April 27, 2005
 

Watch out for the Rs. 1000 mobile phone

I am willing to stick my neck out on this one. I predict that within a year, or at most 18 months, mobile phone users in India will be able to purchase a basic feature model for as little as Rs. 1000. In fact, I actually think that one of the telecom service providers will tie up with the handset manufacturer to give a deal which gives a mobile connection plus the handset for Rs. 999. I base this on two happenings in the last forthnight.

On April 6, Nokia announced that it would be setting up a manufacturing plant at Sriperumbudur, more famous for being the sleepy town a few km away from Madras where Rajiv Gandhi was assassinated on 21 May 1991. Ever since Nokia phones entered the Indian market, they were initially imported completely and then gradually started getting assembled in India. There would obviously have been a cost of importing/transporting. Add in the import duties and thats where the phones' prices come into the picture. Now I own a very basic model Nokia phone, costing around Rs. 3000. But I would certainly love the same features for half the price, or even less! By producing locally, I am fairly sure they are getting nice tax concessions. Obviously this reduces their costs.

Yesterday, the Communications Minister Dayanidhi Maran launched a Rs. 1700 handset made by Motorola. Now Motorola is not among the top 3 mobile phone brands in India. In my opinion, they would be Nokia, LG and Samsung. So it is trying to break into the top 3 by introducing low-priced models, possibly specifically targetted at the rural consumers and the lower middle-class in urban areas.

If Nokia manufactures here, can the others be far behind? The competition means that Nokia, Motorola or indeed any other manufacturer will ensure that it keeps costs to a minimum because otherwise it would be difficult to justify a US $150 million investment. In addition, the current (and predicted) high growth nature of the Indian telecom market (perhaps 25-30% annually?) means that they can expect to follow a model of high volume production, once again resulting in lower costs. Obviously consumers will not allow themselves to be taken for a ride by buying these phones at high prices.

So if you do get that Rs. 999 deal in the near future, remember, you read it here first!

Rambled @ 7:56 PM

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4 comment(s)

Hey,
Actually I have worked on two low cost chipsets in my short career of 3 years...(Both of them are targeting 20$ phone market).
I know for sure that one of them is already in the field trial stage and the other program is in the middle stage(implementation)..The design and implementation for the softwares required for these mobiles have been done in India.(Bangalore).Jai Hind

By  Anonymous (Apr 29, 2005, 4:05:00 PM)  

Tell us which company is working on these and who uses the chipsets? We will never buy these phones;)

By  Anonymous (Apr 29, 2005, 5:42:00 PM)  

Jagadish: More than from Nokia or Motorola, when the chipsets and other components come to the commodity market, then local companies will come up making the product available for closer to Rs. 1,000.

They won't have any worries on brand building etc. and can save money considerably.

Let us see.

By  Badri Seshadri (May 10, 2005, 6:23:00 AM)  

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By  Unknown (Apr 19, 2013, 9:30:00 PM)  

I'd prefer if you posted comments with your real name to add more credibility to your opinions. Obviously comments containing offensive and unsuitable language will be deleted. The opinions in the comments are your own views. You are welcome to provide a URL to your own blog, especially if it discusses issues you find here.