brownfield’ Electronic Manufacturing Clusters (EMCs), the Govt. of India has recently received an investment proposal of INR 2,000 crore, which aims to set up three clusters in southern India. Two EMCs have been proposed by the Andhra Pradesh Industrial Infrastructure Corporation, while the third cluster is proposed to be set up by GMR Infrastructure.

The Department of Electronics and Information Technology (DeitY) has received a preliminary application from Raaga Mayuri Builders to set up two more electronics clusters in Andhra Pradesh. All such investment proposals will be duly evaluated before grant of approval.

Apart from announcing policies to attract investment in manufacturing, the government must simultaneously pay attention to rationalizing the prevailing taxation rules. For instance, while a landed consignment of electronic assemblies / equipment attract no or low customs duty, import of components for local manufacturing sees a larger incidence of tariff. According to the Directorate of Transfer Pricing, Department of Income Tax, Govt. of India, about 3,500 transfer pricing litigation cases amounting about INR 1,11,299 crore for FY 2010-11 and FY 2011-12 are still pending in India. Despite the best incentive schemes, lack of clarity in taxation rules and perceived indifference in their application is bound to restrict investors’ confidence.

The government must realise that this is the right time to announce and implement serious tax reforms, which will not only benefit the investors but also the country in the long run.

If the government takes steps to ensure quick and positive movement on both the incentive schemes to encourage indigenisation and local manufacturing, and rationalizes tax rules, the sunshine days of the Indian semiconductor and electronics industry cannot be too far behind!

CMR’s CIO Roundtable-Speakers

cmri — Tue, 07 May 2013 10:21:40 +0000

WILL UPDATE SOON

CMR’s CIO Roundtable-Partners

cmri — Tue, 07 May 2013 10:20:39 +0000