| Date: |
13-11-2014
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| Subject: |
Android One faces stiff competition from Xiaomi & Motorola; poses tough challenge for Google
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NEW DELHI: Early trends suggest that Indian consumers have given a lukewarm reception to Google's much-touted Android One devices amid intense competition from the likes of Xiaomi and Motorola, posing a tough challenge for the US company, which has made the standard the centrepiece of its emerging-market strategy for smartphones.
Import data for October showed Google's Android One partners — Micromax, Karbonn and Spice — together imported just over 2 lakh devices in the first full month of sales. This was less than the nearly 2.3 lakh handsets imported for the 15 days of September, data from market research firm Cybex Exim Solutions, available exclusively with ET, showed. The devices were launched in mid-September.
IDC analyst Karan Thakkar and Counterpoint Research Analyst Tarun Pathak said initial sales have been hurt by intense competition as well as the fact that Android One devices were initially only available online, which still has limited penetration in India. The strategy was flawed, especially for a device targeted at a large segment of the population unlikely to have access to the internet.
"For the month of October, roughly 8 million smartphones were shipped into the country, of which Android One would be just about 2.5%," said an industry tracker, who did not want to be quoted.
A Google spokesperson, however, said the devices were seeing "very strong sales and consumer interest", particularly in tier II and tier III cities. IDC's Thakkar, too, expects Android One sales to pick up in November and December. A person familiar with the matter said though Micromax's sales of its Android One device exceeded that of rivals, it managed to sell only about 1.2 lakh units till October end, as against a total of 2.50 lakh units imported. "They had anticipated huge demand for the device, and therefore had ordered a large stock." Micromax didn't respond to requests for comment.
Pardeep Jain, managing director of Karbonn Mobiles, said its Android One Sparkle V smartphone had performed below the company's expectations, adding that sales were also marred as supplies were available for only 15 days in October. "Traction has started coming now and demand is improving," he said. Prashant Bindal, chief executive officer of Spice Mobility, said sales were hit by supply issues. "We had faced an outof-stock situation during the month since there was no inventory coming from China"
A person familiar with the matter said that Karbonn and Spice, unsure about the product's prospects, had shipped low quantities, which were eventually sold out once they started offline sales in addition to online. "The factories in China couldn't suddenly cater to their requirements for additional stocks, thus creating a supply gap."
The two companies started selling their devices offline to push sales earlier in October, after their initial strategy of an exclusive online launch failed to gather momentum. The drawback with selling through retail stores is that it increases the cost of handsets.
Micromax imported 1.32 lakh units of its Canvas A1 device in October compared with 1.19 lakh in September. Karbonn brought in just 34,390 units of its Sparkle V handset in October, almost half the 67,440 units imported in September. Spice brought 34,390 units in October, compared with 43,100 units in September, according to Cybex Exim. Android One devices are facing stiff competition from the likes of China's Xiaomi and Motorola - both of which are also selling only online -- as some of these models offer the same or better specifications at lower or similar price points. "Vendors such as Motorola, Gionee and Lava are providing stiff competition," said Pathak of Counterpoint Research. Experts added that these phones need to offer more features at lower price points, and that their unique qualities need to be more effectively communicated.
"The USP of Android One such as software updates and other Google services of the device were not publicised. That was another reason for the lukewarm response toward Android One devices," Pathak said, referring to the close integration of Maps, Google Now and other features.
Moreover, the inability of these devices to take pictures without adding an external card may have also hurt sales.
Success in India - among the world's fastest-growing and most price-sensitive markets -- is critical for Google, which plans to take the low-cost Android One devices to markets such as Indonesia, the Philippines, Pakistan, Bangladesh, Nepal and Sri Lanka shortly. The US giant has tied up with new partners including Acer, Asus, HTC, Lenovo and Panasonic apart from India's Lava and Intex and chipmaker Qualcomm for the next set of handsets.
Source: http://economictimes.indiatimes.com/