Mobile phone maker Nokia which had taken a beating from Indian brands in the low end segment, is making a comeback. Thanks to Rupee depreciation over the past few months Indian phone brands have been forced to increase price of the low end models thereby eroding their edge.

Indian handset makers also have had to deal with Nokia launching a range of dual SIM phones – a segment which the local brands were riding on till now. Multi-SIM mobile handset shipments accounted for 54 per cent of the total India mobile handsets market during November 2011 in the country according to Cyber Media research. Nokia, despite being a late entrant, is already the market leader in the category with 19 per cent market share, followed by Micromax with 7.1 per cent and Karbonn with 6.9 per cent market share.

Nokia has also been able to cushion the impact of foreign exchange fluctuation because it sources components for its low end phones from the domestic market. But Indian phone makers including Maxx Mobile, Lava, Micromax and Karbonn have had to increase price as all of its phones are imported from China and other Asian countries.

“The sharp depreciation of the rupee over the last couple of months has understandably had an impact on margins in the industry. Many players have had to increase their prices to protect margins. And, we at MAXX have selectively revised the prices of some models, post the festive season,” said Mr Ajjay Agarwal, Chairman & Managing Director, MAXX Group. To cushion customers from the marginal increase in the prices, phone makers like MAXX are throwing freebies with the purchase of handsets.

According to industry analysts Indian and Chinese mobile handset players have witnessed a fall in shipments. “This is a phenomena where macro-economic factors are beginning to effect handset market just like it does other segments like oil or food. One may witness a see-saw effect when the Rupee gains value,” said Mr Alok Shende, Principal Analyst, Ascentius Consulting.

At the same time Nokia launched 7 phones in the dual SIM category which has enabled the Finnish major to get back some lost ground. Nokia's market share had slipped from nearly 60 per cent to less than 30 per cent because it did not have a product in the dual SIM category. Indian brands saw the opportunity and shaved off nearly 25 per cent share from Nokia.

But things are beginning to change for the foreign handset maker, a fact acknowledged by Mr. Stephen Elop during Nokia's Q3 results for 2011. “Nokia shipped approximately 18 million dual SIM devices globally, and in markets such as India where dual SIM is pervasive, we gained market share,” Mr Elop said.

But local brand claim they are not too worried as they have also moved beyond dual SIM to feature phones. MAXX Mobiles shipments rose to 10.1 per cent, as per Q3 CY2011 IDC's India Mobile Phone Tracker Report. “The pricing and dual SIM is only an aspect of the market. The market has expanded and I expect Indian brands to only increase their market share going forward,” said Mr Sunil Raina – CMO, Lava International.

> tkt@thehindu.co.in

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