Indian Smartphone Market Can't Support More Than 6 Firms: Sculley
By PTI | Published: 05th August 2014 04:24 PM |
NEW DELHI: The crowded Indian smartphone market, which currently has over 20 brands selling their devices, will not be able to support more than six successful firms in the long run, former CEO of tech giant Apple John Sculley said.
Sculley, who has also served as the President of the soft drink giant PepsiCo, said his own firm Obi Mobiles will leverage expertise in marketing and sales to ensure its place in the top six.
Talking to PTI, Sculley said technology has now been "commoditised" and companies now need to focus on the brand and building customer loyalty.
"Technology is a commodity ... I grew up in commodity markets and I love that. There is little difference in what's there in a Coke bottle and a Pepsi bottle. Its all in the brand and the loyalty that you can build with the customer," Sculley said.
He added that with commoditisation of technology, many players are coming in and trying to differentiate with different features.
The experience in consumer businesses that have commodity technology is that one ends up with six companies in the market, he added.
"Markets, even as big like India, can't really support more than half a dozen very successful companies," Sculley said.
Sculley said that the market will see such a situation in about three years. "I think this thing will sort itself out pretty fast. Fast meaning, three years something like that. Its not driven by us, its driven by how things are happening." he added.
When asked, if the handset market will see consolidation, Sculley said: "I don't think people will be buying people, necessarily. I think eventually you have to make money.
"Some companies will look at it and say, I've got beautiful products, but I can't figure out how to make money in India. Other companies will say I was just never able to achieve what I thought I could, so I'm dropping out. There will be people who will drop out."
According to research firm IDC, India saw the highest rate of growth -— over 186 per cent -— in smartphone sales in Asia Pacific region during January-March 2014, outshining countries like China.
In the first quarter of 2014, vendors in India shipped a total of 17.59 million smartphones compared to 6.14 million units in the same period of 2013. Smartphone sales in India are expected to reach 80.57 million units by the end of this year, IDC added.
While Samsung is the category leader with a 35 per cent market share, Micromax had 15 per cent, Karbonn 10 per cent, LAVA 6 per cent and Nokia 4 per cent in Q1, IDC said.
On Obi's strategy for India, he said: "I was in Shenzhen just a few days ago and its hard to tell one product (smartphone) from the other, they all look the same and that is just fine from my stand point because Obi's story is not about innovation in technology.
"Its about building a very targeted customer experience of young people in their teens and giving them a customer experience that they can afford."
Sculley, who has been investing in various technology ventures in Asia including India, said one has to see the possibilities before they become obvious.
Companies will have to differentiate. Its will be about domain expertise. So firms have to become experts in healthcare, financial services, education, he added.
"Our expertise at Obi is gonna be marketing and distribution. So we understand sales channel and we understand marketing. We bring nothing to advantage in technology, but thats just fine.
"So, we are saying we will play in the game and invest our money because we think we know enough in the domain of marketing and in distribution, supply channels that we think we can be one of those top six companies in India," he said.
Sculley said Obi is very focused and the firm will try to do few things really well. It going to be all about experience marketing and the company has high quality products at disruptive prices.
"And we can be very virtual so that we don't have to carry this huge job ahead, that many of the traditional companies have. So thats why we think we have chances to be in one of those top six," he explained.