IPhone Outpaced in Surging India by Less Costly Rivals Like Micromax and Karbonn

Apple Inc. (AAPL) and Samsung Electronics Co. (005930) are being beaten in the fast-growing Indian smartphone market by a couple of aggressive local competitors.

   

A MicroMax Informatics Ltd. employee demonstrates a smartphone at the company's store in New Delhi. Photographer: Prashanth Vishwanathan/Bloomberg

Sales growth at Bangalore-based Karbonn Mobiles India Pvt. and Micromax Informatics Ltd. (MICRO) is being fueled by Indians buying their first smartphone to surf the Internet, which will be accessed by more than 300 million people by 2017. Their secret: the price.

In a country where about 800 million people live on less than $2 a day, Karbonn handsets start from 3,599 rupees ($66) and Micromax’s from 3,999 rupees, less than the cheapest Apple and Samsung smartphones. The iPhone 4 is available for 26,500 rupees and Samsung’s Galaxy Y Duos Lite for 6,110 rupees.

“India is poised for a smartphone boom; just look at the Internet penetration and potential,” Deepak Mehrotra, chief executive officer of Gurgaon-based Micromax, said in an interview. “But we don’t see any point to offering a Ferrari.”

India will become the third-largest smartphone market by 2017, according to the Framingham, Massachusetts-based researcher IDC, after China and the U.S. Samsung (005930), based in Suwon, South Korea, remained No. 1 by unit shipments in the December quarter and Cupertino, California-based Apple (AAPL) was sixth after shipping 254,000 iPhones, according to IDC.
Micromax, which ranked second by shipments, and fifth- placed Karbonn are growing faster, according to IDC. Micromax increased shipments to 633,000 smartphones in the last quarter of 2012 from 9,990 a year earlier, while Karbonn grew to 304,000 from zero, according to Gurgaon-based Consumer Media Research. Karbonn introduced smartphones in April 2012, said Shashin Devsare, executive director at the handset seller.

Subsidized Data

Karbonn subsidizes monthly data packages for some users carrying their phones, contrary to the global model of offering discounted devices to lure subscribers into signing annual service contracts, according to Devsare.

The two Indian mobile-phone sellers are both doing so well that they have considered going public, though they have put off a decision for now.

Mehrotra said he hopes Micromax (MICRO) will topple Samsung as India’s top smartphone vendor by March 2014. Karbonn has set a target of selling 5 million smartphones in the fiscal year that started April 1. Samsung is on track to sell more than 8 million smartphones in 2013, according to Consumer Media Research.

“The scale of the Indian smartphone market is growing by leaps and bounds with increased affordability,” said Manasi Yadav, an analyst at IDC in India. “Local vendors have remained dominant in the sub-$100 price band while they pose serious competition in the $100 to $200 range.”

Fast Enough

Micromax and Karbonn can’t import Chinese components and assemble their signature handsets fast enough, as demand for many of their Google Inc. (GOOG) Android-based phones is beating supply across the country. Online vendors are out of stock of the Micromax Canvas HD, leading consumers to New Delhi’s gray market shops, where the handset commands a 1,000-rupee premium, said Suraj Singh, owner of the Great Mobile Shop in the capital’s Gaffar Market.

Karbonn unveiled the Titanium S5 on March 15, with similar technical specifications to the Canvas HD: Qualcomm Inc. (QCOM)’s Snap Dragon quad-core processor, an 8-megapixel camera and a 5-inch touchscreen for 11,990 rupees. Samsung, the market leader in Indian smartphones, offers the same features on its Galaxy Grand for 21,500 rupees. The iPhone 5 starts at 45,500 rupees in a market where operators do not subsidize handsets.

Data Subsidy

Karbonn is attracting buyers by flipping the global model of phone subsidies that allows operators like Verizon Communications Inc. (VZ) and AT&T Inc. (T) to charge $199 for an iPhone 5, which otherwise retails for $649. The Indian handset supplier is helping billionaire Sunil Mittal’s Bharti Airtel Ltd. (BHARTI) lure new subscribers by offering 500 megabytes of 3G data free for six months if they buy certain Karbonn handsets.

“Middle-class India is quickly realizing they can afford our devices, but it’s the recurring cost of data which they are struggling with,” said Devsare. “That’s the key. If we can get people online once, we believe our devices will be their point of access for years to come.”

Dinesh Shanker, 34, couldn’t find Micromax’s Canvas HD in New Delhi’s Green Park market, where entrances to phone stores are littered with window advertising for Apple, Nokia OYJ (NOK1V) and BlackBerry (BBRY). Instead of springing for one of the pricier devices from the global brands, Shanker said he’d wait for fresh shipments or consider the new Karbonn handset.

“I’m not one of those people who has 40,000 rupees to spare for a phone,” said Shanker, who works as a chauffeur to an expatriate family in the capital city. “What’s wrong with this phone anyway? My son will be impressed by the big screen.”

Deferred IPOs

Both companies have pushed back equity sale plans in the past three years. Micromax surveyed the market in 2010, before deciding against an initial public offering. Karbonn, which had plans to sell a 10 percent stake in the fourth quarter of the year ended March, delayed the decision to the new fiscal year, Devsare said.

While Micromax and Karbonn’s recent sales growth in India hasn’t been matched by Apple and Samsung, it’s not for lack of effort by the world’s biggest smartphone sellers. Both companies have been splashing their gadgets on the front pages of Indian national daily newspapers every week since November, boasting their deferred payment plans and trade-in offers.

India Potential

After Apple introduced the iPhone 5 and cut the price of its iPhone 4 to 26,500 rupees, sales spiked almost threefold in the quarter ended December from a year earlier, according to Consumer Media Research. Samsung shipped 2.2 million smartphones during the same period, a 74 percent increase.
Samsung is addressing India’s demand by offering “varied product line-ups,” Chenny Kim, a spokeswoman, said in an e- mailed statement. An Apple spokesman in London declined to comment on the company’s India business.

BlackBerry is also making the most out of India’s smartphone growth potential, opting to introduce the new $800 Z10 handset in one of its smaller markets before introducing it in its largest, the U.S.
BlackBerry has seen global revenue tumble, but less so in developing markets, including India, where smartphone sales are expected to surge 50 percent every year for the next three years and may cross $7 billion by 2016, according to IDC. After dropping the price of its popular Curve series in India to about $200, the company is readying lower-priced devices for emerging markets.

Almost 75 percent of the mobile phones Indians use cost less than 2,500 rupees, according to Gartner Inc. The percentage will shrink as users move from feature phones to smartphones over the next seven years, which is where Micromax and Karbonn will pick up market share, Devsare said.

(Source: http://www.bloomberg.com/news/2013-04-12/iphone-outpaced-in-surging-india-by-less-costly-rivals.html)

Some Do's and Don'ts For Building a Social Bookmarking Network

Developing a strong presence on social networking and bookmarking sites doesn't involve complex formulas or algorithms. Sure, sites like Digg and Reddit have algorithms, but your best bet is to focus on the two major pillars of success on social bookmarking sites - great content and a network of users to promote it - rather than focusing on racing to the front page.

Building your social bookmarking network involves more than just adding users to your friends list. Participation is required - it's what gets you noticed. Voting for, spreading and commenting on other users' content shows you're willing to contribute to the community.

Keep reading for nine basic do's and don'ts when building your social bookmarking networks.

DO friend, IMvite and follow power users - but DON'T become a pest

The best place you can start building your social media presence is by making friends with power users. They have literally hundreds, if not thousands of friends, and a vote on your content from them can often translate into additional votes from their followers.

But remember, everybody is busy. They most likely won't have time to digg, vote or retweet 100 links a day or answer a beginner's questions personally. Be sure you vote on their content and respect their time.

DO participate in the SOCIAL part of social bookmarking - but DON'T be a troll

Commenting and participating in conversations on social bookmarking networks isn't so much about being social as it is about taking the time the to look at other's submissions.

But don't be too controversial just for the sake of stirring things up, and don't reply to something just to disagree. You can try to be funny, but remember not everyone will appreciate your sense of humor, so be careful.

DO embrace multiple social networks - but DON'T spread yourself too thin

There are literally thousands of social media networks and instant messaging utilities out there. Joining multiple social bookmarking sites like StumbleUpon and Yahoo! Buzz is a great way to expand your reach. Manage your time wisely, though. Creating and maintaining an active profile can be a lot of work on some sites, so don't spread yourself too thin.

DO submit content from community favorite sites - but DON'T submit commercial content

When you're a part of a social bookmarking community like Digg, Newsvine or Propeller, it's likely you will notice certain sites make the front page regularly. Being the first to submit new content from these sites can be a great way to get noticed.

On the other hand, submitting content that has no place in the community you're in is one of the sure-fire ways to fail at social bookmarking. If you appear self serving, folks will vote your stuff down and remove you as a friend. Be sure what you're promoting is worthy of votes!

DO submit content from a variety of sites - but DON'T consistently submit content from a single site or short list of sites

This may seem obvious, however, there are many people who only submit their own content and occasionally make comments on or vote on other stuff. This is a red flag that you're only in it for the marketing, which is not the image you want to project.

The best way to avoid looking like a marketer is to submit articles, etc. from a wide variety of websites that fit the bookmarking site.

DO sign in, vote up, retweet and comment regularly, DON'T leave huge lapses of activity in your accounts.

One of the keys to successful marketing through social bookmarking sites is being a regular. Taking too much time away could mean all of your hard work going to waste. It's not that you can't take a well deserved vacation. But the more available you are to vote and spread submissions of others, the more influence you will have in gaining exposure for your own stuff.

DO perform favors for your friends - but DON'T ask for too much without giving something back

Help your friends out and they'll help you! Don't wait to vote up or retweet your friend's submissions. If you go out of your way for them, the more likely they'll do the same for you.

Don't ask too much without giving something in return and if you ask someone to vote or retweet something, be sure it's top quality content. Eventually, people will avoid or ignore you altogether if it's not.

DO act like a human being, DON'T act like a computer or robot

The basis of social media like bookmark networking sites is the human touch - the fact that a real person cares enough about a topic to pass it along to others who they think will also care. If you're trying to get content out to as many people as possible, you need to act like a real person. Be friendly and have conversations with others online from time to time.

DO keep at it and DON'T give up

Like anything, building a network for social bookmarking sites takes a lot of time and hard work. You don't have to spend all day everyday on social media to be successful. But you need to find a routine you're comfortable with and stick with. Persistence is the key to success.