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Indian Telecom Story (Part XXXV): Of 1 billion connected Mobiles, Burgeoning Dual SIMs and Distribution viabilities

Posted in Industry updates by Manas Ganguly on September 26, 2010

About an year or more back,I had written about a billion Indians connected through Telecom networks. That was a report by Gartner then.A recent report by iSuppli supports the year old theory of a billion subscriptions. Wireless subscriptions in 2014 expected to amount to more than 97% of the country’s population of 1.26 billion. Taking it further from the 652 million connections, the next 350 million mobile connections will really be scrubbing the bottom floor of the pyramid.

The age old axiom of growth from the rural markets is again coming afore. iSuppli has termed rural markets to be “significant and untapped market opportunity”. The other trend that seems to be catching on in Urban markets is that of multiple connections per person (112% mobility), which re-enforces the growth in Dual SIM handsets. Talking of Dual Sims, this has been a category that has seen a significant growth in the last 2 years. From being a “Chinese” handset identity feature, the Dual SIMs are now going mainstream. A recent report by GFK Nielsen, emphasizes the scale, growth and popularity of Dual SIM phones in India

• Dual SIM contributed to 23% of overall GSM handset sales in May.
• Dual SIM Market grown by 45% in 1St half of 2010.
• 2K – 3K price band Dual SIM contributes to 41% of overall dual SIM sales.
• Dual SIM market primary driven by Indian brands or Chinese brands.

• Micromax leads the market with a market share of 18.5% in terms of units share, followed by Spice 14.7%, G Five 12.8% & Maxx 11.6%

Once dismissed as a Fad which would fade away because of problems in quality and absence of strong market players, Dual SIM phones have now gone mainstream with Samsung, Nokia and Motorola beginning to consider Dual SIM handsets in their portfolio (a tad late maybe!)

Dual SIM markets in India have gone up by 45% in 6 months(December 2009- May 2010)

Dual SIM Market sizes as a %age of the Total Market in terms of Price Categories.

As discussed in an earlier post, the next 350 million will be a justifiably difficult segment in terms of viabilities versus realizations. With Call and Data rates scrapping the bottom, connectivity to rural millions will also not come at high ARPUs. In fact, that ARPU for the next 350 million will be about $1 or less. Thus the ability to collaborate and cut costs will be critical differentiators for Telcos. Towards this, Telcos would need to be open to new distribution and marketing paradigms based on collaborating with 3rd parties. Government of India under its rural empowerment program is piloting many such initiatives which offer the last mile connectivity. Similar arrangements of distribution such as Fertilizer companies or e-Choupal constructs will be important and critical for Telcos to incorporate and collaborate in terms of businesses needs.

Dual/Multiple SIM markets in India

Posted in Mobile Devices and Company Updates by Manas Ganguly on March 20, 2010

Dual SIMs entered the Indian Markets with stealth and are often connoted with inferior quality Chinese White branded handsets. However, the response to Dual SIMs and Multiple SIM handsets from the Indian markets has been phenomenal. The markets have almost move to the tune of 25% per month of the total handset sales from dual/multiple SIM handsets.
This inspite of the fact that it didnot have active support from the big 5: Nokia, Samsung, LG, Sony Ericsson and Motorola. Dual SIMs handsets have powered low cost players like Spice, Micromax, Karbonn to 20% market share levels. So much so that the organized players such as Samsung, LG and Nokia are also jumping into the dual SIM bandwagon. Here’s a media release that i had given on the scope, market, consumer preferences and cons of the multiple SIM handsets.

The scope of multiple-SIM phones in the Indian market
A large percentage of mobile users have a tendency to maintain two to three connections and therein arises the need to accommodate this requirement through multiple SIM phones. This is actually a reflection of the fact that markets in India are maturing even while 15-20 million subscribers are added every month. Multiple SIM phones are mainstream in Europe, Russia, Thailand and other mature markets. Indian Users are slowly waking upto the trend of multiple SIM cards. Consumers today want to keep their work connection separate from their home connections. Yet others like to toggle between two operators one with cheaper VAS/SMS and the other with a cheap talk plan. There are still others working across geographies who maintain multiple connections: One from the Home network and the other from the other geography network. Another new category of consumers prefer to maintain a GSM and a CDMA connection and there-in lies the utility of GSM-CDMA phone.

Do such phones hold promise in rural segment
While Multi SIM phones are globally a feature of mature markets, the spread in India covers rural segment also. This is because cheap SIM and talk times allow people to maintain multiple connections. The cost differential between a Multi-SIM phone and a Mono SIM phone is lesser than the perceived benefits and utility of owning a Multiple SIM Phone. Hence there is a market which exists in this segment as well.

The growth of Dual SIM phone segment in India
Market analysts say that, in India 50 million people have multiple SIM handsets and the numbers are increasing by 2-3 million users every month. That is 20-25% of the total market and is substantial.

Will the success of Dual SIMS be replicated in the Triple SIM segment?
Any new segment must have a valid consumer proposition for it to make business sense.
In India, Dual SIM phones are more widely accepted for the reasons mentioned earlier. A Triple SIM phone has a niche market in business usage (Order Booking, Handling multiple partners, small retailers and SMEs). Thus in terms of numbers, a dual SIM phone will have more acceptance, though a triple SIM phone will make sense for its kind of users.

The value addition of triple SIM phones to the consumer
Lets sample a few types of consumers of the Triple SIM phone:
A restaurateur who has a delivery service; a travel agent who has multiple phone connections; businessmen who need to manage customers, vendors and personal contacts and People who travel a lot who need to maintain low cost Talk options in two or more geographies and a data/VAS connection. The Triple SIM is a solution where-ever there is a need to work and manage more than 2 kinds of user groups. As stated earlier, this market is niche but a triple SIM phone has a direct relevance to these users.

Will we see SIM support number rising further to 4 or 5 in the coming days?
Dual SIM has mass connotations, Triple SIM has a niche; however, 4 or 5 SIM phones would be an overkill. There is very limited consumer proposition for more than 3 SIMs and hence we do not see a relevance to any consumer category for 4 or 5 SIM phones. Besides on the technology part, a 4/5 SIM Phone will lack stability, cause battery drainages, Overheating and burn outs.

Disadvantages of multiple SIM phones?
As discussed earlier, we can only put 2 PCBs on a phone. Using more than 2 may cause phone instability, battery drainages, Overheating and other technical issues. 2 PCBs support Dual SIM the best, Triple SIM optimally. Hence going beyond 3 SIMs is technically not preferred.

Read the follow up post on Dual SIM Markets in India

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