Rating: The latest (and certainly not the last) salvo in the brutal-but-beneficial Indian price wars
Vodafone, India’s second-largest carrier, is pushing the envelope in the world’s most price-sensitive market with a handset that reaches a new low price of Rs.800 (€14) unsubsidised, writes John Kneeland. The Vodafone V150 handset breaks the Rs.1000 barrier, and undercuts the wildly popular Nokia 1100 phone.
At this price it should come as no surprise that the V150 is a very basic phone, being capable only of calls and SMS on its 96 x 64 monochrome display. Nevertheless this will enable many more of India’s poor to join the mobility revolution.
Vodafone is not aiming merely to poach well-served urban customers, but also making a deliberate push to reach into India’s more underserved markets as they have that they “will provide an extensive logistics infrastructure, reaching deep rural segments where mobile penetration has remained low.”
What we think?
With over 100 million users in India alone, Vodafone has exploited its vast scale to deliver a new level of handset affordability in India, and will allow the dream of mobile phone ownership to become a reality for more Indians than ever before.
However, market leader Nokia is no slouch when it comes to scale, and will likely mount a competitive response to Vodafone’s V150, be it by introducing new low-end handsets, cutting prices on existing ones, or both.
The profit margins of Nokia and other mass handset makers will surely be further squeezed (making their ability to find success in the more profitable smartphone market all the more crucial), but the consumers of India (and other developing countries) will benefit as the price of admission to the mobile world falls even further.
Eventually it may be impossible to make phones any cheaper, prompting handset-makers and carriers alike to explore ways of subsidizing the cost of handsets.
As fixed-term contracts are not permitted in the Indian mobile market, this could be an opportunity for some enterprising folks to find another way to monetize handsets through advertisements (InMobi? Google?)
Last year, India surpassed China to become the fastest-growing mobile phone market in the world, and has added twice as many new subscribers as China in 2010.
With the price wars continuing to put mobile phones and services within the reach of more and more Indians, we have every reason to believe the Indian mobile market will continue to be an enormous growth opportunity.
John Kneeland is a telecoms specialist with a particular eye on the India market sector