Mr Aditya Gole, a 25-year-old from Mumbai, is hooked to his high-end Android-enabled handset for which he pays a monthly rental of Rs 1,500.
Till a year ago, he was happy with his 2G smartphone. But now, he can seldom put down his HTC Pulse. The lure: he has not paid a penny for the handset, which would have cost him nearly Rs 16,000 upfront.
Welcome to the concept of bundling, where high-end handsets are given to subscribers at subsidised costs by operators. In an apparent sign of change in the Indian telecom scenario, operators seem to be moving from providing free connections (read SIM-cards); the market is opening up to the idea of payback through high data usage and at times subsidising handset costs.
Subscribers, too, seem to like the idea of such offers especially with the rise in smartphones.
Hit scheme
MTS India, which launched a fairly high-priced Android smartphone — HTC Pulse — for the grand price of zero with the commitment to a monthly rental of Rs 1,500 a year, confirmed that the scheme was a hit. “We sold off our inventory in a couple of months. Encouraged by the success, we launched two similar offers,” a company spokesperson told Business Line .
Similarly, officials at Research in Motion (RIM) – makers of BlackBerry – too acknowledged the success it got through bundling. “Bundling meaningful offers on BlackBerry smartphone and PlayBook has been extremely successful during festive seasons,” Mr. Sunil Lalvani, Director, Enterprise Sales, India, RIM, said.
Global Scenario
Not exactly common in India, bundling – devise subsidising – is more common in operator-dominated markets that include the US and Europe. For example, a Windows Phone 7 device is offered free by Telus, and even the iPhone was subsidised at launch in the US and Canada.
Canadian Telecom service provider Telus has reduced prices of several popular models and offers most smartphones free if customers agree to sign a three-year term with the operator.
The New Buzz
Market sources admit that following Reliance's 2003 gamble with Monsoon Hungama, mobile operators had been muted in offering subsidised handsets thereby spurning the concept of prepaid SIMs. But if initial reports and opinion from market sources are to be believed then bundling has indeed re-created a buzz.
Following up on MTS' offer, Airtel and Aircel both ‘launched' the Apple iPhone 4 in India (Apple launched it in the US in June 2010) in 2011, bundled with ‘reverse subsidy' plans by which the customer could make back almost the entire cost of the handset over time.
Steady income
According to Mr Viral Oza, Marketing Director, Nokia India, in an open market like India, bundling helps not just handset makers but also for operators that ensure a steady income for the from a subscriber. “It's a win-win situation for both,” he said.
If not a new subscriber then it might help companies keep existing customers willing to switch handsets in a couple of years, a market source said.
Vodafone, the country's second largest mobile operator (in terms of subscribers), said: “Bundling is an innovative marketing concept where two companies, the handset brand and telecom company, come together to promote an end-service to the customer. It works hence we keep on doing it,” a company spokesperson said.
The Flip Side
While the initial brouhaha over a steady RPU might see more such offers, analysts are keeping their fingers crossed. Mr Kunal Bajaj, Director, India at analysis firm Telecom Mason, says that ideally bundling offers are yet to mature in the Indian context.
“Other than iPhone offer by Aircel and a couple of more, there are hardly any bundling offers in the true sense here in India. I think more bundling offers are going to be made once the 3G network in the country stabilises,” he said.