Philips Bets Big On Indian Mobile Market

The Indian mobile handset market is estimated at approximately 250 million units with a value of around Rs 40,000 t0 60,000 crore, according to industry analysts. While feature phones still dominate the market, smartphones are increasingly on the rise and currently one in four mobile phones sold in the country are smartphones. With market saturation for smartphones in most large countries, India is the last great frontier of the global smartphone market and every vendor is vying for a share of this market. From the likes of Apple, Samsung, Nokia, Blackberry, Sony, LG to Asus, Oppo, Xiaomi and Huawei, a few large Indian brands like Micromax and Karbonn as well as numerous other small players, all are vying for a share of the customer wallet.

The mobile market is highly competitive and characterised by high volumes, razor thin margins (except for Apple) and a very quick obsolescence rate in terms of technology. One familiar brand in India which is making a sort of comeback is Philips. While Philips which is big in consumer electronics and healthcare is a household name in the country, both in India and globally, it is a peripheral player in the mobile handset market.

S S Bassi, Country Manager - India at Philips Mobiles, claims that Philips was always present in the India mobile market. It, however, is looking to make a big bang impact by launching a slew of handsets both feature and smart phones. In an interaction with BW| Businessworld’s Venkatesha Babu,  Bassi talked about why Philips chose to re-enter the market and what is its future roadmap. Edited Excerpts

Why is Philips re-entering the India mobile market now?
First, let me clarify. Philips mobile has always been present in India. Yes maybe not with the same level of visibility as its other businesses, but we have always had a small footprint in the feature phone market. To that extent, it is not as if we are entering the India mobile handset market. Even when we did not have a direct presence there was some amount of imports happening. You can probably say that we are re-entering the market with a bigger and wider portfolio which includes both feature and smartphones. Sang Fei has been running service centres for Philips mobile in India for the last couple of years.

Where does Sang Fei Mobility Pte Ltd come in and what is its relationship with Philips?
In the mid 1990’s, Sang Fei had a joint venture with Philips to manufacture mobile phones in Shenzen (China). When Philips decided to move out of the global mobile phone business in 2005, Sang Fei took over the JV and the brand was leveraged out by Philips.

So essentially this is a Chinese brand with a Philips label?
That is one way to look at it. But Philips is involved in a lot more things than just lending the name. Philips is involved into a whole lot of quality control, checks and other things  as the phones are sold under their brand. The reason for getting back into the India market is fairly straight forward. The market is really, really huge. Even a small slice makes for a big number and we have big plans of growth here.

We are into the feature phone as well as the smartphone segment with Android based phones. Today Sang Fei is selling mobile phones under the Philips brand name not just in India but China, Russia and Turkey. We intend to expand globally. For instance, we have been in the China market for the last four years with a degree of success.

We have our own R&D team to tweak our offerings and customise it depending on the requriements of the local market. You cannot ignore the feature phone, which is still contributing a sizeable segment of the market. It’s over 200 million. So the market exists and there are only very few players now left in the feature phones side of the business.

On the smart phone side of the business, we are entering with phones which stand out in the marketplace. For instance everybody complains about running out of juice on a smart phone. So we came up with one which has 5300 mAh battery which has 66 days of standby time. We have a phone targeted at senior citizens with large buttons. We are launching an octa core phone. We have launched 3 smart phones and two feature phones These are just some examples. We intend to differentiate ourselves by offering unique phones and expand our portfolio. Right now we have phones from Rs 1600 to Rs 35,000. For the Indian market the key board will support Hindi. There is great degree of customisation based on our study and understanding of market requirements.

So what is the distribution, support and service strategy?
Our distributor in India is Redington but we intend to leverage the Philips network across the country as they have a large footprint. So these phones will be sold in Philips stores. We are also working with Accel Frontline which has about 165 service centers across India and will provide support.

Our pitch in the market is fairly simple. Philips is a known trusted brand and which has touched most of our lives whether it was in lighting, consumer electronics or in some form. The brand plus the network which Philips has are our greatest strengths. Also Sang Fei is a part of the $ 27 billion China Electronics Corporation. So this is from the backing of two global companies.

When the flagship phone from Samsung sells at Rs 35,000 and you price your offering at the same price point but with mere 3G and lower specifications, how do you intend to compete?
Let me not comment about my competition. We respect them. Good luck to them. But I have a product here which at this point of time is an octa-core product. If you compare feature to feature, we offer better value. Also in India there is not much of 4G and it is still largely 2G and 3G market. Why increase prices by offering not used features? If tomorrow there is market demand, we will certainly have that in our portfolio. Our aim is to be among the six largest handset vendors in India in the first year.  There is enought and more market for all of us to grow.

Given that Philips brand resonates very highly in Europe, does CEC plan to launch the phones there?
Yes we are a global licensee and as part of our plan we are expanding everywhere. Right now the focus is to grow on the markets we are present in. I am confident that Philips Mobiles will succeed in India.