10-Cellular-Industry-in-India by Sanjay Gupta

CONTENTS

 Executive Summary  Introduction  Company Profile  Nokia  Sony  Motorola  Objective of Study  Methodology  Marketing strategy  Market mix  Competitors Analysis  Competitors Marketing Strategy Analysis  SWOT analysis  Findings & Analysis  Conclusion & Recommendation  Bibliography

EXECUTIVE SUMMARY THE INDIAN MOBILE PHONES INDUSTRY The mobile phones industry made a slow start in India in 1995. Several private players who had entered the industry in 1995 exited in the next few years due to the unfriendly telecom policies of the Indian government, high licensing fees and absence of a proper telecom regulatory body. The growth in the subscriber base of mobile phones remained sluggish initially, reaching

the

million

milestone

1998.

1999,

the

Government of India announced a new telecom policy. This policy planned to provide telephones on demand by 2002.Among other things, the policy allowed unrestricted private entry into almost all mobile service sectors. The government allowed cellular mobile service providers to share infrastructure with other operators. It also allowed existing operators to migrate from fixed license fee to one-time entry fee with revenue sharing. This policy helped many private operators to break even faster. By 2001, the demand for mobile services was growing well. The

private companies concentrated on providing basic telephone services to consumers. The number of mobile phones crossed five million by 2001 and doubled to 10 million in 2002. According to mobile phone industry body, GSMA, the mobile phone industry is globally growing at the rate of one million subscriptions per day. Of these new subscribers an estimated 85% live in emerging markets. Markets like India and China are likely to continue developing rapidly in the coming years. It is estimated that these markets will account for nearly 12% of the entire global mobile handset sales by the year 2010. Nearly 100 Million migrant workers in China rely on their mobile phones, to speak to their families settled in rural China. In Asia/Pacific region, an increase in demand of mobile phones from emerging markets such as, India and China, and growing replacement markets, contributed to high growth in the 1st quarter of the year 2006. Total mobile handset sales resulted

64.4 Million units in this period, 36% up from the 1st quarter of 2005. According to experts, the global mobile handset sales, reached the 224 Million units mark in the 1st quarter of 2006, a 23.8% increase from the same duration in 2005, and are expected to grow by familiar figures in 2007. Mobile handset manufacturers are looking for new emerging markets,

where

people

are

not

used

telephones,

penetration rates in European regions have already crossed 90 percent. The number of global mobile phone subscribers is around 2.2 Billion presently. Experts expect that it will become 3 Billion by this 2007 end as the number of subscribers is increasing in China, India, Latin America and Africa. Manufacturers believe that there exists a big potential of earnings in these areas, as only 1/3 people have cell phone in such developing mobile markets. There still exist challenges with the present infrastructure, such

as putting adoption driving services in place and coming up with low cost mobile phones. But the total number of potential mobile subscribers makes emerging markets an expected source of mobile market development. HISTORY OF CELLULAR TELEPHONY IN INDIA Cellular Telephony The technology that gives a person the power to communicate anytime, anywhere - has spawned an entire industry in mobile telecommunication. Mobile telephones have become an integral part of the growth, success and efficiency of any business / economy. The most prevalent wireless standard in the world today, is GSM. The GSM Association (Global System for Mobile Communications) was instituted in 1987 to promote and expedite the adoption, development and deployment and evolution of the GSM standard for digital wireless communications.

The GSM Association was formed as a result of a European Community agreement on the need to adopt common standards suitable for cross border European mobile communications. Starting off primarily as a European standard, the Groupe Speciale Mobile as it was then called, soon came to represent the Global System for Mobile Communications as it achieved the status of a world-wide standard. GSM is today, the world's leading digital standard accounting for 68.5% of the global digital wireless market. The Indian Government when considering the introduction of cellular services into the country, made a landmark decision to introduce

the

GSM

standard,

leapfrogging

obsolescent

technologies / standards. Although cellular licenses were made technology neutral in September 1999, all the private operators are presently offering only GSM based mobile services. The new licensees for the 4th cellular licenses that were awarded in July 2001 too, have opted for GSM technology to offer their mobile services.

CELLULAR INDUSTRY IN INDIA The Government of India recognizes that the provision of a world-class telecommunications infrastructure and information is the key to rapid economic and social development of the country. It is critical not only for the development of the Information Technology industry, but also has widespread ramifications on the entire economy of the country. It is also anticipated that going forward, a major part of the GDP of the country would be contributed by this sector. Accordingly, it is of vital importance to the country that there be a comprehensive and forward looking telecommunications policy which creates an enabling framework for development of this industry. New Telecom Policy 1999 Telecommunications is now universally recognized as one of the prime

movers

the

modern

economy;

hence

it's

vital

importance for a developing country like India. The availability of adequate infrastructure facilities is critical for acceleration of the economic development of any country. In fact international

studies have established that for every 1% increase in teledensity, there is a 3% increase in the growth of GDP. Accordingly, the Government of India has accorded the highest priority

investment

and

development

the

telecommunications sector. Telecom requires very heavy investment and it was not possible for the Indian Government to organize public funding of this sector on such a massive scale. In fact the national telecom Policy 1994, estimated a resource gap of Rs. 23,000 crores to meet the telecom targets of the eighth five-year plan of the Government of India (1992-97). It was for this reason to bridge the resource gap between government funding and the total projected funds requirement and to provide the additional resources to achieve the nation's telecom

targets

that

the

telecommunications

sector

was

liberalized in 1992 and the Government invited private sector participation in telecommunications.

Cellular mobile services were one of the first areas to be opened up to private competition. The whole country was divided into the 4 metropolitan cities and 19 telecom circles, which were roughly analogous with the States of India. Cellular Licenses were awarded to the private sector - first in the metropolitan cities of Delhi, Mumbai, Kolkata and Chennai in 1994 and then in the 19-telecom circles in 1995. The first metro cellular network started operating in August 1995 in Calcutta. When cellular mobile services were first introduced in 1994 it was as a duopoly (that is a maximum of two cellular mobile operators could be licensed in each telecom circle), under a fixed license fee regime and for a license period of 10 years. The initial response of the private sector was very encouraging. The attractiveness of the Indian market - the low tele density, the high latent demand and a burgeoning middle class - brought in some of the largest global telecom players, foreign institutional

investors and the major Indian industrial houses to invest in telecom, especially the Indian cellular industry. Telecom proved to be a powerful attractor of foreign investment. The cumulative FDI inflow into telecom since 1993 has exceeded Rs. 43,000 Million. Within telecom, the cellular industry has attracted most of the foreign investment since 1993, accounting for almost 50% of the FDI inflow into telecom - representing amongst the biggest investments in any one sector in India. Annual foreign investment in telecom increased steadily from an insignificant Rs. 20.6 Million in 1993 to Rs. 17,756.4 Million in 1998. However, the attractiveness of the Indian market did not last for very long, as by 1997-98, the private cellular operators were confronted with a series of problems that threatened their very viability and survival. As a result of this, FDI inflow into telecom dropped sharply, declining by almost 90% to Rs. 2126.7 Million in 1999. This

dropped further in Year 2000 - as until June 2000, only Rs. 918 Million had flown into the country. One of the key factors responsible for the critical state of the telecom sector & consequently also the cellular industry was that liberalization / deregulation was undertaken in an inverted manner vis-à-vis international practices and generally accepted norms. Usually, deregulation is preceded by tariff rebalancing, institution of a strong and independent regulator and only then is private sector participation invited. In India, private sector participation was invited in 1992, the Regulatory

Authority

was

set

1997

and

the

tariff

rebalancing exercise commenced in 1999 and is still far from complete. Further, even when the regulatory authority was set up, there was considerable ambiguity on its powers, which resulted in virtually each and every order of the Authority being challenged by the Licensor / incumbent. The ambiguities in the jurisdiction of TRAI resulted in a limbo in the industry.

Another

important

factor

was

the

basic

approach

the

Government towards liberalization. Consumer benefit was given the go-by and the telecom sector was viewed as a revenue generator / cash cow for the Government exchequer. NTP 94 was basically a good policy. It clearly identified that the primary objective of the policy was to make available affordable telecom services. However, in actual policy implementation, this key / fundamental objective was disregarded. Licenses were granted through an auction process and the enthusiastic private sector deluded by the seemingly huge potential of the Indian market were lured into bidding exorbitant sums of money for cellular licenses. The huge license fees paid by the private operators resulted in a high cost structure leading to un-affordable tariffs and lower growth of the market. By end-1998, the cellular industry was on the verge of bankruptcy and at that time it appeared that the liberalization dream was over & the nightmare had begun.

It was under the above circumstances that the Government undertook a review of telecom policy & the role of the regulatory authority. The result was NTP 99, which was announced in March 1999 & the amendment of the TRAI Act in January 2000. NTP 99 is an extremely forward-looking policy. It significantly changed the dynamics of the Indian telecom industry as it not only replaced the high cost fixed licensing regime with a lower cost licensing structure through revenue sharing, but also provides for greater degree of competition and more flexibility in choice of technologies. The amendments in the TRAI Act resulted in a considerable strengthening of the Regulator & greater clarity on its role and powers. It also put in place a separate dispute settlement mechanism in the form of the Telecom Dispute Settlement and Appellate Tribunal to expeditiously deal with and resolve issues relating to the telecom sector. Existing private cellular operators migrated to the new telecom policy regime with effect from August 1999. There can be no

doubt that migration to a more beneficial regime translated into tangible consumer benefits - lower tariffs, greater subscriber uptake & increased coverage. Cellular tariffs have dropped by over 90% since May 1999 - a feat unparalleled by any other sector or industry in India. The average airtime tariff in Year 2002 is prevailing at around Rs. 2 per minute as against the peak ceiling tariff of Rs. 16.80 per minute when NTP 99 was announced. Parallely, there has also been a significant drop in the cost of mobile handsets. Cellular handsets that were available for around Rs. 25-30,000 in the initial days of cellular have now dropped significantly, with a base level handsets being available for as little as Rs. 2,000 upwards. This has come about as a result of increased

volumes

and

some

degree

rationalization

government levies. As a result of improved affordability, there has been an increased take-up of the service and the cellular operators were able to venture into more and more cities & towns of the country. In fact

cellular services are now available in almost 1400 cities & towns of India. With the lower tariffs and increased coverage, there was also a resultant increase in the number of cellular subscribers. The point of inflexion for subscriber take-off is clearly post NTP-99. From 1.2 million subscriber in April 1999, to almost 2 million by April 2000, the number of cellular subscriber have now grown to almost 6.5 million by the end of March 2002. By March 2001, the industry had invested nearly Rs. 16,000 crores in cellular infrastructure and it is estimated that these investments will grow to Rs. 20,000 crores in the next 4-5 years. The year 2001 also saw the entry of BSNL and MTNL as the third cellular operators as had been mandated in NTP 99. Further, in July 2001, cellular licenses were awarded to the 4th cellular operators in different telecom circles. With this the number of cellular operators has gone up to 89 licenses. As of March 2002, the Indian cellular mobile industry had 42 networks on air, serving over 1400 towns and cities and covering

thousands of villages and serving almost 6.5 million subscribers across the country. The quality of the service is widely accepted to be of international standards and till date there has been no waiting period involved in availing of this service. The cellular industry has been growing at an average rate of 85% per annum and it is hoped that the industry will be able to sustain this growth in the coming years. The Working Group on the Telecom Sector set up by the Government of India for the tenth five-year plan, has estimated that over the next five years, around 31.55 million cellular subscribers would be added all over India. To achieve this growth, the Working Group has also estimated that resources to the tune of about Rs. 25,240 crores will be required over the next five years. However,

attract

foreign

investments

into

India,

imperative to ensure the predictability and stability of the policy and

regulatory

regime

the

country.

Policy flip-flops

regulatory ambiguity have plagued the Indian telecom sector

since the introduction of privatization. This has had the unhappy result of putting the entire sector into a state of limbo as investors - both foreign & domestic await clarity on the final direction that the policy will take. In the meantime, foreign investors, who have not committed themselves to the Indian market, will divert their interest & investments to competing and more attractive FDI destinations. Further, for the industry to attract the requisite investments and to reach the growth targets set for the tenth five-year plan, it is imperative that a few crucial industry issues that have been plaguing the industry, be resolved on an urgent footing. This includes most importantly.

INTRODUCTION CELLULAR COMPANIES V\S CELL MANUFACTURERS What do cellular phone companies have in common with betel leaves? Not much. But one Indian mobile phone company is using the humble spice-laden, red-staining betel leaf called "paan" that is used as a digestive aid to go mass market. It represents the fledgling mobile industry's effort to shake off the popular view that mobile phones are only for the rich. "Saada (ordinary) paan -- 3 rupees, Airtime Rate -- 1.78 rupees," declared an advertisement of Hutchison Essar in Wednesday's edition of New Delhi's Hindustan Times newspaper. The price represents a real comedown for an industry which charged up to 16 rupees a minute when it started in 1994. "The idea is to expand the category of users. Earlier only the breadwinner of a family could have a cellular phone. Today he can think of phones for his wife, his two kids and probably even

his driver," said Sudershan Bannerjee, chief executive officer of Hutchison Essar. "We want people with cellular phones to talk more and those who do not want them to go and buy them," he said. Hutchison Essar, in which Hong Kong's Hutchison Whampoa and India's Essar group hold stakes, earlier this week introduced new plans to lure customers with 40 percent lower tariffs. The New Delhi-based cellular operator introduced Talk295, a plan which allows customers to make and get calls at 1.78 rupees a minute for a minimum monthly billing commitment of 295 rupees. It unveiled two other plans, Talk Easy and Talk795, which have tariffs pegged at 1.98 rupees and 1.48 rupees a minute for varying minimum monthly billing commitments. Hutchison is not alone here. Mobile companies across India, especially in the cities, are mounting aggressive drives to attract customers by introducing tailor-made plans with attractive tariffs.

Late last month, the two main cellular companies in Bombay -Hutchison Max Telecom and BPL Mobile -- flagged off the race for lower tariffs by announcing cuts in various tariff plans in a bid to expand their market. Hutchison Essar's main rival in New Delhi, Bharti Cellular, quickly followed suit Tuesday, introducing a range of new subscriber plans. Under its new "dream plan," Bharti will charge 1.15 rupees for every 30 seconds of incoming and outgoing airtime. Bharti also announced a slew of tariffs plans for various customer profiles. "We are targeting fence-sitters who have stayed away from owning a mobile because of a perception that it's expensive," said Sanjay Kapoor, chief executive officer of Bharti Cellular. Both Hutchison Essar and Bharti have slashed security deposit charges for new connections to 1,500 rupees from 2,000 bringing down another major entry barrier for first-time users. Mobile tariffs have been falling since the late 1990s and have helped the industry expand its subscriber base. In February,

mobile firms in the two main cellular markets of Bombay and New Delhi slashed tariffs to around 2.80 rupees a minute from four. India's mobile subscriber base grew 88.7 percent year-on-year to 3.7 million at end-April 2001 but analysts and industry officials say the numbers are still way too low for its billion-plus population. Analysts say the numbers spell potential for huge growth and not surprisingly firms are pulling out all stops to exploit it.

INDIA

ADDS

RECORD

6.6M

MOBILE

PHONE

SUBSCRIBERS IN OCTOBER Cellular phone subscribers rose in India by a record 6.6 million in October, keeping the country’s place as the world’s fastestgrowing mobile phone market, according to data released over the weekend. Subscribers for the GSM network grew by 4.7 million in September, while the number of mobile phone subscribers using CDMA technology increased by 1.9 million. The Cellular Operators Association of India, which includes mobile phone companies offering services on the GSM network, said the country now has about 96 million GSM-based phone connections. CDMA phone service providers say they now have about 40 million subscribers. The total number of mobile phones in the country stands at about 136 million at the end of October.

However, India still lags far behind China, which has more than 420

million

mobile

phones,

the

most

the

world.

T.V. Ramachandran, CEO of the Cellular Operators Association of India, said New Delhi topped Indian cities with just over 10 million subscribers. The introduction of mobile services in India in the 1990s coincided with a period of rapid economic growth. Intense private sector competition, coupled with falling tariffs and ease in getting a connection, led to a surge in subscriptions. India Adds a Mobile Phone User Every Second India's mobile phone industry is expanding exponentially, adding one new subscriber every second to take the total telephone subscriber base to 250 million by 2007, Communications and IT Minister Dayanidhi Maran said on Thursday. "India's telecommunications industry is on a very high growth trajectory. We have already crossed the 185 million subscribers mark,

and

2007

India

will

have

250

million

phone

subscribers,"

the

minister

said

India

Telecom

2006,

inaugurated by President A.P.J. Abdul Kalam at the Pragati Maidan fairground here. "Our mobile subscriber base is increasing phenomenally each year, adding almost six million new subscribers a month, which means one customer is added every second," Maran told the conference attended by the who's who of Indian telecom. The

conference

being

organised

Ministry

for

Communications and Information Technology, in association with Federation of Indian Chambers for Commerce and Industry (FICCI)

and

Telecom

Equipment

Manufacturers

Association

(TEMA). Over 200 companies are participating in the exposition, including biggies like Bharti Airtel Limited, BSNL, C-Dot, Hutchison Essar Mobile Services Ltd, COAI, Qualcomm India Pvt Ltd and Reliance Communication Ltd. Among the international participants are various small and medium telecom companies from Canada, China, Singapore,

Hong Kong, Italy, Taiwan, South Korea and the United States. "By 2010, India will have more than 500 million mobile subscribers from the current base which is more than 140 million," Maran said. "This year we have already had investments of up to $17 billion in IT and telecom, of which $1.5 billion have been in telecom alone," the minister said. He said an investment of $2 billion had been made in telecom manufacturing only. "And more investments are on the anvil." However, broadband

Maran

expressed

connectivity

and

concern said

over

that

slow

one

growth

million

subscribers would be added to the current three million by the end of this fiscal

COMPANY PROFILE NOKIA Nokia was founded in 1965 by Fredrik Idestam in Finland as a paper manufacturing company. In 1920, Finnish Rubber Works became a part of the company, and later on in 1922, Finnish Cable Works joined them. All the three companies were merged in 1967 to form the Nokia Group. In the late 1970s, Nokia started taking an active interest in the power and electronics businesses and by 1987, consumer electronics became Nokia’s major business. Nokia created the NMT mobile phone standard in 1981 and launched the first NMT phone, Mobira Cityman, in 1987. The company delivered the first GSM network to Radkilinia, a Finnish company in 1991, and in 1992, Nokia 1011 - a precursor for all Nokia’s current GSM phones - was introduced. In the 1990s, Nokia provided GSM services to 90 operators across the world. Another significant move of the company during this period was the divestment of its non-core operations

like IT. The company focused on two core businesses - mobile phones and telecommunications networks. Between 1992 and 1996, the company exited from the rubber and cable businesses as well Nokia in India Nokia entered the Indian market in 1994. The first ever GSM call in India was made on a Nokia 2110 mobile phone on its own network in 1995. When Nokia entered India, the telecom policies were not conducive to the growth of the mobile phone industry. The tariffs levied on importing mobile phones were as high as 27%, usage charges were at Rs.16 per minute and, at these high rates, consumers did not take to mobile phones. Nokia also had to face tough competition from other powerful global players like Motorola, Sony, Siemens and Ericsson Nokia Corporation (Nokia) is a manufacturer of mobile devices. The Company offers mobile network equipment, solutions and services to corporate customers. Nokia operates in four business

segments: Mobile Phones, Multimedia, Enterprise Solutions and Networks. The Mobile Phones segment connects people by providing mobile voice and data capabilities across a range of mobile devices. The Mobile Phones segment offers mobile phones and devices based on global cellular technologies, such as global system for mobile communications (GSM)/enhanced data for GSM evolution (EDGE), third generation/wideband code division multiple access (3G/WCDMA) and code division multiple access (CDMA). The Multimedia segment provides mobile multimedia experiences to consumers in the form of advanced mobile devices and applications with connectivity over GSM, 3G/WCDMA, wireless

local

area

network

(WLAN),

Bluetooth

and

other

standards. The Enterprise Solutions segment offers businesses and institutions a range of products and solutions, including enterprise-grade

mobile

devices,

underlying

security

infrastructure, software and services. The Networks segment provides network infrastructure, communications and networks service platforms, as well as professional services to operators and service providers.

In October 2006, the Company completed the acquisition of gate5 AG, a supplier of mapping, routing and navigation software and services, and Loudeye Corp., digital music platforms and digital media distribution services company. In February 2006, Nokia acquired Intellisync Corporation (Intellisync). Intellisync is a provider of mobility software, and delivers wireless e-mail and other applications over an array of devices and application platforms across carrier networks. The Company has two horizontal

groups,

Customer

and

Market

Operations,

and

Technology Platforms, which support and service Nokia's mobile device business groups. Customer and Market Operations is responsible for marketing, sales, sourcing, manufacturing and logistics for mobile devices from Mobile Phones, Multimedia and Enterprise Solutions. Technology Platforms supports Nokia's overall technology management and development by delivering technologies and platforms to Nokia's business groups, as well as to external customers.

Mobile Phones Nokia's product portfolio includes features and functionality designed to appeal to the mass market, such as megapixel cameras, music players and color screens. During the year ended December

31,

2005,

Mobile

Phones

introduced

its

first

3G/WCDMA products, which included the Nokia 6280, the Nokia 6233, the Nokia 6234 (for Vodafone) and the Nokia 6282 (for the Americas). During 2005, Nokia shipped a total of 28.5 million smart phones and more than 40 million mobile devices with an integrated music player. The Mobile Phones business group has five units: Broad Appeal, Entry, Lifestyle Products (formerly known as Focused Appeal), CDMA and Vertu. The Broad Appeal unit focuses on mid-range products. The majority of Nokia's product portfolio falls into this category. During 2005, the products introduced by the Company included the Nokia 3250, a music-optimized device supporting one gigabyte of memory; the Nokia 6280, a 3G/WCDMA phone with a

two-megapixel camera, and Nokia 6230i. Under the Entry unit, Nokia's products include the Nokia 2600 monoblock and the Nokia 2652 clamshell, both with color screens, and the Nokia 1100. During 2005, the Company introduced the Nokia 1110 and the Nokia 1600. The Lifestyle Products unit focuses on top-end products. During 2005, the Lifestyle Products unit introduced the Nokia 8800 phone, featuring a sliding stainless steel case; the L'Amour collection of mobile phones, which come in three different form factors and two color schemes, and the Nokia 5140i outdoor mobile phone featuring thermometer, compass and flashlight. The CDMA unit supports operators that use CDMA technology. During 2005, products introduced by the CDMA unit included the Nokia 6265 slide design phone with a two-megapixel camera and Bluetooth connectivity, and the Nokia 6155, a CDMA mid-range phone

for

the

Americas.

The

Vertu

unit

offers

luxury

communications products. Products offered in the Vertu unit include the Signature Diamond Collection of tri-band GSM

phones, including a model inlaid with 700 diamonds. The Vertu unit also offers White Special Edition and Motorsport Limited Edition phones, both of which are handcrafted from leather and stainless steel with a custom-developed, scratch-resistant alloy, and

include

tri-band

GSM

and

Bluetooth

connectivity.

Multimedia During 2005, the products introduced by the Multimedia segment included Nokia 6630 and Nokia 6680 3G/WCDMA devices, and the Nokia 6600 and the Nokia 7610 imaging devices. In April 2005, Nokia announced a sub brand, the Nokia Nseries, for a category

advanced

multimedia

computers

that

offer

consumers the ability to shoot video and still pictures, printquality images, watch television, listen to music, and access the Web

and

e-mail.

addition

supporting

3G/WCDMA

connectivity, certain Nokia Nseries multimedia computers also feature non-cellular connectivity, including WLAN, frequency modulation

(FM)

radio,

digital

video

broadcasting-handheld

(DVB-H) and Bluetooth. The Multimedia segment has two units, the Multimedia Computers unit and the Multimedia Experiences unit.

The Multimedia Computers unit focuses on managing, delivering and expanding the Nokia Nseries multimedia computer portfolio,

as well as developing and marketing accessory products and car communications solutions. During 2005, the Company began shipping the Nokia N90, featuring Carl Zeiss optics for video and still imaging, and the Nokia N70, a small device with a twomegapixel camera. Upcoming products in the Nokia Nseries range include the Nokia N71, featuring a quarter video graphics array (QVGA) display and music capabilities; the Nokia N80, featuring a three-megapixel camera and WLAN connectivity, and the Nokia N91, featuring a four-gigabyte hard disk and WLAN connectivity. In November 2005, the Company announced the Nokia N92, a mobile device with an integrated DVB-H receiver that enables television broadcast services on a mobile device. The

Multimedia

Experiences

unit

develops

and

markets

multimedia applications and solutions in various areas, which include mobile photography, mobile music, mobile computing, mobile

television

and

mobile

games.

Under

the

mobile

photography area, Nokia is developing imaging applications for Nokia Nseries products that help in capturing, editing, printing, sharing and storing of photos and video. Under the mobile music

area, the Company is developing music applications and features that deliver audio and enable music management. Under the mobile computing area, Nokia is developing applications for Nokia Nseries products in four areas, personal productivity, Internet services, software additions and digital home connectivity. For the mobile television area, it is developing applications for the DVB-H standard. For the mobile games area, the Company is developing the N-Gage platform and N-Gage Arena gaming community, as well as the Nokia scalable network application platform

(SNAP)

population

mobile

gaming

Java-based

platform,

support

mobile

the

phones.

Enterprise Solutions Under

the

Enterprise

Solutions

segment,

the

Company

collaborates with a range of companies to provide fixed-Internet protocol (IP) network security, mobilize corporate e-mail and extend corporate telephone systems to Nokia's mobile devices. During 2005, the products introduced by Nokia included the Nokia Business Center, a software that combines and manages

corporate mobile e-mail, personal organizer, voice and other business applications in a mobile device, and the Nokia Eseries, a line of devices designed for business users and the information technology (IT) organizations that support them. During 2005, the Company also introduced the Nokia 9300 and Nokia 9300i enterprise smart phones, and the Nokia 9500 Communicator, each of which features a range of corporate mobile e-mail solutions from a number of vendor companies. The WLANenabled Nokia 9300i enterprise smart phone was introduced in November 2005. In 2005, Nokia introduced the Nokia 6708, a device focused on the requirements of the Chinese market. The Enterprise Solutions segment consists of four main units, Mobile

Devices,

Mobility

Solutions,

Security

and

Mobile

Connectivity, and Sales, Marketing and Services. The Mobile Devices unit produces mobile devices specifically designed for business use. The Company's product portfolio contains devices with both cellular, such as GSM and 3G/WCDMA, and non-cellular connectivity, such as WLAN. Its products include the Nokia E60, the Nokia E61 and the Nokia E70, as well as the Nokia 9300,

Nokia 9300i and Nokia 9500 devices. These mobile devices are designed to address the security and manageability concerns of corporate

departments.

The

Mobility

Solutions

unit

developing a suite of software solutions. The unit also works with external vendors, such as Research in Motion, Microsoft, IBM, Good, Visto and Seven,

make

Nokia's

mobile

devices

compatible with their solutions. In addition, the unit works with vendors, such as Avaya and Cisco on other applications, such as connecting the Company's mobile devices to corporate fixed-line telephone networks over WLAN technology. The Security and Mobile Connectivity unit has a range of application and secure connectivity offerings designed to help enterprise customers grant employees access to corporate information and connect their mobile devices to their corporate network. These offerings consist primarily of firewall gateways and software-based tools that operate with both Nokia and nonNokia devices, as well as with other existing IT infrastructures. Nokia's

firewall

gateways

run

software

from

Checkpoint

Corporation.

The

Sales,

Marketing

and

Services

unit

responsible for sales to corporate customers, the management of relationships with IT distributors, systems integrator and valueadded resellers (VARs), as well as for specialized sales resources for selling Enterprise Solutions products to operator customers. The unit is also responsible for management of the services business,

which

includes

support

services

for

corporate

customers and resellers, as well as professional services to help corporate customers with mobility solutions. Networks

The Networks segment focuses on the GSM family of radio technologies, and GSM, EDGE and 3G/WCDMA networks. It also focuses on core networks with IP and multi-access capabilities. As of December 31, 2005, the Networks segment had more than 150 mobile network customers in more than 60 countries, with its systems serving in excess of 400 million subscribers. During 2005, Nokia delivered GSM/EDGE technology to more than 130

customers in more than 60 countries. In 2005, the Company supplied 3G/WCDMA technology to a total of 44 operators that had launched commercial 3G/WCDMA services. The Networks segment has five units: Radio Networks, Core Networks, Services, Networks Customer and Market Operations, and Delivery Operations. Radio Networks develops GSM, EDGE and 3G/WCDMA radio access networks and cellular transmission for operators and network providers. The main products offered by Radio Networks are base stations, base station controllers and cellular transmission equipment. Core Networks develops core network solutions for operators. The main products are switches and different kinds of network servers. Many of Nokia's core network products can be used in both fixed and mobile networks. Services offers operators a range of services, from network planning and implementation to network optimization, care, managed

services

and

operations

outsourcing.

Networks

Customer and Market Operations deals with operator customers, and is responsible for sales and marketing, as well as for overall

customer relationships. Delivery Operations is responsible for the sourcing, manufacturing and distribution of network products, in addition to network delivery and services. The Company competes with LG, Motorola, Samsung, Siemens, Sony Ericsson, Apple, Canon, Dell, HP, Microsoft, Palm, Research in Motion and Sony.

MOTOROLA Motorola is known around the world for innovation and leadership in wireless and broadband communications. Inspired by our vision

Seamless

Mobility,

the

people

Motorola

are

committed to helping you get and stay connected simply and seamlessly to the people, information, and entertainment that you want and need. We do this by designing and delivering the "must have" products, "must do" experiences and powerful networks — along with a full complement of support services. A Fortune 100 company with global presence and impact, Motorola had sales of US$35.3 billion in 2005. Connected Home Solutions Provides integrated, end-to-end systems that reliably deliver digital entertainment, information, and communications services over a variety of wired and wireless broadband network architectures. The world's leading provider of digital video settops and cable modems, Connected Home Solutions empowers

consumers by connecting their homes, keeping the people, content, and services important to them always within their reach. Mobile Devices Designs, manufactures, markets and services market-changing icons of personal technology — transforming the device formerly known

the

cell

phone

into

integral

part

daily

communication, data access and management, and mobile entertainment.

Mobile

Devices'

portfolio

market-leading

innovations — "must have" designs that deliver "must do" experiences

such

mobile

music

and

mobile

video

—

encompasses all cellular and wireless systems and includes an array of software, applications and the industry's leading portfolio of Bluetooth®-enabled accessory products. Networks & Enterprise A leading provider of end-to-end infrastructure, integrated voice and data communications, and information solutions, Networks &

Enterprise delivers mission critical secure two-way radio, cellular and wireless broadband systems to meet the needs of public safety, government, private, service provider and enterprise customers

worldwide.

Networks

Enterprise

advancing

seamless mobility with innovative technology solutions and a services business that helps our customers integrate, optimize and manage their networks to keep people connected as they move about their daily lives.

Motorola in India Motorola India is headquartered at Gurgaon, Haryana, with offices at Delhi, Mumbai and Bangalore. It has research and development centers at Bangalore and Hyderabad. Motorola's operations in India are divided into three businesses: Mobile Devices, Networks & Enterprise, Connected Home Solutions. The Company’s

focus

Infrastructure,

areas

Managed

include, and

Mobile

Hosted

handsets,

Services,

Wireless

Broadband

Equipment (wired as well as wireless), Trunking & Two Way Radios,

Software

Development,

Applied

Research

and

Development on Seamless Mobility/Convergence technologies. Networks & Enterprise Solutions n India, Motorola is a leader in Trunking & Two Way Radios and serves

key

government

and

non-government

customers.

Motorola India has leading multi service operators as its customers for Voice and Data solutions. The Company is also the leading provider of integrated communications and information solutions, trusted to meet mission-critical requirements and improve

the operations

public

safety,

government

and

enterprise customers worldwide It has proven capabilities in cellular, wireless broadband and wireline access technologies, with recognized leadership in integrating core networks through wireless IP, wireless softswitch and IP multimedia subsystems. The Networks & Enterprise group is advancing seamless mobility with innovative technology solutions, and services business with an expanded portfolio

delivering support, integration, applications and management. It provides

integrated

radio

communications

and

information

solutions. Network & Enterprise also designs, manufactures and sells automotive and industrial electronics systems . Motorola India enjoys a key position in the wireless infrastructure segment and offers cutting edge end-to-end solutions across GSM and CDMA technologies. It is a dominant player in GSM technologies; the only one to have set-up networks in all metros and India's first GPRS and CDMA network. All major carriers (GSM and CDMA) are Motorola customers. Motorola’s CanopyTM, is an internationally proven, always on, high speed broadband solution for cost-effective, secure and flexible connectivity for networks, government, institutions, homes and internet service providers. It enables a secure, flexible and reliable wireless broadband connectivity and a costeffective means for "last mile" high speed internet and data access

for

building,

enhancing

and

extending

networks, services and related applications.

broadband

Mobile Devices Motorola is amongst the leading handset players in India. Its varied portfolio of products caters to every market segment. From iconic products like the MOTOPEBL, MOTORAZR and SLVR series, its mass market products are known for their reliability and economy, and include several models on the C 11x and related platforms. And leading offerings in Linux based PDA phones. India is also the global headquarters for Motorola's High Growth Markets division. Connected Home Provides a scalable, integrated end-to-end system for the delivery of broadband services that keep consumers informed, entertained and connected. Its technology enables network operators and retailers to create and execute on new business opportunities by providing innovative products and services to the home. The business is also known for high definition IP TV,

set-top boxes, wireless modems, wireling broadband products and home security solutions.

Motorola Software Group Motorola Software Group's India center is the oldest and largest center for research and development of software. It was the first commercial software organization in the world to achieve SEI Level 5 in 1993 and also the first organization in the world to be assessed at SEI CMMI Level 5 on a continuous model. The Motorola Software Group in India develops custom software and solutions for Motorola's existing, and next generation wireless systems and technologies.

SONY Ericsson has been associated with the Indian telecom industry for more than 100 years. Headquartered in the National Capital Region of New Delhi, Ericsson today has more than 1250 employees

across

offices

the

country.

From

Basic

Telephony, GSM, CDMA, Intelligent Networks, Datacom and the most advanced computer telecom integration to mobile office applications,

multimedia

communications

and

Software

Development, Ericsson offers a complete spectrum of telecom solutions. Ericsson has played a key role in spreading the cellular revolution in the country. In India, Ericsson has clearly established itself as a Wireless Infrastructure Leader. With 57 GSM and CDMA Networks, Ericsson India has a market share of 33% in the Wireless domain. The telecom market in India is currently growing at a fast pace and is expected to more than double every year.

Latest phones

K790i

K550i

W610i

J110i

J120i

K220i

K200i

K810i

OBJECTIVE OF STUDY The main objectives of the project are The objective of the study is to have a study on the Handset industry in India. Also studying about the trends and the different players in the handset industry. The major object is to identify and learn the marketing strategies of different players in the industry. Also to study the market trends in the Indian market. 1) To understand the marketing and advertising strategies of

Nokia. 2) To analyze the strategies and its effect on the corporate

profile of the company 3) To compare the strategies of Nokia with its competitors and

to analyze its strengths. 4) To realize the role

being played by advertising and

promotion on the change in sales volume of the company 5) To

understand

the

future

trends

advertising

marketing in mobile handsets sector especially. 6) To understand the international operations of the company

and

RESEARCH METHODOLOGY TYPES OF RESEARCH: Exploratory research: In well established fields of study, hypotheses usually are drawn from the ideas developed in previous research studies or are derived from theory. Design of Exploratory Study Study of Secondary Data: The quickest and the most economical way for researchers

to find possible hypothesis is to take

the advantage of the work done earlier and thus utilize their efforts.

(Refer

Bibliography

for

the

names

books,

magazines and websites consulted). We would be using different sites , journal, Magazines, past researches , publication houses, CII report to do this project. The primary source of data will be secondary data. This will help us in also studying the market trend across the country and not restrict us to India only.

MARKETING STRATEGY NOKIA Nokia started operations in India in 1995. In 2005, India is among the top 5 markets for Nokia worldwide! Nokia has developed major efforts in adapting its products and advertising to the specificities and tastes of the Indian market: - 1998- 1st Indian ringtone - 2000- First Hindi User Interface - 2002 -First Hindi text input - 2003- First Made for India phone (Nokia 1100) - 2004 -Hindi SMS campaign - 2005 –Local User interface in additional local languages

Nokia's

retail

strategy

India

involves

classifying

consumers in to one of 4 categories The mobile handset manufacturer has embarked upon a brand new retail strategy that is based on a classification of its consumers into four major groups that separates people in terms of usage, income level and lifestyle. The classification is based on an extensive survey –the Nokia Segmentation Study —that was carried over two years involving 42,000 consumers from 16 countries. It studied the impact lifestyle choices and attitudes have on the mobile devices consumers buy and how they use them. The strategy, which was announced globally in June last year, is being unfolded in India now. While the nitty-gritty of the new strategy is still being worked out, it is likely that the company would follow separate marketing strategies for the four different segments. The advertising campaigns could be different for the segments.

Nokia’s entire product portfolio has now been re-aligned towards these four groups to address the specific needs of each. The first of these segments Live, aimed a first time users whose basic need is to stay in touch with voice as the main driver, would have basic handsets low on features and price. “These may be functional phones but the target group for these phones range from SEC C (low socio-economic class) to SEC A1+ (very high socio-economic class) markets,” says Nokia India marketing head Devinder Kishore. The second segment Connect looks at more evolved users who look for more functionality and features and connectivity. Accordingly, phones in this segment would have GPRS, camera and music capabilities. The next two categories, Achieve and Explore, are aimed at highend users and have Nokia’s top-end handsets. For example, Achieve segment looks at enterprise users who need to have business functionalities in their phones. Nokia’s new E-series has been put under this segment with handsets having QWERTY keyboards and full Internet capabilities.

Aimed at high-end lifestyle users, Explore would be the most prominent segment for the company in the coming years. Says Nokia India multimedia business director Vineet Taneja, “This segment would see the most vibrant growth in the coming year. It will look at five different areas – applications, imaging, mobile TV, music and gaming. We are fast developing the ecosystem to support these areas.” PLACEMENT OF NOKIA At Nokia, they like to make customer’s buying experience as convenient as using their mobile phones. Nokia has a retail chain across the country, to meet all the mobile phone needs. The chain consists of exclusive flagship stores and important mobile phone shops in all major Indian cities. Nokia Professional Centres : These are Nokia flagship stores that offer a full range of Nokia mobile phones and accessories in an international retail environment, which helps the customers in their decision making. NPCs also provide "Nokia Care", their

branded after sales services, provided by specially trained staff. The NPC is truly a one-stop centre for all your mobile phone needs. Nokia Priority Dealers : These key outlets allow the company to come closer to the customers. Spread across the country, and expanding rapidly in terms of reach, the NPD chain ensures that you get the latest Nokia mobile phones and genuine accessories, quickly and conveniently. DISTRIBUTION CHANNEL OF NOKIA IN INDIA Nokia has a very simple distribution channel in India and its very similar to its competitors and is working to the advantage of the industry as a whole . As of the distribution channel company has used different networks to reach to the masses and their distribution channel is Priority dealers: They are the people who represent the company . They have all the latest models and have information about future introductions by the company . Here customers

normally find the personnel of nokia. In India the total number of priority dealers is around 8 only and they are located at major cities of the country . Showrooms: The company makes sure that their products are available at leading electronics shops

Agrani Switches ,

They

normally

form

the

lower

end

the

distribution chain. They sell the max volume of the mobile phones for the company. The are located at different strategic locations and customers mostly purchase these from here only. GREY MARKET: It’s a very important distribution channel used by the company. Nokias India`s operation may not be using this channel as its illegal sorts but lots of Nokia’s products are

available in these markets .We can understand the volume by the fact that grey market sells 75% of the total turnover of the mobile phones sold

MARKET MIX PRODUCT The Latest Style When people walk into a shop, many of them have already made up their minds when they reach out their hand towards a Nokia mobile phone and say, “I want that one.” They might ask about data connections or operating times, but they have made their choice because they like the design. They choose a Nokia phone because its style is part of their lifestyle. The latest technology The first hand portable GSM phone, the first WAP phone, the first mobile terminal with Web and email capability. Technology is moving fast, and Nokia is moving even faster. Or put it another way. The first digital GSM phone that let you call home without having to look for a phone booth. The first phone that let you check flight schedules over the Internet. And

the first mobile terminal that let you check your email without having to stop at the office. Introducing the new Nokia 9210i a Genetic Breakthrough in business tools. Cutting edge features like real-time video and audio streaming, Flash animation player, fax, email, Internet WAP, Word Processor, Spreadsheet, Presentations, Calendar and Contacts give you more than a phone. They give you a distinct competitive edge. Introducing the new Nokia 9210i a Genetic Breakthrough in business tools. Cutting edge features like real-time video and audio streaming, Flash animation player, fax, email, Internet WAP, Word Processor, Spreadsheet, Presentations, Calendar and Contacts give you more than a phone. They give you a distinct competitive edge. Full Specifications •

Cellular mobile phone (handsfree, handset and headset use)

•

Desk application with background image and links

•

Messaging includes SMS, Fax, E-mail

•

Internet includes WWW and WAP

•

Contacts

•

Calendar

•

Office

includes

Word

Processor,

Spreadsheet

and

Presentation viewer •

Extras:

Calculator,

Clock,

Recorder,

RealOne

Player,

Imaging (Digital camera connectivity), Control panel, Data mover, Internet startup, Help, Fax modem, Cell broadcast, Calculator There are also additional applications available on the CD-ROM, like games and Flash Player. VPN support available as additional software. Additional Nokia OK software available. Real Audio and Real Video You can stream video from services that use the RealNetworks codec RealAudio 7&8 and RealVideo 7&8 (RA7, RA8, RV7, RV8). In addition the service must be available with bit rates suitable

for your HSCSD connection. You may find some material that is only designed for wide band Internet access and this kind of material cannot be viewed on the Nokia 9210i Communicator. Flash: Flash Player renders Flash 5 content. Not all Flash 5 content is optimised for mobile devices. Therefore, some content may be unsuitable for use in your Nokia 9210i Communicator. Size •

Dimensions: 158 x 56 x 27 mm

•

Weight: 244 g

Technical data •

Dual band: EGSM 900/1800

•

32-bit ARM9-based RISC CPU

•

Operating system: Symbian OS

•

Data speed up to 43.2 kbps (HSCSD)

•

Memory Card slot (MultiMediaCard standard)

•

Connectivity: IrDA, Ir-TranP, Cable (DLR-2L)

•

Low power consumption

E-mail protocols •

POP3, IMAP4, SMTP (SSL,TLS)

PC Suite for Nokia 9210 Communicator •

For use in Microsoft Windows 95/98/2000 and Microsoft Windows NT 4.0 environments

Memory •

Total memory: 40MB

•

Application memory: 16MB

•

User

memory:

16MB

(contains

applications) •

Execution memory: 8MB (SD-RAM)

•

64MB Memory card available as an accessory

preinstalled

Battery Performance Talk/Data/Fax time

Standby,

phone on phone off

Charging time

High power Battery BLL-3 4-10h 1300 mAh LiIon

80-230h up to 400h 180min

PRICE Nokia`s strategy as of pricing is very simple . They are trying to target everyone from a 12 year old teenager to 60 yr old man . Their pricing fits the pocket of everyone from a middle class income family to the super premium league. The base model of Nokia in India as of now is 5210 which is sold at a price of Rs 5,000 appx. Where as the costliest model of Nokia commands a price of 50,000 + Indian Rs .Nokia has a very unique approach towards pricing in south east Asia especially India where a new product when launched is sold at a very high price but as and when the time passes by they reduce these prices considerably. It helps the company to maximize its profits initially and in later parts of product cycle the phone is sold at only variable cost plus profit. The company has divided its range on the basis of price as follows Below 10,000- base products. !0,000—20,000---- products with few unique features 20,000—30,000--- products having latest technology

30-000---- 50,000---- mobiles with cutting edge technology Initially the Nokia products are priced at a premium range in order to skim the market but in later penetrate in to the market

stages in order to

deeper the company reduces its

prices, generally this happens after six months of the launch . In terms of Pricing Nokia products are bit on the higher side if we compare it with competitor products. Placement of Nokia At Nokia, they like to make customer’s buying experience as convenient as using their mobile phones. Nokia has a retail chain across the country, to meet all the mobile phone needs. The chain consists of exclusive flagship stores and important mobile phone shops in all major Indian cities. Nokia Professional Centres : These are Nokia flagship stores that offer a full range of Nokia mobile phones and accessories in an international retail environment, which helps the customers in their decision making. NPCs also provide "Nokia Care", their branded after sales services, provided by specially trained staff.

The NPC is truly a one-stop centre for all your mobile phone needs. Nokia Priority Dealers : These key outlets allow the company to come closer to the customers. Spread across the country, and expanding rapidly in terms of reach, the NPD chain ensures that you get the latest Nokia mobile phones and genuine accessories, quickly and conveniently. Distribution Channel of Nokia In India Nokia has a very simple distribution channel in India and its very similar to its competitors and is working to the advantage of the industry as a whole . As of the distribution channel company has used different networks to reach to the masses and their distribution channel is Priority dealers: They are the people who represent the company . They have all the latest models and have information about future introductions by the company . Here customers normally find the personnel of nokia. In India the total number of priority

dealers is around 8 only and they are located at major cities of the country . Showrooms: The company makes sure that their available at leading electronics shops

products are

Agrani Switches ,

Airtel shops e.t.c. They are the most crucial part of the supply chain. The company has normally Tie up with these chain of retailers who display and sell the models of Nokia and also act as a place of service stations as their trained personnel are trained by Nokia staff RETAILERS: They normally form the lower end of the distribution chain. They sell the max volume of the mobile phones for the company. The are located at different strategic locations and customers mostly purchase these from here only. GREY MARKET: It’s a very important distribution channel used by the company. Nokias India`s operation may not be using this channel as its illegal sorts but lots of Nokia’s products are available in these markets .We can understand the volume by the

fact that grey market sells 75% of the total turnover of the mobile phones sold PROMOTION Nokia is a very techno savvy and market savvy and friendly company. As of the advertisement expenditures, Nokia spends maximum

amount

advertising

compared

its

competitors and is closely followed by Samsung. The company uses mix of Public relations, promotions, advertising and personnel selling and the major focus is on the advertising. The

company

spends

%of

its

total

revenue

advertisements and the rest in other tools. Nokia has been ranked as one of the top 5 brands in world telecommunication and in mobile industry it holds the premier position in terms of brand

recall

,customer

satisfaction

etc

Different

advertisement campaigns have been launched from time to time by Nokia and more often at the time of launch of a new model.

PRINT CAMPAIGNS:The thing to observe in their advertisement is that all their campaigns are

targeted at youth or at professionals

which

form the core of all the campaigns. The Nokia hasn`t kept using particular colours in their campaigns but they have used a mix of it - yellow in case of 8310 ,red in case of 8810. But one thing is common that is they are flashy, very attractive and attention garners. Their partner Bates Advertising company in India has done a wonderful job. Another thing observed is that their campaigns in print target more on product features that is that their campaigns have product centric appeals. ADVERTISEMENTS IN TV’S:We have observed that strategy in television is entirely different when Nokia decides to start its marketing inniotaitive on tv. The focus is more on emotional appeal and the most commonly appeal used by Nokia is the life style .who can forget the soup ad of Nokia and their latest campaign on Nokia 8810. The most

preferred channel in India for Nokia is CNBC followed by star and then SONY PUBLIC RELATIONS: Mostly it is done by South East Asia operations and it deals with printing of articles in magazines which mainly deal with business, leisure and newspapers. The articles are mainly written by prominent personalities about their product and its features. Another form of public relations being used is the use of bollywood stars. Nokia has sponsored certain scenes in few movies which are targeted at upper class with the actors possessing the latest models of Nokia. It is a very successful tool and has helped Nokia in building the brand name. PROMOTIONS :Promotions are normally done by sponsoring the events

which

are mostly related to sports and games like golf, Polo, Cricket And sponsoring of other events like fashion shows, movies, Co promotions Etc. This tool has been second most preferred tool used by Nokia in India.

LOCAL COMMUNITY INVOLVEMENT INTERNATIONALLY Nokia’s country organization support various local community programs. In the US, for example, these include: • Class Link – a project that uses wireless technology to connect students, teachers and parent. • Vision one – an initiative in which Nokia provided 38,700 wireless phones worth US$3 million to four Native American tribes in Arizona. • The United Way to America – an organization bringing diverse people and resources together to address community issues. In the UK, Nokia supports Men cap, a leading charity working with children and adults with learning disabilities, and in China, Nokia Thinking Corner is a series of road shows and activities is schools, encouraging creativity and innovation amongst young people.

Disaster relief Following the events of September 11, 2001, Nokia provided an initial grant of US$ 1 million to establish the Nokia Education Fund that contributes to the college education needs of children who lost one or both parents, regardless of their nationality. In co-operation with the International Red Cross, it has also contributed to: • Humanitarian assistance in the Kisovo crisis. • Relief after the Venezuelan floods. • Relief and reconstruction after the earthquake in Gujarat, India. • Relief after the volcano eruption in the Congo and Rwanda.

MOTOROLA Motorola India is entering the new year with a whole new team of top management. The company had recently roped in ex-Tata group veteran Firdose Vandrevala as its new chairman, Lloyd

Mathias as its marketing director and a new head of marketing communication, Jatin Ahluwalia. The company is now learnt to be looking for a managing director for mobile devices. While the new man will be part of the global divisional reporting structure technically, he will be under the newly-appointed chairman. A company source said Motorola has appointed a global search agency with the mandate to look for the executive. The change in top deck of `Team India’ comes in the wake of a new-found focus on India for Motorola. This follows the India visit of global chief Ed Zander, who disclosed the blueprint of a multipronged strategy to pull up its Indian operations, which has been languishing under single-digit market

share, despite being

aggressive plan to capture a bigger pie of the mobile handset market in the country with a revamped product strategy to tap both the top end and entry level markets. Motorola announced a series of steps to help drive the company’s growth in India. It announced the C115, one of the company’s hottest-selling mass-market handsets, will now have a “Made in India” label. The

company

expects

the

first

Motorola

C115

handsets

assembled in India will be available by mid-December this year. Assembly in India is the first step in a multi-phase manufacturing strategy being deployed by Motorola in India. Motorola also announced that it has selected India as the first market to launch its new ultra-sleek and ultra-chic Motorola L6 mobile handset. It has also entered into a strategic relationship with Bharti Teletech to drive rapid expansion and brand presence.

The ‘Made in India’ handset is not the only happening thing with Motorola India. The US-based telecom giant is entering the new year with a whole new team of top management. While the company had inducted a new marketing director a few months back and had recently roped in ex-Tata group veteran Firdose Vandrevala as its new chairman for India, the company is now learnt to be looking for a managing director for mobile devices.

While the new man will be part of the global divisional reporting structure technically, he will be under the newly-appointed chairman. A company source said Motorola has appointed a global search agency with the mandate to look for the executive.

It’s learnt that initially Motorola had also given the mandate to search a country head for India, but had eventually gone ahead and appointed Firdose Vandrevala independently. With the new MD, the Indian arm of the telecom equipment giant will have a new team to push forth its growth strategy in the country. A few months back, Motorola had roped in Lloyd Mathias as its

marketing director, who had spent more than 10 years at PepsiCo India. Two months back, Motorola had also roped in a new

head

marketing

communication,

Jatin

Ahluwalia.

The change in top deck of `Team India’ comes in the wake of a new-found focus on India for Motorola. This follows the India visit of global chief Ed Zander, who disclosed the blueprint of a multipronged strategy to pull up its Indian operations, which has been languishing under single-digit market

share, despite being

present in the market for a long time. While the strategy for the Indian subsidiary is already under the supervision of Motorola’s emerging marketing expert Allen Burnes, the new team is expected to bring a fresh approach in implementation of the plans. The company has charted an aggressive plan to capture a bigger pie of the mobile handset market in the country with a revamped product strategy to tap both the top end and entry level markets.

Motorola-Bharti tie-up to boost sales Motorola announced a strategic tie-up with Bharti Teletech to boost the sales of its phones in India. The company says it wants to break the Indian consumer’s “mindset” for Nokia phones. Alan Burnes, Motorola vice president for high growth markets, while unveiling the tie-up with Bharti Teletech, also shied away from stating the market share the company hoped to achieve in the next few years. As Bharti goes after the lower socio-economic segment, Motorola can provide the mass-market handsets like C113a. It has stylish models like the Razr and Pebl in the higher-end segment. Bharti Teletech is India’s largest manufacturer of fixed line phones and the tie-up will open its 200 distributors and 12,000 retail outlets countrywide to Motorola, which currently has 6,000 outlets of its own. Bharti hopes to expand its network to 300 distributors and 15,000 retailers by March 2006.

Motorola launches Motofone globally from India 29 November 2006 New Delhi: Global wireless communications major Motorola, Inc. (NYSE: MOT), has announced the global launch of its ultra-slim Motofone handset from India, enabling Indian consumers, for once, to be the first to own and operate a global product. Motorola says it will use the Motofone to connect the next billion mobile phone users. The product is available for the GSM mobile technology while the CDMA version will be out before the end of the year. The new handset was unveiled jointly by K.Sridhara, member, Technology, Telecom Commission, government of India, and Allen Burnes, corporate vice president, high growth markets, mobile devices, Motorola. As

Motorola's

thinnest

phone

yet

at approximately

9mm,

Motofone is positioned as a value-priced handset with an

extensive core feature set, while appealing to sophisticated design tastes and incorporates a flat keypad, a range of colours and innovative materials. The product is based on Motorola's new SCPL design platform and will be "the first of a new breed of handsets designed to disrupt today's communications landscape by cutting across price tiers,

product

segments

and

international

markets,"

says

Motorola. "Today's global debut of Motofone in India marks a major milestone as Motorola continues its drive to connect the next billion handset users," said Burnes. "Innovatively designed to meet the needs and tastes of consumers such as those right here in India, Motofone is a signature handset that specifically addresses the universal desire for connectivity." Specifically for the Indian market, Motorola is further enhancing Motofone's features by providing voice prompt options, apart

from English and Hindi, in another six local languages — Hindi, Punjabi, Tamil, Telegu, Kannada, Malayalam and Bengali. Motofone offers an intuitive interface built with icons and voice versus text, as well as voice prompts in local languages, the handset makes it easier and friendlier for first-time users to navigate, place a call, and retrieve messages. Its large, high contrast screen, powered by a revolutionary ClearVision display, provided by E Ink Corporation, makes it easier to use the phone outdoors as its changeable electronic ink display is just as easy to read in bright sunlight or dimly lit environments from virtually any angle - just like paper.

SONY ERICSSON Watch out for Sony Ericsson handsets in the movie Spiderman 3 that is set to hit the theatres next year. According to Mr Dee Dutta,

Corporate

Vice-President,

Head

Marketing,

Sony

Ericsson, some of the company's mobile phones will feature in the movie, which is now under production. This is in sync with Sony Ericsson's strategy to ride on the plank of "entertainment through music, movies and sport," said Mr Dutta. While handsets T230 and Z200 were featured in Spiderman 2, James Bond was seen using the K800 model in Casino Royale. And just about every phone used in Da Vinci Code was a Sony Ericsson model. India strategy But it's not just Hollywood that Sony Ericsson is trying to tap. The company is also in talks with a few Indian moviemakers for a

possible association. While the company would not reveal the movie names, the scoop is that they are scheduled for release in April. Recently, Sony Ericsson tied up with Kabhi Alvida Na Kehna for a 360-degree promotion around the movie by offering wallpapers, audio and video content, apart from launching an entire media campaign. According to Mr Dutta, India is a key market for the company — among the top five markets that comprises Brazil, Mexico, China and the UK. (Globally, Sony Ericsson has an 8-9 per cent market share in terms of mobile phone subscription.) As part of its India campaign, the company is looking to feature Indian music in a big way; it is talking to Indian artistes for exclusive tracks on Sony Ericsson handsets (this is similar to its global initiative featuring singer Robbie Williams and Christina Aguilera ). It also has associated itself with sports by announcing

a women's tennis tournament in Bangalore featuring Sania Mirza and Serena Williams. The company recently set up four `experience stores' — in Delhi, Rajkot, Pune and Guwahati. These are exclusive Sony Ericsson showrooms retailing not only its products but also offering a complete brand experience, including live demonstrations. The company plans to have 25 `experience stores' by the end of 2006. Only a few years ago it would have sounded very nearly crazy. But when Sony Ericsson Mobile Communications President Miles Flint told the press last October that his company would be among the top three mobile phone makers within five years, it seems he wasn't just blowing smoke. Sony Ericsson's recently released fourth-quarter results confirm that in the last two and a half years, the joint venture between Japan's Sony and Sweden's Ericsson has transformed itself into the rising star of the mobile industry. Boosted by sales of its

Walkman and Cyber-shot phones last year, the London-based company posted record quarterly revenues of £3.78 billion ($4.9 billion), up 64%, and more than tripled its quarterly net income to £447 million ($581 million). For the year, revenues hit nearly £11 billion ($14.25 billion), up 51%. Perhaps best of all, Sony Ericsson managed by yearend to increase its market share by two percentage points to 9%, according to company estimates. That put it right on the heels of the No. 3 global mobile phone manufacturer, Samsung. Over 50 Models All this for the company that in 2003 was hemorrhaging money, hampered by a limited product portfolio and dogged by a reputation for late delivery. Since 2005, however, Sony Ericsson has vastly expanded its offerings to include over 50 models. It skillfully transferred the appeal of the Walkman and Cyber-shot sub-brands into the mobile phone world. And it reformed its

production process to create a faster and more flexible supply chain. When sales of Walkman phones soared in 2006, it was relatively easy for Sony Ericsson to ramp up production to meet the increased demand, something it had struggled to do in the past. "One question I often got from vendors was, 'You've got a fantastic portfolio, but can you really deliver?'" says Flint. "In 2006 we proved we really could." Sony Ericsson can't afford to coast yet. To grow volume, it must focus more on fast-growing, but fiercely competitive, emerging markets such as China and India. And it will face rivals both old and new -- including Apple, with its much-hyped iPhone -- who hope to bump the Walkman off its perch as the premiere mobile music phone brand. 'Exceeded Everyone's Expectations' For now, analysts say Sony Ericsson is in a sweet spot, with a judicious product mix -- ranging from handsets of modest cost to

$800 smartphones -- plus powerful brands and a happy marriage of mobile technology and attractive product design. Even industry experts admit they are surprised. "It was always well known that Sony would bring marketing and branding to the table and Ericsson would bring cellular experience," says Neil Mawston,

senior

analyst

with

market

researcher

Strategy

Analytics, near London. "But the success with which the two have mashed together has exceeded everyone's expectations." In the end, a large part of Sony Ericsson's success in the last two years can be summed up in a single word: Walkman. Just like Motorola did with the ultra-thin Razr phone in late 2004, Sony Ericsson codified a new mobile sub-genre in August, 2005, by launching its first Walkman phone, the W800i. Though not the first handset to offer an integrated MP3 music player, the W800i was the first phone to put music playing at the heart of the product; Sony Ericsson even packaged each handset with a pair of earphones to convince consumers it was sincere.

Ripe for Imitation The massive sales that followed have proved that the nearly 30year-old Walkman brand still has plenty of life. In 2006, the first full year on the market, Sony Ericsson sold 60 million music mobile phones, including 17 million Walkman-branded devices. By comparison, Apple sold 39 million iPods during the same period. Flint pointed to these figures at this year's MIDEM music industry conference as proof that the market for music mobile phones is vastly bigger than that for dedicated MP3 players. That also means, of course, it won't be long before competitors catch on and challenge Sony Ericsson for a bigger chunk of the sector.

"This

industry

getting

extremely

cyclical,"

says

Mawston, who reports competitors are faster than ever in mimicking successful ideas. "With its emphasis on cool products and cool branding, [Sony Ericsson is] likely to be copied by Apple."

To keep its lead in music phones, Sony Ericsson is belatedly going down-market with less expensive models. Last year, it released the W300i, the first low-end Walkman phone, and will follow up this year with the W200i, a sub- 100 Walkman phone. That will help pick up sales in emerging markets like China, India, and Pakistan. At the same time, the company's longstanding emphasis on highend phones -- bolstered by its unrivalled position in the highpriced Japanese market -- keeps the overall portfolio profitable. By comparison, Motorola and Nokia have been bloodied in a race for volume and sales of low-end models in India and China, pushing margins down. Keep Your Prices Up By staying above the fray, Sony Ericsson has maintained an average selling price (ASP) of $188, one of the highest in the industry, compared with Motorola's $121. (Nokia has yet to

announce its results for 2006, but analysts predict its fourthquarter average selling price could be $113). "What's been most impressive, beyond [Sony Ericsson's] steady unit growth, has been how they've maintained the ASP," says Andrew Brown, program manager for mobile computing research at IDC in London. "They've managed the product mix extremely well, keeping things slanted toward the high end, which is terrific." For all its success, Sony Ericsson is still somewhat of a niche player. Its annual volume of just under 75 million units is roughly a third of Motorola's, and less than one-quarter of Nokia's. But Flint sees plenty of opportunity for growth. "Sony Ericsson respects all of its competitors, but we fear none of them," says the British-born chief executive. "Five years ago, we were a company that was almost written off before we started, and now we're a major player in this industry." If things

keep going as well as they have recently, it may not be long before Flint's bold October prediction comes true. Sony-Ericsson plans to expand its retail base from the current 23 outlets to around 4,000-4,500 outlets by 2004. While the current retail outlets are under the Sony World centers, the expansion strategy would see the company appointing franchisees to set up sales, service and experience centers. These experience centers would play a critical role in the company's marketing strategy since most of its GSM handsets are positioned at the high end. The company expects 80 per cent of its sales to move through these franchisees by then. "Customers rarely discover, let alone use half the features that a high end phone offers. From that perspective it is a very important market building exercise to educate the customer," said Sudhir Mathur, Country Manager, Sony-Ericsson. Sony-Ericsson came into being a year ago after the merger of the cellular handset business of Sony Corp and Ericsson. Over the

past year, the company has mostly focused on establishing its brand, streamlining its organizational structure and distribution network. Currently Salora is the company's only distributor in the country although it has also tied up with big time retailers like Agrani Convergence. During this year the company has launched T100, T200 and T300 in addition to T68-i. It plans to launch P800 and P200 shortly. The major selling point of Sony-Ericsson phones is to pitch on multimedia application and hence most of its phones come equipped with a camera.

COMPARATIVE ANALYSIS TECH freaks certainly have much to look forward to. With the mobile handset market in India maturing at a rapid pace, not only are an increasing number of companies entering the arena, firms are also coming out with innovative features to catch up with the dynamics of consumers' rapidly changing tastes. The last couple of months have seen at least three-four new GSM handset brands make a beeline for the Indian market. This includes the likes of LG Electronics, the Taiwan-based BenQ, and the China-based Bird International. In addition, a leading Taiwanese player, DBTEL, has announced its intention to launch over 10 GSM models in India by November, and it is primarily targeting the lower-end of the market. Further, a few Indian companies have indicated their plans to enter this segment soon. The reason for the heightened activity perhaps lies in the profile of the market, which many term to be the second largest in Asia. Points out Ashish Bakshi, Country

Head, BenQ India: "It would be estimated at 16-18 million handsets by next year. According to Gartner (a research firm), this figure is likely to touch 70 million by 2007. This would translate into a compounded annual growth rate of about 40 per cent."

In addition, the number of cellular users soared 115 per cent to 18.3 million in the year to September. According to market estimates, the number of cellular users is expected to jump further to 100 million by 2008. Says Ravi Sharma, Managing

Director, Alcatel India, the Indian arm of one of the top five suppliers of cellphones globally: "We were not very active earlier because about 80 per cent of the sales was coming from the grey market, which meant that the organised market was only about 0.8 million, a minuscule number. The situation has, however, changed in the past six months, with the growth in mobile phones being more than a million a month. The legal market for handsets is now estimated at 12-13 million." Adds Anuj Kapur, Country Head (Telecom), Marketing and Infrastructure, Samsung India, "The key drivers for this growth have been the reduction in tariffs, aggressive price points, attractive networks

packages to

smaller

from

service

markets,

the

providers,

expansion

consequent

increase

of in

penetration, and finally the growth in services like SMS and MMS." Interestingly, the growth is not merely price-driven; features are increasingly driving it. As a result, while firms are keen to have at least one model at the entry-price level, the major focus is on

making available newer features in the market. "The definition of an entry-level handset has changed and will continue to do so. About three-four years ago, an entry-level handset offered basic voice functionality and little else. This has changed now as consumers are going in for handsets which are packed with value-added features," says an industry official.

Little wonder then that companies such as LG, Panasonic and market leader Nokia are actively focusing on the mid- to highend of the market. Says Praveen Valecha, Country Head (mobile phones), LG Electronics: "The market has matured a bit and

people are ready to pay for more features. For instance, these days, colour phones are in great demand, which we will also focus on. We expect that by mid-2004, more than 50 per cent of the handsets will be colour. Other features which are popular include

MMS,

camera

phones,

and

entertainment-related

features. Apart from this, looks, style and design are still major factors when it comes to buying a phone." LG, on its part, has introduced two new models in the market and intends to roll out five more by the end of the year. "This will include a new camera phone with a very unique design," says Valecha. The company is targeting to sell over four lakh GSM handsets in the Indian market in the next calendar year and corner a 12 per cent market share in the next two years. BenQ too will focus on the mid- to high-level segment, with an aim to offer more features at a lesser price. "We intend to redefine the mid-level segment by giving customers value-added features at a competitive price. We are targeting the customer

who aspires to buy certain features but cannot, due to the steep prices," says Bakshi. BenQ has rolled out two new models in the market, and intends to roll out six more by December in the price range of Rs 5,500 to Rs 15,000. "We are targeting a market share of five per cent by 2004," he says. BIRD International, the largest mobile phone manufacturer in China, intends to have a product offering in every price segment of the market, though the focus would also be on newer features. Among the phones lined up for launch later are those with features such as SMS remote control, PDA phone-carrying device and so on. The company is targeting sales of three lakh units by 2004. However, Alcatel, which is drawing up an aggressive strategy for the Indian market, feels much of the growth would be coming from the entry level. The company has already come out with a handset priced at Rs 3,199 (which comes with an AirTel

connection), packed with features such as a speakerphone, and runs on a lithium-ion battery. Incidentally, the company is the only player in the market offering such features at a price below Rs 4,000. "With the number of first-time mobile users growing, the share of entry-level phones is set to grow from the current 25 per cent to about 45-50 per cent. So, we will address this end of the market first. We are targeting to capture about 10-15 per cent market share in the next 1-2 years," says the company MD, Sharma. The company would also be rolling out new models in the midand high-end segments with features such as camera phones and colour screens. "However," points out Narendra Nayak, Country Operations Manager-PCS, Motorola India, "it would be unfair to say that a particular handset segment is the fastest-growing. India has a low cellular base that is growing at a phenomenal rate. This, coupled with the falling handset prices and increased features in handsets, is resulting in all handset market segments growing. While the mid- and low-end segments might have the

maximum volume of sales, the high-end segment is growing off a smaller base and has higher revenue per product." Motorola has been actively introducing handsets in different segments over the past few years. It launched 11 products across various price points last year. This year, the company has already introduced seven new products (both GSM- and CDMAbased) in all segments and plans to launch at least four more handsets before the end of 2003. These would include features such as camera, colour display, MMS/EMS, games and GPRS. "Motorola is among the top handset vendors in India and our strategy is to grow our local market share in line with our international market share of 25 per cent," says Nayak. According to Motorola, mobile gaming is the next big thing in handsets, as phones become more powerful and come with colour screens. As people generally feel more at home with gadgets like mobiles, they will experiment more and want to do different things on them.

"In India, mobile gaming is a relatively nascent industry. The uptake of gaming using mobiles in India is still in the early stages. The advent of colour phones with multimedia capabilities and more processing capabilities this year, and falling prices are providing

impetus

mobile

gaming

amongst

Indian

consumers. Over the next few years, we expect gaming to emerge as a revenue stream for operators," says Nayak. Another encouraging trend is that the replacement market for GSM handsets is also growing at a rapid pace, with people changing their phones as frequently as every three-six months. "On an average, estimates reveal that about 15 per cent of the consumers are replacing their handsets every two years," says LG's Valecha. Meanwhile, with competition hotting up in the market, handset brands are emerging as one of the highest spenders on advertising and marketing in the consumer electronics category. At present, there are at least 12 handset brands present in the market. While players such as Nokia, Motorola and Samsung

have been advertising aggressively, more firms are firming up their marketing strategies. Panasonic, for instance, has signed up Bipasha Basu to promote its brand of cellphones in the market. "We intend to launch four-five new mobile phone models this year in the mid-upper segment, which is also our focus segment. An entry-level model would be introduced only in April next year," says Shashi Bhushan, Manager (Marketing), Systems Product Division, National Panasonic India. BenQ too has outlined about Rs 10-12 crore to promote the brand in India and achieve its market share. Nokia, which has been investing substantially in promoting its products, is focusing on the distribution end and is opening exclusive outlets for its products. Motorola is setting up exclusive `Moto' outlets across India. Alcatel, meanwhile, has struck a distribution alliance with Videocon and would be retailing through about 40,000 outlets. Samsung India, after setting up an exclusive Samsung Mobile Plaza (SMP) in Mumbai recently, said it will be focusing on shopin-shop stores — Samsung Mobile Privileged Partners (SMPP).

The company will be launching close to 75 such shops across the country within this year. With the share of the grey market set to fall further, the Indian handsets market is all set to boom. According to market watchers, there is still a price differential of about 20 per cent between the organised and grey market due to the prevailing duties. As the market becomes increasingly attractive for handset brands, Indian consumers can look forward to being wooed by the best technology in the market. When mobile phones were introduced in India in the mid-90s, US based

Motorola,

Sweden's

Ericsson

and

Finland's

Nokia

dominated the handset market in India. Over the years, the old order has changed. Asian players like Samsung and LG, European brands Philips and Siemens now compete with Motorola and Sony-Ericsson. However, Nokia has been able to race ahead of all other players to become the leading mobile handset maker across

the

world.

India

its

dominance

even

pronounced with a 70 per cent market share, compared to

around 30 per cent globally. Its closest rival in the Indian market, Samsung, comes a poor second with less than 10 per cent market share. Its business strategy, management style and marketing savvy have earned it the respect of its peers. In 2004, Nokia was chosen as 'the most respected consumer durables company' in India by the weekly magazine BusinessWorld. The reasons for Nokia's stupendous success in India include amazing branding,

focussed

marketing

exercise

and

distribution

strength, among others. Sanjeev Sharma, CEO, Nokia India, says, “An extensive product range, anticipating consumer trends early — we were the first to introduce a phone for the fashion segment, the 8210 — a retail strategy that ensures consumers across the country get a consistent experience and an excellent staff, all put together, clicked for Nokia.” Nokia's commitment to the Indian consumer was underscored when it became the first, and only, handset major to develop a model suited for Indian conditions. The company launched two models, 1100 and 1108, after intensive research on the Indian customer's specific needs. The phones gave an integrated torch, a sheath covered keypad

for dust protection and a slip-free grip. The phones were also introduced in other markets in Asia and Africa. Nokia's first ‘Made for India’ model, the 1100, is the largest selling model in the Indian GSM handset market. The five largest selling handset models in the market are all Nokia's. Besides, the company today has a substantial share of both ends of the market. It has 77 per cent of the $66-$88 phone market and about 68 per cent of the over $330 phone market. In a marketing first, in March this year Nokia opened a dedicated Concept Store which features the full range of Nokia products including handsets, mobile enhancements, ring tones, graphics, games, software and exclusive Nokia merchandise. The products allow clients to experience the newest applications such as gaming, imaging and e-mail support amongst others. In its marketing endeavours, Nokia has ensured that its advertising ensures its phones stand out from the clutter of mobile phone advertising. “Our advertising is aimed at making communication relevant to strengthen consumer-connect with the brand,” says Sanjay Behl, head of marketing, Nokia India.

Nokia has not used the pricing plank for marketing its phones. However, it did adopt an aggressive pricing strategy to fight the grey market, successfully. Initially the grey market accounted for 80 per cent of the mobile phone sales due to a huge price differential between the legally imported and the grey market phones. Even as the government slashed duties to reduce the scope of arbitrage, Nokia and other handset players too reduced their prices to induce the consumer to buy a phone from the authorised phone shops. Today, the grey market comprises less than 20 per cent of the total handset market. As part of its distribution strategy, Nokia has ensured that it has a presence in all 2,000 cities and towns that have cellular coverage. Nokia's distribution network of over 30,000 outlets is roughly double that of its rivals, according to industry sources. The other edge that Nokia has over its rivals is the large portfolio of phones. Unlike other consumer durables, a mobile phone is a style statement much like the wristwatch. The design, style and colour elements play an important role when consumers are choosing a phone. Today it has the largest range of handset

models to choose from. Nokia has introduced phones at all price points, right from the mass market entry-level phones to the mid-market colour and camera phones and also the high-end exclusive phones. “Nokia empowers the consumer in that it offers a choice of more than one phone at every price point,” says Kobita Desai, principal analyst, telecom, with research firm, Gartner. “Thus, in the mid-market range, you can have a phone suited for the corporate types while another would be aimed at techno-loving teenagers.” Nokia lost its edge when GSM's rival technology, CDMA, made its entry in 2003. That was because the

Finnish

major

had

concentrated

GSM

technology

and

was losing ground to CDMA handset makers like Samsung and LG in India. The Korean brands quickly established themselves after they tied up with CDMA operator Reliance Infocomm, which was launching its services then and making a big splash in the marketplace. Nokia soon introduced several CDMA models and it now has eight CDMA models out of its total of 40 models. The lack of CDMA phones had seen Nokia's market share falling from 50 per cent in 2002 to

just 22 per cent in 2003, the year

Reliance Infocomm launched its services in a big way. It was only after Nokia gave a push to CDMA phones in the Indian market did its market share roll upwards again to 60 per cent in 2004 and an estimated 74 per cent in 2005. Shortly thereafter, Nokia was again under siege, but this time it was international. Nokia had concentrated on the candy bar type of phones which were perceived as ‘boring’ compared to the flip type ‘clamshell’ designed phones of rivals like Samsung. Because of its innovative designs, Samsung seemed to be gaining ground as the mobile of choice when it came to high-end colour and

camera phones. Around 2003, Samsung became the highest selling phone in India in the colour segment. Industry analysts felt that the company could only go down globally as it lost market share to the newer players. The scene looked bleak for Nokia. “We had a gap in our product portfolio,” admitted Sharma. However, the subsequent quick turnaround of the mobile giant by the launch of new clamshell models globally is probably what legends are made of. A year on, and the picture has changed totally. Nokia has increased its market share in India from around 55 per cent in October 2004 to around 74 per cent in March 2005. It has also become the number one player in the colour phone segment. With net sales of $1.6 billion in 2004, India contributes 4.5 per cent to Nokia's revenues worldwide and is its fifth largest market after the US, China, UK and Germany. India's mobile market is growing at the breakneck rate of over two million mobiles a month and is widely expected to cross 80 million customers by December. According to estimates by analysts, 30 to 35 million

handsets would be sold in the $3 billion Indian cell phone market in 2005, compared to the 17 million phones that were sold in 2004. India has emerged as a hot spot for global handset and telecom gear manufacturers as low wireless penetration and the cheapest call rates in the world are pulling in users. “The market has seen tremendous growth in the last three years. Compared to net additions of 300,000 subscribers a month in early 2002, we at Nokia are now seeing additions of about 1.5 to 1.8 million subscribers

month,”

points

out

Sharma.

The

growing

importance of India led to setting up a facility for handsets as well as telecom infrastructure in India. Nokia has announced an investment of approximately $150 million for the Sriperumbudur handset facility in Tamil Nadu, the tenth Nokia facility globally. It will be Nokia's second largest production site in Asia, after the China plant. With less than 25 per cent of India having cellular coverage, increasing the geographical coverage is the next step for Sharma and his team at Nokia. The telephone had not even been invented when Fredrik Idestam first started his toilet paper

and rubber boot business on the banks of the river Nokia in Finland. He could hardly have guessed that over a century later the company he started would be synonymous with a futuristic gadget.

COMPETITORS MARKETING STARTEGY ANALYSIS Executives at Ericsson speak a different lingo from executives elsewhere. Market segmentation, for instance, isn’t along Sec A, B and C lines. Ericsson brass talk about A, T and R. Or rather, ART segmentation. Cutting a long story short, A-type phones are entry-level phones. Which means they have most of the standard technology features that Ericsson offers, plus the low-cost advantage. The flip side is they are only that much advanced, feature wise. Ttype phones are, by contrast, far more advanced. But that’s not the differentiator. These phones are defined by their styling – small, slender and compact in design. The dress phone, to coin a term. R-type phones are at the very end of the spectrum, packed with cutting-edge technology features. Interestingly, ART segmentation is as much about consumer profiles as it is about Ericsson’s products. “This segmentation of

products

is extremely helpful in researching

markets

and

launching phones,” says Ranjivjit Singh, director, mobile phones and corporate communications, Ericsson Communications Ltd. “Consumers in markets that are yet to mature chose A-type phones

they

are

looking

for

something

they

can

comfortable with, both in terms of price and usage,” he adds. “Take India’s example. One look at this market and you know that A-type phones are what will sell here.” Since 1995, when Ericsson

first

entered

India,

the

company

has

launched

approximately 30 models. Of these, close to 70 per cent are entry-level phones. In fact, in the entire Asia-Pacific region, A-type phones account for 60 per cent of Ericsson’s sales, by volume. T-type phones account for 30 per cent, and the rest is R-type. In value terms, of course, T-type phones account for 50 per cent and A-type accounts

for

per

cent.

“As

consumers

become

comfortable using mobile phones, they start demanding more features and styling. And that’s when they upgrade to first T-

type,

then

R-type

phones,”

explains

Singh.

Last week, Ericsson unveiled two new phones for the Indian market – one, the entry-level A2618, and the other, the R310. The A2618 is Ericsson’s effort to breach the Rs 10,000 price barrier. This WAP-enabled phone is priced at Rs 9,995 plus taxes. The idea is to offer consumers an opportunity to shift to the newgeneration WAP technology at an affordable price. The R310 is a “tough and rugged phone meant for active and outdoor people”. This water-, dust- and shock-resistant mobile phone is targeted at the youth segment and is priced at Rs 15,495 plus taxes. Speaking at the press conference that announced the launch of the

phones,

Jan

Campbell,

managing

director,

Ericsson

Communications Ltd, said that these two phones were evidence of Ericsson’s dedication to bring the latest technology to Indian consumers. “In two years, the number of mobile phones in India will exceed the number of fixed lines. We want to be a part of this wireless revolution and take mobile phones to the masses.”

The size of the global mobile phone market is estimated at 450 million units. In comparison, the Indian market is a smidgen – a mere 1.5 million units are likely to be sold this calendar year. However, the silver lining is that the domestic market is expected to grow at 100 per cent, with sales of 2 million and 4 million units in 2001 and 2002, respectively. For mobile phone manufacturers, the low penetration of phones – due to the prohibitive tariff structure – is disheartening. And if that isn’t bad enough, with duties on handsets of up to 44 per cent, the hapless manufacturers end up losing consumers to the grey market. No wonder manufacturers are keenly awaiting the implementation of the revenue-sharing model between operators and the government. As far as Ericsson is concerned, the focus is going to be on the youth. “India is an expanding market, and in any such market, the youth is the biggest segment,” says Singh. The company is targeting the 20-30 age group and claims that more than half of its sales come from this segment. “For the youth the mobile

phone is all about image and lifestyles,” says Singh. “That’s why we have come out with the R310 and the A2618. One is a trendy, technology-led image statement, the other puts the convenience of

mobile

telephony

within

the

target

segment’s

reach.”

This is certainly part of Ericsson’s global strategy. Take the daily six-minute interactive interstice on MTV, branded ‘LiLi TM : version 1.2’. LiLi is the virtual veejay who chats with show callers in real time, who plays their favourite music video requests and gives viewers a glimpse of the latest technology and street trends. LiLi is powered Bluetooth wireless technology, pioneered by Ericsson – which also sponsors the show. “Ericsson sees teenagers as driving the future,” says Singh. “They are energized, emotional, market-wise and tribe-minded. More importantly, they grasp new technology very quickly and are constantly hungry for more. We believe their early adoption of new technologies will spearhead 3G, the next communication revolution.” The idea is to catch ’em young. And tell them that Ericsson has

the technology they’re seeking. Which is one area where Ericsson has been lagging in consumer perception. Nokia and Siemens have always been perceived to be technologically superior. Ericsson wants to put the record straight, it appears. When asked about the sales targets that Ericsson has set for the R310 and the A2618 Singh replied, “We have very high expectations from the A2618s as it is positioned for the first-time buyer, and most of the growth is coming from this segment. It appeals to young buyers as well as businessmen who need WAP. The R310s will appeal to a smaller segment than the A2618s. The more outdoorish, rough-and-tough kind of user who carries off this phone with a lot of attitude.” Without mentioning figures, Singh said Ericsson’s growth in India would be in line with market growth. He also claims that Ericsson is one among the top three players in mobile phones – the other two being Nokia and Motorola. “We have a market share of 12-15 per cent in the 1.5-million-unit market.” The target is to take

that share to 15-20 per cent over the next 12 months. “In a market that is growing by 100 per cent,” he stresses. MARKETING STRATEGY OF SAMSUNG INDIA SAMSUNG Electronics India Information and Telecommunications Ltd (SEIIT) on Wednesday said it would invest $6 m in marketing and service initiatives, aimed at becoming the largest player in the country's growing mobile phone market by 2003. SEIIT, the wholly-owned subsidiary of South Korea's Samsung Electronic Co, claimed it has a 25 per cent market share in GSM phones and over 60 per cent in CDMA phones since entering India's mobile handset market two-and-a-half years ago. ``Our target is to grow by 300 per cent over the last year and achieve the number one position by year 2003,'' said Mr Shashin Devsare, Senior Manager — Telecom of SEIIT, at a press conference. He said SEIIT sold 80,000 handset units last year, but declined to give the sales break up of CDMA and GSM handsets.

The company provides CDMA phones to Tata Tele services in Andhra Pradesh, HFCL in Punjab and Shyam Telecom in Rajasthan. According to industry estimates, handset market in India during 2002 would be 4.4 million units of which 3.3 million units are expected to come through the grey market. Mr Devsare said of the proposed $ 6 m investment would be spent on marketing while the balance would go towards developing a nationwide service network. The company is launching `Samsung Talkies', a chain of mobile phone shops across the country. These shops have already come up in Delhi, Mumbai and Chennai and would extend to 10 cities by the end of this year. SEIIT also launched a new handset — the Samsung T100 — with an LCD screen to give colour pictures. Priced at Rs 32,000, this WAPenabled GSM phone is the latest one from Samsung after the `Blue i.'

FINDINGS & ANALYSIS Big global international handset makers Nokia, Motorola, and Sony Ericsson, along with Korean players LG Electronics and Samsung Electronics, are in hot pursuit of mobile-phone growth in India, and it turns out with good reason. The emerging economy's white-hot mobile-phone market grew faster than China's for the first time last year -- and is on pace to become more than three times as fast in 2007, according to a new study by London-based research firm Wireless Intelligence. This is a startling development given that India was pretty much a telecom backwater at the start of the decade. Last year, the number of mobile connections in India more than doubled to 142.2 million, and that figure is expected to increase 48% to roughly 211 million by the end of 2007. China is still the world's biggest mobile-phone market with an estimated

443

million

subscribers,

according

Wireless

Intelligence. However, the mainland's market grew by only 18%

last year and that pace will slow further in 2007, to about 14% -still robust compared to developed markets such as the U.S., Western Europe, and Japan. Where the Growth Is Last year was definitely a tipping point for Indian mobile telephony, which had been growing by about 5.1 million new net subscribers on a quarterly basis in the middle of 2005. By the last quarter of 2006, wireless operators were pulling in about 17.1 million over a three-month stretch. In terms of the expected 409 million additional global subscribers that Wireless Intelligence is forecasting for 2007, Asia is expected to represent 40% of that growth. Indeed, India, China, Pakistan, Indonesia, and Bangladesh are among the top 10 markets expected to register the fastest growth this year. In many developed markets, such as Italy, market penetration is more than 100% thanks to multiple-device ownership, according to

Wireless

Intelligence,

which

co-owned

European

telecoms, IT consultant Ovum and the GSM Assn., a global mobile-phone trade association. Meeting Market Needs That's

why

global

handset

makers

are

shifting

product-

development efforts and marketing strategies to emerging markets. For instance, Motorola last November launched the Motofone in India after spending two years researching life in rural Indian villages to gain better insight on the phones it ought to design. The Motofone handset has bold characters and a screen that remains visible even in the bright light of day. For those who can't read, the company developed a menu that is based on easy-to-understand icons, rather than characters, and handset software that is loaded with regional-language voice prompts. Market leader Nokia, which has invested heavily in emerging markets, late last year slashed the price of its basic monochrome

model -- the Nokia 1110 -- from $50 to $43. And it now has three phones in the sub-$50 range. While the growth outlook is spectacular in India, it's a very tough market from which to extract profitable growth. Most of the truly robust growth is in rural India, home to 75% of the country's 1 billion-plus population. And handset manufacturers are faced with the tough task of delivering functional but low-priced handsets (in the under-$50 range) designed to meet the needs of low-income users.

MOBILE PHONE: A Ring-away Success With a growth of about 568 percent, the mobile handset industry has broken all records Pravin Prashant Tuesday, June 15, 2006

Fiscal 2005-06 belonged to the mobile handset industry, an industry which showed an outstanding

growth.

The

Indian

mobile

handset

industry has broken all records and achieved a growth of 568 percent in value terms. The industry has recorded a turnover of Rs 8,344 crore ($1.85 billion). Just a comparison, the handset industry in FY 2004-05 was around Rs 1,250 crore, of which GSM contributed around Rs 727 crore whereas CDMA contributed around Rs 523 crore. In FY 2005-06, CDMA contributed around Rs 4,153 crore whereas GSM contributed around Rs 4,191 crore. In value terms, GSM leads the way, but in volumes CDMA has a slight advantage. The CDMA handset market in FY 2005-06 was estimated at around Rs 4,153 crore, registering a growth of around 694 percent on the other hand GSM handset market in FY 2005-06 is estimated at around Rs 4,191 crore, registering a growth of 476 percent. The GSM market leads CDMA by a narrow margin of around Rs 38 crore. In volume terms, CDMA leads the way. In FY 2005-06, the Indian

Nestling among the designer labels in a smart Delhi shopping mall is the glittering glass front of a Nokia mobile phone shop. A few kilometres away, Amit Bansal sells mobile handsets from a small display cabinet in a poor market district called Paharganj. An advertising hoarding featuring a giant mobile handset almost obscures the entrance to his shop. Both are capitalising on a huge push to sell cheap mobile phones in one of the fastest-growing mobile markets in the world. India reported more than 137.4 million subscribers by the end of December - adding a whopping 62 million new subscribers during 2006, according to research firm Informa Telecoms & Media. Competing Selling mobile phones to people in the poorest countries on earth has become a major focus of the world's largest mobile handset manufacturers.

Facing a slowdown in handset sales as many richer markets become saturated, they have turned their attention to the three billion people who are living in areas where there are wireless networks, but who cannot afford to use them. As a result market leaders Motorola, Nokia, LG, Samsung and Sony Ericsson are competing with each other to slash the cost of making a mobile phone, in an effort to appeal to millions of potential customers. They are also competing with the huge market in cheap, illegal mobile phone imports as well as stolen and second-hand phones. No-frills models The market in so-called ultra-low-cost handsets is growing at a phenomenal rate - more than 14 times faster than the global handset market, according to research firm Strategy Analytics. But the question is, just how low can these handsets go?

While the cheapest Motorola handsets sell for just under $30 wholesale and Nokia's are below $40, a handset for less than $20 has become something of a holy grail. "To get the cheapest possible phone to the rural areas, where people have very little cash to spend, then less than $20 is the ultimate goal for the industry," says Neil Mawston, associate director at Strategy Analytics. Because every dollar added to the cost of the handset counts, the industry has gone full-throttle to make handsets as cheap as possible. Most phones have black-and-white screens, rather than colour, because they are cheaper. Few have large memories, cameras or games, because the components needed to provide these features will raise the cost.

The most expensive part of the phone is the chip, so instead of having numerous chips that each perform a particular function, newer phones cram lots of functions onto a single chip. Many handset makers are also cutting costs by opening factories in India to avoid taxes and import duties. Sony Ericsson announced its intention to manufacture in India this week. Motorola, which already imports components and assembles phones in the country, plans to build handsets from scratch in Chennai from March. And on Monday 12 leading mobile operators selected a slim multimedia phone made by LG Electronics for their 3G for All campaign. Economies of scale will cut the wholesale price of the phone by about 30%, and allow them to offer next-generation mobile phone services to consumers in developing countries at the price of current second-generation handsets.

Local needs But some costs cannot be cut, says David Taylor, director of strategic operations for high-growth markets at Motorola. Handsets must be very tough to withstand dust and heat in many areas of Asia and Africa. Many handsets contain expensive, state-of-the-art batteries because

many

consumers

cannot

charge

their

phones

regularly. They have intermittent access to electricity and need batteries with double the standby times seen in Europe. Getting phones to remote areas can be complex and costly, too. In rural Nigeria, Motorola even pays security guards to defend truck drivers carrying handsets worth millions of dollars from violent attacks . Despite rampant cost-cutting, manufacturers cannot make their handsets too cheap.

Although ultra-low-cost handset buyers cannot afford $300 handsets, they are just as style- and quality-conscious. "A mobile phone is very aspirational. It's a substantial amount of their salary for the year and they would not like to buy something that looks cheap or downmarket," says Devinder Kishore, director of marketing at Nokia India. Dilemma The problem is that handsets featuring colour screens, radios and the ability to download Bollywood film tunes may be in great demand, but these features make them more expensive to manufacture. Demand

for

different

sets

features

also

varies

across

countries, such as text messaging in various local languages. This also raises the cost of handsets, because there are fewer economies of scale.

Analysts at Informa suggest the dilemma may be resolved in time. As advances in technology, such as new chip designs, inevitably drop

price,

mobile phone

manufacturers

will

increasingly be able to add snazzier features to handsets while maintaining the ultra low-cost price. One feature that could result in a huge take-up of handsets, however, is security. Increasingly, ultra-low-cost handsets are beginning to appear that cannot easily be unlocked and used on rival phone networks. As a result, mobile operators in poorer countries may well begin to subsidise handsets or pay for a proportion of a handset themselves - a commonplace practice in mature markets.

SWOT OF ANALYSIS Then we did SWOT analysis of the company followed by competitor’s

analysis

and

concentrated

Samsung

prominently as it follows Nokia very closely in terms of market share. Then we see how Nokia plans to be ahead in future and maintain its numero uno position in handsets industry. At the last we deal with limitations of the project. Then we concluded followed by recommendation and at last we have appendix in which the different ad campaigns, both print and TV Commercials are considered and it has both national and international advertisement. SWOT Analysis is a very critical exercise a very effective way of identifying your strengths and weaknesses, and of examining the opportunities

and

threats

brand

faces.

Strengths

and

weaknesses are internal, whereas opportunities and threats lie outside i.e. they are external.

As we know that Nokia is the market leader in India with every second cell phone sold in India is of Nokia thus it doesn`t have much of weaknesses but there is still chance for improvement

STRENGTHS 1. 1 High brand value 2. 2 Market leader 3. Customer loyalty 4. Wide variety of product portfolio 5. What are your advantages? 6. What do you do well? 7. What do other people see as your strengths? WEAKNESSES

1. Its distribution channel is weak 2. No product for low level entry customers 3. Doesn’t have company owned Showrooms 4. No production facility in India 5. What could you improve? 6. What do you do badly? 7. What should you avoid? OPPORTUNITIES 1. Growing market 2. Penetration levels of mobile telephony is low 3. One of the fastest growing markets of the world. • Where are the good opportunities facing you? • What are the interesting trends you are aware of? Useful opportunities can come from such things as: • Changes in technology and markets on both a broad and narrow scale • Changes in government policy related to your field

• Changes in social patterns, population profiles, lifestyle changes, etc. • Local Events THREATS 1. Motorolla becoming too aggressive with launching very sleek mobile phones 2. Grey market is no more, thus samsung has upper hand as of distribution . 3. Entry of Mobile phones from china 4. WLL will have negative impact on its sales 5.

What obstacles do you face?

What is your competition doing?

Are the required specifications for your job, products or services changing?

Is changing technology threatening your position?

Do you have bad debt or cash-flow problems?

CONCLUSION & RECOMMENDATION Nokia clearly had the early mover advantage in India. After launching its handsets over a decade ago, the Finnish major strengthened its grip on the Indian market like no other player ever did. Or, as some say, like no other player ever would. A large number of consumers have got so used to Nokia’s interface, designs, price points and easy availability of a wide range of models that a few months ago, its market share almost touched 80%. And now, it is riding high its omnipresence, with the

largest

distribution

reach

among

all

other

handset

companies. But then, some consumers are beginning to look for alternatives. Waits at Nokia care centres have become longer, even if the faults are not that big. Others say that incidents of software snags have gone up. Still others are keen to possess handsets that are trendier, stylish, and multi-functional.

And, other companies are beginning to cater to the palate of the discerning consumer. In fact, there is big chase on for India’s growing cellular handset market, projected to be $11 billion in the next 4-5 years, double the current size, with an annual demand of 100 million handsets by 2009-10. The shift is showing already. Motorola, Sony Ericsson and Samsung are hungry like wolves. They have sharpened product and marketing strategies to go for the kill, or at least fight back the dominance of a bison like Nokia. They are pushing slim phones, ultra-slim phones, folders, phones with big memory for music, photos and video clips and so on. The result: Over the past three months, Nokia’s market share has dipped. Its overall share (including CDMA handsets) has fallen to below 60% from about 65% and to about 72% in the case of GSM handsets, which not long ago at about 80%. Worldwide, Nokia commands a market share of just 36%.

Motorola and Sony Ericsson have started to slowly eat into Nokia’s share in India, with Samsung itching to join the pack of hunters. Apparently, Nokia doesn’t seem to be quite perturbed because its executives say that despite some adjustment in the market, the company’s dominance continues. Nokia may even be able to hold its share around these levels, they say. In any case, the first thing Nokia officials say is that they are going to adopt the attack strategy to maintain the dominant share in the country. They plan to attack the market's sweet spots of opportunity with innovation in design and ‘continue to offer value for all customers in all categories’. “Nokia playing defence is the worst thing it can do,” says a Nokia official. Secondly, the company is more than aware of the weak spots of the attacking wolves. Profitability, for instance. Nokia officials believe that a company has to have at least 15% value share to be profitable. And, they claim that only Nokia has that, and no

wolf in the pack chasing it is anywhere near that mark yet. They even point out that top officials of those companies that have recently gained market share in India are beginning to question the strategy of selling at loss or very low margins. Thirdly, Nokia is skeptical of its competitors gaining the vast distribution reach that it has -- about 80,000 outlets, up from 14,000 three years ago. Others don't even have half that reach. Besides, Nokia is very confident of its consumer-following in the country. Says Nokia's sales director Sunil Dutt, “Each of the competing brands (competitors) is trying to highlight one USP (slimness, music, storage etc) through its products. All of them are targeting an individual feature or set of features. Nokia, on the other hand, is able to provide to its customers complete range of products and features at different prices.” “Nokia is offering value in terms of functionality and performance to all,” says Dutt. “We strongly believe in a Nokia for everyone

approach to satisfy individual tastes and replicate this while designing products,’’ adds Dutt. Actually, Nokia believes that these novelty factors would settle down and again the issues of reliability, services, reach and range will become the deciding factors. Whatever be the outcome of this fascinating chase that is unfolding in the country’s cellular market, one thing is clear. The Indian playground is getting bigger and better – someplace that is certainly worth betting on. In any case, majority of people do believe and rightly so that there is nothing more gratifying than greater consumer choice through strong competition. Nokia expanded its leadership position in the mobile handset market in 2006, shipping more units than its next two closest competitors combined, according to iSuppli. However, the biggest waves in the market in 2006 were made by Sony Ericsson, which in the fourth quarter posted the largest quarter-over-quarter growth of all mobile-phone makers, with shipments rising 61.5%

to 26 million units, up from 16.1 million units during the same period in 2005. The joint venture between consumer electronics giant Sony Corp. and telecommunications specialist Ericsson enjoyed a great 2006, achieving more than 15 percent growth in the second, third and fourth quarters of 2006. "Sony Ericsson is targeting its entire product line at the mid-tohigh range of the market and just recently has started entering the emerging low-cost handset market," said Tina Teng, wireless communications analyst at iSuppli. "This has contributed to the company's accelerated growth in 2006. Plus, Sony Ericsson's products appeal to every regional market globally, because its camera- and music-enabled phones hit the sweet spot in terms of desirable handset features." Sony Ericsson's shipments increased to 74.8 million units in 2006, up 46.4 percent from 51.1 million units in 2005.

Nokia stays on top Nokia, for its part, is still the No. 1 handset OEM by a wide margin, with unit shipments of 348 million in 2006. This compares to combined shipments of 335.3 million units for Nokia's two closest competitors, Motorola and Samsung. The company also shipped a staggering 106 million units in the fourth quarter of 2006, up from 83.7 million during the same period a year earlier. Nokia's highest growth and volume is coming from Europe, which accounted for nearly 32 percent of Nokia's shipments in the fourth quarter. The figure below and attached presents iSuppli's unit-shipment

ranking

for

the

manufacturers in 2005 and 2006.

Top-5

mobile

handset

The RAZR effect Motorola's mobile handset shipments picked up speed in 2006. Despite missing its own fourth-quarter target, Motorola still managed to ship 65.7 million units in the fourth quarter of 2006, up 22.3 percent from 44.7 million units in the fourth quarter of 2005. However, it is in the yearly total where Motorola truly excelled, growing a whopping 48.6 percent to 217.4 million units in 2006, up from 146 million units in 2005. The company's marketing campaign for its RAZR phone was the main reason behind the surge.

"The success of the RAZR handset pushed the whole industry to go thin," Teng said. "Now virtually all of the upper-echelon phone OEMs have super-slim handset models." Motorola also introduced the first phone equipped with an Electrophoretic Display (EPD) to the emerging low-cost market in late 2006. However, the display used didn't allow consumers to enter many words or characters into the phone, which is required in certain emerging market regions specifically India and China, according to Teng. Samsung Electronics and LG Electronics both suffered sales declines in Asia, leading to inventory buildups that the companies must deal with in the first quarter of 2007. These issues caused LG to drop one rank to fifth place in 2006, down from fourth in 2005. Unit shipments from the South Korean handset OEM rose to 64.4 million units in 2006, up 17.4 percent from 54.9 million units in 2005.

LG also posted a flat fourth quarter, with shipments of 17 million units, up just barely from the 16.2 million units the company shipped in the fourth quarter of 2005. However, LG is hoping that the popularity of its Chocolate line of mobile handsets and the U.S. debut of Shine, the follow-up to Chocolate, will help it regain its fourth-place position. Samsung now must watch its back because Sony Ericsson is gaining on it. In the fourth quarter of 2006, Sony Ericsson was only 5.9 million units shy of Samsung's fourth-quarter unit total of 31.9 million units. Samsung ended 2006 in the No. 3 position with 117.9 million units, growing 14.6 percent from its 2005 total of 104.9 million units.

BIBLIOGRAPHY • http://www.accenture.com/NR/rdonlyres/88D23EA9-371043D2-842A-E13BCFF1F091/0/mc44.pdf • http://www.sdaindia.com/sda_india/psecom,id,22,news,15785,site_layout, sdaindia,.html?PHPSESSID=94240abc116c37e6... • http://www.financialexpress.com/fe_full_story.php? content_id=148367 • http://www.thehindubusinessline.com/2006/12/20/stories/ 2006122002760500.htm • http://www.ciol.com/content/search/showarticle.as p?artid=41629 • http://www.rncos.com/Blog/mobile.html •

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