Qualcomm Inc (QCOM)

[Eric]

Yankee Group on Ultra-Low Cost Device Competition in India

Jim,

I have not seen Yankee Group's 15 page May 31 report titled "Aiming Low for Great Heights: Ultra-Low Cost Device Competition in India" by John Jackson who "examines GSM and CDMA ex-factory/landed handset cost trends in the Indian market," but you and others might be interested in the introduction ...

>> Executive Summary: Recent initiatives around ultra low-cost (ULC) handsets have attracted a great deal of industry attention. As markets begin to saturate and less affluent consumers become the engine of future market growth, affordability will become key. This is particularly relevant in markets such as India, where mobile penetration remains a single digit percentage of the addressable market, and relatively low incomes preclude mass adoption at the current handset average selling prices (ASPs).



This Yankee Group Report focuses on GSM and CDMA ex-factory/landed handset cost trends (net of tariffs) at the low end of the rapidly growing and competitively unique Indian market. Using comprehensive monthly handset import data for 2005, Yankee Group identified specific Indian market trends relating to price points, technologies and consumer preferences. ... Historically driven by US$51 to US$100 devices, ULC (less than $50) device shipments in India accelerated rapidly in 2005, accounting for 50% of total monthly volumes by year-end (see Exhibit 1). The reduction in government duties boosted the market. Further momentum will build as major handset vendors develop or expand their local manufacturing facilities. Despite being late to the low-end game, ULC CDMA devices outperform GSM devices in volume terms, although average ULC GSM device prices are lower. However, for the overall market, GSM devices’ ASPs remain higher than CDMA devices, given Indian consumers’ preferences for more expensive, brand-specific GSM devices. But ultimately, price is just one component of both vendor and competitive service provider environments. ULC devices are essential, but portfolios should map to customer segmentation objectives and long-term operator goals.

Table of Contents
I. Market Demand for ULC Devices
II. Indian Market Overview
III. Handset Market Dynamics in India
---> Pricing and Consumer Choice Varies
---> ASPs Are Only Meaningful In-Context Indicators
IV. Conclusions and Recommendations
---> Can CDMA Devices Compete with GSM Devices at the Low End?
---> Recommendations for Operators
---> Recommendations for Vendors
V. Further Reading.

http://www.yankeegroup.co.kr/link.php?key=eykgwmt_r0605_2 <<

Good graphic on 2005 handset models shipped into India by price point and month at the link above if the embedded .gif chart link gets busted.

Best,

- Eric -