Inflection point in Global mobile sales – Q2 2013

The latest Gartner Mobile sales reports are clearly saying one thing – the 2nd quarter of 2013 has been the inflection point in Global Mobile sales.

Smartphone sales data

  1. Feature phone sales were lower than Smart phone sales for the first time ever. This is big, as it is a sure sign of how mobile usage trends would look like. Mobile operators across the developing world must be cheering this report as it is a strong promise to them that the data-usage and hence non-voice revenues might increase. The gadget is no longer the bottleneck.
  2. Micorsoft Windows overtook Blackberry for the first time to be 3rd biggest Operating Source.
  3. Android is now almost 80% of new shipments (up from 64% last year) where as Symbian is down to o.3% from almost 6% last year. Symbian was what Nokia’s feature phones ran on.
  4. Lenovo is now the 4th largest Smartphone supplier and the 7th largest across all categories of mobiles. Interestingly, almost 95% of these sales are domestic sales within China. If Lenovo can crack the international markets, they would be a serious player to reckon.
  5. As expected Samsung took the biggest pie – 25% of overall mobile market and 32% of the smarphone market.
  6. While Apple saw an increase in its number of units shipped, it saw a serious drop in its average sales price. Mainly due to the heavy sales of its now-cheaper iPhone4 especially in markets like India. Many are saying that this is yet another reason why Apple might want to consider a low-price-iPhone.

Automobile recalls in Indian Market

May 2013: Updated  with the new Nissan Micra & Sunny recall data.

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Aug 2012: The recent and much covered recall of the Ford Figo, sparked a lunch debate  – which is the most re-called brand of car manufacturers?

We did some quick Googling and here’s what we could find out:

Manufacturer Brand Year/Month Issue # of Units
Nissan Micra/Sunny 2013/May Brake System 21,000+
Ford Figo 2012/Aug Steering & Suspension 120,000+
Maruti Swift 2012/May Petrol Leakage 100,000+
Toyota Etios/Liva 2011/Dec Faulty fuel inlet pipe 40,000
Honda City Sedan 2011/Sep Power Windows 71,000
Maruti Swift Dezire Diesel 2011/Apr Connecting Rod Bolt 13,000
Honda City Sedan 2011/Feb Valve Train Component 58,000
Fiat Punto 2010/Nov Faulty AC
Maruti A Star 2010/Feb Fuel Tank 100,000+
Honda City Sedan 2010/Jan Power Window Switch 8,000

Ford Figo. (09/23/09)
Disclaimers from our Googlers:

  • Does not include Global re-calls where Indian market was un-affected
  • Maruti recall numbers are way higher than the true impact on domestic market as some of these were global recalls.

So which is the most recalled brand? Maruti/Honda/Ford 🙂

Bing Cheating from Google

Bing GoogleThe latest in the Search Engine wars has got every one interested – Google has claimed that it has conclusive proof post a sting operation that Bing has been sniffing out Google results and showing them as top-searches, for keywords that have very few possible matches.

While the engineers at Google cry foul at this, many are debating whether this is just a smart move on Bing’s behalf or outright unethical. What do you think?

Airtel gets RBI nod for the mwallet

Today’s announcement is big news for not only the mcommerce folks in the country but also for people in Telecom, Retail and Payments industry. This approval allows Airtel to act as a semi-closed loop operator for pre-paid transactions. The Customers can now deposit upto Rs5000/- with Airtel (not to be clubbed with talktime) and can then use this money to buy goods and services at Airtel partner stores.

While its too early to say how this would grow, its very clear that there are certain pockets which might show early adoption tendencies

– Customers without debit or credit cards & wishing to transact online

– Customers concerned about the security of carrying cash or plastic in the wallet

– Parents wanting to give some financial freedom to their kids but not comfortable with just cash or add-on cards

– Impulse purchases by consumers when they are not carrying enough cash or cards in their pockets. This will definitely be the preferred way to promote impulse buying in young spenders

The critical thing to note is that the RBI has not yet allowed peer-to-peer payments through this channel. While some say that the current mobile wallet is the first step in that direction, globally it has been seen that P2P mobile payments help increase the adoption. For the simple reason that P2P payments are inherently viral whereas C2B are not.

One more aspect is that aggregators are not allowed currently- or so I am told. Which means that a retailer who wants to accept mwallet payments from Airtel, Vodafone & Reliance customers would need to deal with 3 different players and systems. There will be no VISA or MasterCard equivalent (atleast for now) making their lives easier. When they allow this, its a space we would be very interested in.

Labour strike in China- the new chapter begins

Business dailies have been covering the current strike at the Honda plant in China where workers have demanded an almost 500 Yuan increase in their monthly wages.

Interestingly the workers there have average wages of 1000 Yuan & 2000 Yuan- much higher than the city’s minimum at 920 Yuan.  While labour strike over wages is not new, whats new is the fact that its happened in China & with a plant as prominent as this. The 1900 or so workers have continued to be on strike after the initial discussions failed to resolve the differences.

china labourThis is definitely going to hit China’s attractiveness as a manufacturing hub for global co’s coz

– It shows that the workers in China are on a path which leads to awareness & demand of their rights

– If China tries to crush this the harsh way, it would have the wrong kind of publicity. If the strike continues, it would mean that many more such incidents could follow.

I feel this might be the start of China’s entry into a middle path towards modernization. Lets see how it pans out.

Apples iAds coming soon

Apple iAdsApple just announced its official foray into mobile ad networks – iAds. This is sure to change a lot of things in the rapidly growing mobile ad industry. Google’s acquisition of AdMob might have given them a headstart in the space but with Apple sitting on a huge consumer base the battle of giants will be interesting to watch.

More so coz the iAds would be reaching to the now best-selling iPads too.

Will anyone buy Satyam ?

Its been a not so great start to 2009 for India world over. The economic crisis just keeps getting worse.

I had last written about a how the slowdown could be the right time for cherrypicking. But the Satyam story has made me wonder if the same really applies to competitive industries in the service sector also.

SatyamTake the Satyam example: There are way too many options available to Satyam clients. They would get similar (if not better) standards of deliverables at better costs probably (given the slowdown and IT industry’s need to get more paying clients)

– Most big IT clients already have multiple vendors. So they would not have to start afresh but look at re-distributing business amongst the others

– Most clients will not be rewarded (enough) back home for the risk involved in continuing with Satyam- given that it has already earned the title of India’s Enron. So even with the new board and GoI pitching in, my sense is that most of them would want to make a quiet and slow exit.

– Satyam was not into cutting edge IPR generating work- which means that they are replacable with the highly documented processes etc.

– Service sectors like IT do not have much “assets” beyond people IPRs. With the scale of fraud being discovered at Satyam, this asset(people) will be highly undervalued by any suitor. Even if one ignores the Sr Mgmt and looks at the Project Mgr level- the indian job market is full of qualified and experienced techies looking for better avenues.

So why would any one want to pick up Satyam – a Co. without much assests, with huge and increasing liabilities? I tend to agree with Phaneesh’s point of view that window of opportunity to invest in Satyam is now gone- with each passing day it would be tougher to revive an organisation which is losing more than its gaining (since the scam discovery).

And Honda does it Again !

Honda has always been like the Intel of the automobile market. It has had a steady stream of products coming out of its shop which has meant that one time Honda owners stayed with them while looking for an upgrade or a replacement. The City platform has seen a steady stream of variants and so have the Accord CRV.

But by slashing the price of its Hybrid Civic by Rs 8 Lacs- they had not only grabbed the attention but managed to make sales in this stagnant market. Only a day before the major auto players (incl 2 wheelers like Bajaj) had cribbed at a forum as to how even their Diwali inventories were lying idle.

Am sure the Civic hybrid still makes money at the Rs 13L tag, but the fact remains they have been able to sell 95 cars in one day and many more would follow. Which means that they have created a much bigger market at lower margins. A great strategy to keep yourself alive – to ensure that your factories keep working, that there are no idle inventories lying in the chain. And all of this achieved while saving on the marketing spends. Without a single ad, Honda Civic Hybrid’s price tag is now known to most metro residents.

I think others should take a cue and come up with such steps to milk the market and fuel the demand for their products/services.

DTH Games begin- Elephants will win

The arrival of the telecom giant Airtel has made the DTH arena crowded and fun to watch. Not only was the Airtel’s teaser used by BIG TV, the offers from early entrants like Tata Sky Dish TV have seen a never before decibel levels.

At stake is the current 6 million household market which is expected to reach 37 million by 2010- assuming a monthly billing of 7 USD, the market (from subscriptions) would be 3.2 Bn USD- and this is only a conservative estimate !

DTH industry has some very peculiar characteristics:

– The installation costs and hardware costs are significant- almost equal to 5-6 months of subscription revenue.

– The “running cost” for an incremental customer is negligible and hence one would assume that early scale is what these players will target.

– However the acquisition costs (largely due to distribution set-up and sales team management) increase with increasing sales targets.

– The current pricing is already at levels where none of the players make money. Also it is expected that barring a few offers,all the 4 players will have similar pricing- so pricing is not expected to be a differentiator.

– All the players merely “distribute” content- hence there is not much content-based differentiation amongst players.

– Few weeks ago, ET carried a detailed article on how pay-per-view(PPV) content could become the key differentiator in this DTH war. It focused on movie as the key PPV trigger, where it is expected that users would pay upto Rs 50-75/-(1 to 1.5 USD)for a movie.

Given the above, what strategy do you think these Big 4 must be working upon?

Well, here’s my take on it:

1.Target Scale at pace: Since the pricing is not expected to go up, scale is the only way the DTH players can recover their fixed costs and start making money.MicroEconomics 101 taught that if MVC was negligible and MR was more than MC, produce more units.

2. Attack the geographic long tail early on: The 2 early entrants are not present in smaller towns , the BIG TV Airtel TV should look at attacking these set of customers early on. Since here the customers would have little choice, one can assume higher conversions and low turnover. Meaning sustained revenue streams.

3. Low cost distribution : BIGTV & Airtel have an enviable distribution network that touches the remotest of places in India- thanks to their Telecom ventures. Dish TATA SKY will not have this advantage and they should look at tie-ups to leap-frog this dis-advantage. A tie-up with Vodafone(telecom),forwarding agents of FMCG co’s could help increase their footprint whithout large scale investments

4. Pricing innovation: While the pricing bands will remain common across players, one could look at coming up with innovative packages e.g. Hindi only channels for the cow-belt, or Malyalam + English for the Mallus in Gods own country etc. But the problem here is that since content is not “owned” by the DTH players, any success in innovative pricing/bundling will be replicated in the industry

5. Focus on category conversion : I remember the King Khan ad on “Dont be santusht!”- and I feel thats the right path to take in terms of the communication positioning. Instead of fighting over a share of current DTH subscribers, why not be the leader who is synonymous with conversion from cable TV to DTH. (you suddenly can speak to 80 million cable TV viewing households). Such a move will help the competition also (as some would convert from cable to the competing brand), but if one can manage to get the biggest mind share of these converting customers, the rate of customer acquisition would be highest.

6. Feature differentiation : True that content is not owned by the DTH players, but they can still do a lot more to woo the customers e.g.

a. Make the box into a poor man’s PlayStation.There is only so much TV that a person watches. And if the quality of audio/video doesnt impress him, make his box a high-end gaming console (if he could “request” games – download and play) he might buy the DTH connection as the Diwali gift for his 10 yr old son.

b. eLearning: This is already being done, but the few users who I know have experienced it have complained about the lack of quality content.

c. True PPV/COD- The current options of PPV are only disguised content-on-demand (COD) coz the user is not choosing from the universe of titles the specific movie she wants to pay for. She gets a calendar of movies being broadcast during specific time slots and has to pay for that. If you ask me, its like paying for watching a movie on the flight in the big screen in front of you- I would never be happy paying for it- coz i can never understand why I should be charged specifically for a broadcast content. So why not give the set-top box the ability to “download” content on demand and give user the true power.

7. Implement offers which dont impact marginal costbr /E.g. two connections in a household for the cost of one (for 6 months). Is pretty clear that not many customers see value in switching to DTH at the current price points. Hence the challenge is to increase the percieved value of benefits at the same price/cost.br /br /br /While these 4 compete to sit on the idiot-box, the only thing I am sure of is that winner will take it all-The elephant will do the victory dance !

In the business of breaking (the) news…

I dont spend too much time infront of the idiot box, but I have been a witness to the news blitzkrieg that Indian consumers are forced to live with. With so many news channels, i usually end up pressing the “Up channel” button almost 20 times before I get out of the “breaking news” zone.

I have never ceased to admire these guys coz I guess it takes a lot of practise to present most of these Breaking News with a straight face. Tell me how can you not laugh when you are on Live TV telling the world that there are aliens living under the sea- when you are talking about the Bermuda Triangle. The other commendable feature they have is “creativity”. One would expect, creativity to limited to departments like editing, presentation etc while referring to News- but I guess these truly creative folks have taken it to the “content” part of news- the only holy grail of this business.

They are no longer in the Business of “”breaking news”, they are in the Business of “Breaking the news”. All this used to be funny and I also indulged in the humor. But now the desperation of these channels to get new content has started affecting the common man.

The TRPs of most of the Breaking News channels has only been rising and its hard to explain why this is happening.Maybe the answer lies in the fact that most of the viewers are ill-informed and highly gullible. Why else would someone believe that the world was coming to an end with the CERN experiment and commit suicide in India?The IB ministry needs to take this outright ridiculing of journalism, little more seriously….