Is MTK set to disrupt the India/SE Asia Tablet markets?
Mediatek (MTK) is a Taiwaneese semi conductor maker with revenues worth $3.4bln in 2012. In the semiconductor industry, that number is a modest one, and MTK’s market share is only 1.1% of the global semiconductor sales (Source- iSuppli).
However, MTK has a few disruptions to its credit. Starting 2007 onwards, MTK’s chipsets engendered billions of low cost mobile devices at around half the price of the existing industry standards at that point of time. This provided a significant fillip the telecom industry as it lowered the cost of entry and initial cost of hardware acquisition for a first time buyer. It also was instrumental in replacement sales where in feature categories were available at lower price points thereby getting people to migrate from their existing handsets to a better feature set at a price equal or lower to the existing price of the handsets. It spawned companies such as Micromax, Lava and Karbonn.
In 2012, yet another Taiwanese chipset maker – Allwinner disrupted the tablet market by providing chipsets for WiFi enabled Tablets. This enabled a spate of low end tablets for the first time tablet buyer. Tablet category was till then defined by the likes of Apple and Samsung. Allwinner with Android truely liberated the category of tablets for the first time buyer. What resulted was a major market disruption where in the markets shifted from the majors to low cost- value oriented minors. At the last count, such tablets sold 2.2mln units – out of the 3mln tablet market in India.
In 2013, MTK now endeavours to disrupt the low end tablet space with low cost 3G chipsets – at a differential of $2-3 over the Allwinner WiFi chipsets. That would translate to Rs.150-200 difference in end consumer price for a 3G tablet over the WiFi tablet. One can expect that with the pricing gap squeezed to Rs.150/200, buyers of WiFi tablets could make the jump to the 3G tablets for the inherent advantage – Portability. There – thats the disruption that i am talking about. A Rs.5000-6000 3G tablet. Introduction of low-end 3G tablets and smart devices and the natural price decline curve – will shift demand, supporting uptake among new, less affluent customer segments
What could that do? The way i look at it – there are a few sectors in India that could immediately benefit from low cost 3G tablets – Education, Insurance, Healthcare, G2C payments, UIDAI based transactions and Financial Inclusion, Enterprise and Businesses. Slowly but surely, a lot of drivers are getting together to push the tipping point for tablets and smart devices.
1. Pricing Advantage (Will fuel 60% acquisitions)
2. Affordability in 3G Mobility
3. Business and Bring Your Own Device (BYOD) (Will fuel 4% adoption)
4. Platform maturity and Applications
5. Vernacular matures as a platform
6. Government push on Tablets as a segment to connect the unconnected- Election Year!
While initial estimates point at 6 mln units sales of tablets in India in 2013 – the number might have a groundswell driven by the numerous government programmes – and the MTK advantage would be key to deliver services remotely on these devices.