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Expert
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December
10, 2003
Handset manufacturing viable as market
grows further
Geetanjali
Wadhwa & Pradeep Chakraborty
NEW
DELHI -- Even though the market for mobile handsets
is exploding in India, sales figures haven't reached
a point to justify manufacturing of handsets in the
country. Convergence plus met up with Peter Gartenberg,
executive vice president, Information and Communication
Mobile -- Mobile Phones (ICM-MP), Siemens Ltd., to find
out why none among the various handset vendors had yet
come up with a strategy for manufacturing mobile handsets
in India. Excerpts from an interview:
Convergence
Plus: The Indian mobile market is exploding but no one
has come up with a scheme to manufacture handsets so
far. Why is it so?
Peter
Gartenberg: Although
the Indian mobile market is exploding, handset sales
figures have yet to reach a level that would justify
the capital investment in mobile handset manufacturing.
The thumb rule to set up a new factory is approximately
10 million handsets of a single brand. Initially, Siemens
Mobile is focusing on mobile software development in
India. India is Siemens Mobile's global center for mobile
software development. Our software development center
is headquartered at Bangalore.
CP:
How can we make handset manufacturing or assembly viable?
PG:
As the market grows further and achieves the proper
scale (10 million handsets per brand), handset manufacturing
will become viable. Aside from the scale, India possesses
all the necessary conditions for handset manufacturing.
CP:
How can we deal with the large gray market in handsets
that currently exists in India?
PG:
The gray market is declining rapidly since the lowering
of the customs duty to 15 percent. Indian consumers
are willing to pay more for a fully warranted, legal
handset. The further lowering of duties and taxes would
reduce the gray influx.
CP:
It is not possible to use CDMA handsets in a GSM environment.
Is this a handicap?
PG:
This
really isn't a major issue as GSM is the dominant standard
in the world (1 billion subscribers) and in India (17
million subscribers). The major growth in the market
is in the GSM environment, so we are participating in
the highest growth segment.
CP: Many service operators are clubbing handset
sale to subscription to their service. Is this desirable
from the consumer point of view? If not, what regulatory
measures should be undertaken?
PG:
Yes,
we are seeing various marketing bundles with handsets
today. However, the Retail sales of handsets still accounts
for at least 95% of handset sales in India. We have
and will continue to work with service operators on
bundling schemes but we are realistic that this will
only account for a limited sale.
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