Journey of Mobile Phones and Mobile Makers

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Bhupesh Raseen

In the last few years smartphones have changed the face of society, but now the smartphone market is down. Consumers are waiting for longer to replace their phones because of high cost & economic uncertainty. On the other hand, Mobile makers are facing losses and shutting shops due to unfavourable government policies & various other reasons that are ultimately generating huge unemployment.

By
BHUPESH RASEEN
Chairman-Mobile Advisory Committee, TMA
Board Member-Ghana India Trade Advisory Chamber (GITAC)

Smartphones have changed the face of society and given a new definition to social status. Older people are being challenged by younger people for not using smartphones. Now people are finding directions on Google Maps instead of asking people and that is the power of smartphones. This revolution is more visible in India, as the country has emerged as one of the fastest-growing smartphone markets in the world. The strong and rapid growth of the smartphone market has been made possible by several liberal policies of the Indian government in the past, along with huge consumer demand.

The smartphone market in India is strong enough to ensure a healthy competition among new, upcoming & existing brands. Indeed, the important factors remain price, features, product quality & after sales services. A lot of other factors too have contributed to the rapid growth of the Indian smartphone market. The two most important ones are the low cost of phones & their short shelf life. India is a cost-conscious economy, where affordable products sell the highest. But the year 2019 may witness a slight reversal in this trend as luxury and premium handsets are likely to increase their share in India. Premium price-tag mobile phones are set to attract Indian customers in this year, but it would be entry-level and affordable smartphones that are driving the sales volumes in the world’s second largest smartphone market.

On the other hand, smartphone market is down due to high prices & various other factors. Worldwide handset volumes declined by 4.1% in 2018 to a total of 1.4 billion units shipped for the full year. As per the latest data, the days of smartphone growth is over. The sluggish growth or contraction is likely in many saturated markets. Globally the smartphone market is in a mess right now. Even the high growth markets like India, Indonesia, South Korea and Vietnam have witnessed slow down in 2018. Indeed the consumers are waiting longer to replace their phones due to high cost of premium devices and economic uncertainty. This year, smartphone makers are attracting the customers to upgrade devices with new innovations such as superfast 5G network connectivity and foldable screens.

Mobile handset industry is facing consolidation with many players exiting the industry. Many of them are entering various other businesses after exiting mobile handset business. Few Indian brands are still continuing but are struggling and continuously suffering losses. Mobile Makers have reduced manpower drastically. The situation is resulting in a huge unemployment in the market. Phased Manufacturing Programme (PMP) introduced by the Government of India aims to maximise the local value addition and indigenisation of key components and the corresponding sub-components used in mobile phones. But without monitoring the ecosystem, the government implemented PMP and imposed custom duty on the components resulting in price rise. This ultimately affected the industry negatively and forced many Indian mobile makers to shut shops as manufacturing in India is no longer financially viable. Ultimately mobile makers have to face big losses and mobile handset industry generated huge unemployment.

Government needs to promote investment in manufacturing of core components of mobile phones by offering various benefits to the investors to support manufacturing landscape of the mobile phones. They further need to introduce favourable policies for the survival of Mobile Makers.