Mobile handset business: Into the frying pan?

BANGALORE, INDIA: Not just talking or sending SMSs, clicking photos and playing music, mobile handset devices are also gradually becoming mini-computers catering to rudimentary business needs like net surfing, mail checking, and data storage.

The handset makers are leaving no stone unturned to launch new and innovative products to cater to the demand for smarter business phones. The idea is to integrate telecommunications with computing and offer users an experience that is impossible to ignore.

It is the smartphone today that is creating all the buzz. Be it the Nokia E series, or the Samsung SGH series or the LG Cookie or K series or even Motorolas enterprise class, business phones are slowly storming the market. An obvious question that follows is whether the ongoing trend will pose any threat to laptops? Just like smartphones have nearly sent non-voice PDAs into oblivion.

PC vendors too have become aware of the possibility and are now coming up with new business plans to beat the competition from pure-play smartphone vendors. It was Apple that started the game with iPhone. Today many other PC vendors like Dell and Acer have either already launched or are on the verge of launching their own range of mobile phones. Looks like the Nokias and Sony Ericssons should brace themselves up to face stiff competition

Traditional vs New

It was HP (actually Compaq) which came out with its range of mobile hand-held devices when it launched iPaq a decade ago. That was the precursor to to day PC vendors launching smartphones. The mission was definitely not an unbridled success. Notwithstanding the lukewarm response HP got for Paq, Apple launched its range of iPhones a couple of years ago. However, after tasting initial success worldwide, iPhone too seems to have lost its market craze, especially in India.

Launched a year back in India, iPhone has not been able to sustain its initial euphoria and today there are not too many takers for it. With the tremendous success of the iPod, the Indian users had high expectations from the iPhone. But due to some basic drawbacks like lack of Bluetooth or file transfer function, the device has attracted too many buyers. It is also not very browser-friendly and checking mails is not at all a satisfying experience. India being a price sensitive market, users always look for value for money.

Compared to its price point, the iPhone lacks typical features that any high-end hand-held device should have, explains Vinay Dixit of Kolkata-based Nikkys. Initially we used to get a lot of inquiries. But now there are hardly any. After-sales-service is also very poor. This has added to its downfall, he adds.

iPhones poison has turned out to be the meat for BlackBerry. BlackBerry now rules the Indian smartphone market. Unlike before when BlackBerry was sold through bundled offers by service providers, it is now available in the open market and users can buy it individually to use with their existing connection. This has automatically boosted Blackberrys pull. It has also surpassed the demand of HTC, another popular brand in the smartphone category. Then there are models from traditional players like Nokia, LG and Samsung too.

However, notwithstanding these brands and the lukewarm response to the iPhone, PC vendors are jumping into the smartphone bandwagon with gusto. They are promising products that will offer enhanced computing and Internet experience and rich features like power two-way video conferences, streaming high-definition movies, etc.

Taiwan based ASUS, which is into diverse product manufacturing spanning from server solutions to wireless networking, PC component products, etc, has a wide variety of mobile phones to offer to its customers. It has a range of touch-enabled Windows based PDAs ranging from Rs 10,000 to Rs 40,000 in the Indian market. ASUS will further launch few new models like 5 megapixel PDA device, P835 PDA phone, and few models of the Garmin ASUS Nuviphone in India.

Because our devices are based on Microsoft Windows platform it helps the users to familiarize with the same interface which is available on their PCs and laptops. Our strategy is to tap the very premium high class user segments as the price of the business phone is high, says Edward Wang, business head, Mobile Communication Business, ASUS India. First we target the entrepreneurs, business class people who have the purchasing power to buy an enterprise device and also need to use the features of PDAs daily, he informs.

Today the market for smartphones is moving on to mass market instead of limiting to niche market. PC major Acer, has also launched its own range of mobile phones and as per market feedback, it is soon to launch the same in India. Dell too is working on similar products although the company refused to comment on it.

The Flip Side

The market for smartphones is growing and India being one of the biggest markets for mobile phones in the world, opportunities are high. And with service providers targeting young buyers with special schemes for smartphone usage, the boost for smartphones is inevitable.

However, selling a PC is completely a different ball game from selling a mobile handset. The two belong to different segments and have their own market rules. No doubt the PC or PC product makers are increasingly turning towards mobile handset manufacturing, but they have to be extremely cautious to succeed in this new arena. Some key reasons driving this changeover are the increasing trend of portability, growing user acceptance toward these devices, and reduced pricing.

The decrease in sale of laptop this year has added to the fear factor. This fear is not unjustified. However, one must understand that smartphones and netbooks aim at portability and a mainstream notebook derives its strength on functionality and performance while offering enough portability as compared to a desktop, observes Wang.

phones, those in the PC business are quite apprehensive. The decrease in sale of laptop has added to the fear factor, feels Dixit. To keep their market share intact, the PC product manufacturers are trying their hands in the mobile handset business.

Although we have learnt that Acer is launching its cellphone range very soon in the Indian market, I am not much aware of their plans. However, the only information I have is that they are bringing a wide range of products and will sell through the Acer Malls. I am looking froward to it, says Neeraj Agarwal of Kolkata/ based Nimbus Technologies.

The biggest drawback of these players is poor marketing strategy. Proper product positioning and well-laid marketing plans are very important to be successful in the mobile phone business. It is also essential to target a broad channel network in order to reach out to a maximum user base, even if one has a set target audience.

In most of these cases, the PC product manufacturers are targeting the enterprise users. And hence they are is sticking to a limited set of PC channel only as well as reserved marketing policy. But thats not the correct game that should be played in this business.

To sum it all, if the PC product makers are serious with their mobile handset business, they should start paying attention to revamp their marketing strategies and come out with user friendly and feature-rich products along with competitive pricing and equally good after-sales-service network. They should work out a comprehensive marketing plan and concentrate in creating a widespread channel distribution network to broaden their reach.