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Journalism of Courage
Increased competition among mobile phone manufacturers and their focus on lower-middle income countries will lead to a decline in prices of approximately 70 per cent (4.8 billion of active mobile phones across the globe are below USD 100 by 2015),according to a recent study.
“With the increasing number of subscribers coming from ‘lower-middle income (LMI)’ developing economies,the average size of the consumer wallet is expected to shrink.
To meet this demand,manufacturers are likely to reduce the price points for mass-market phones,” said a study conducted by Knowledge process outsourcing firm Evalueserve.
Lower-middle income economies refer to the countries with the maximum population under the lower-middle income group,such as India and China.
The study further said there will be an increase in the number of features in these low-cost handsets in the next five years.
“This change in buying behaviour will be driven by rapid commoditisation of the mobile handset and higher tendency to switch handsets,particularly in the mass-market segment,” said Evalueserve AVP (Information,Communication and Technology Practice) Nitin Navish Gupta in a statement.
According to an Evalueserve analysis,Nokia,the largest mobile manufacturer,recorded an approximately 39 per cent fall in its average selling price (ASP) between 2005 and 2009.
Similarly,Samsung’s ASP for mobile phones declined approximately 33 per cent over the same period.
With the declining subscriber additions,the demand for replacement handsets is expected to become the key driver for the mobile market,it said.
Evalueserve estimates the share of handset replacement demand to the overall handset demand to increase from 73 per cent (1.46 billion) in 2010 to 94 per cent (2.43 billion) in 2015. Over the same period,gross handset demand is expected to increase at a CAGR of 5.1 per cent from 2 billion in 2010 to 2.58 billion by 2015.
“Among other factors,the purchase will also depend on how seamlessly people can connect with the social networks and stream content,” Gupta said.
“Also,manufacturers will need to come up with innovative business models to reduce customer acquisition cost and increase consumers’ loyalty to their product and service,” he added.
