China mobile phone restructuring paves way for 3G rollout

China has hugely restructured its telecommunications industry to pave the way for a roll-out of 3G technology.

A worker talks on his mobile phone while fixing a street light in front of a 2008 Beijing Olympic Games logo in Qingdao
A worker talks on his mobile while fixing a street light in Qingdao

The country's second largest mobile phone operator, China Unicom, sold 43.17m of its subscribers to China Telecom, a fixed-line operator, for 110bn renminbi (£8.12bn). At the same time, Unicom and China Netcom, a fixed-line operator that covers much of southern China, merged to create a company worth £30.2bn.

The deal means that China will have three mobile phone operators rather than two when it rolls out 3G, and that two of those will also have a fixed-line business. China Mobile, the world's largest mobile phone operator with 380m subscribers, is the only standalone mobile company.

"The ministry of information industry has promised that it will grant the 3G licences after the restructuring is complete, probably at the end of this year or the beginning of the next," said Steven Liu, an analyst at DBS Vickers in Hong Kong.
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The roll-out of 3G has been severely delayed in China because of problems with the country's proprietary TD-SCDMA technology.

However, commercial trials have now taken place in 10 cities, including Beijing, Shanghai, Guangzhou and Shenzhen and 3G is expected to be provided for the Olympic Games.

Samsung, an official sponsor, has provided 15,000 handsets to officials at the Games, in a bid to forge relationships ahead of the distribution of the licences.

Although handset makers will have to spend vast sums on creating phones compliant with the Chinese technology, the vast market is too tempting to miss out on.

Unicom has sold its CDMA subscribers, who use a mobile phone technology unique to China and different from the GSM standard used by most of the rest of the world. The company retains its 127.6m GSM subscribers.

Chang Xiaobing, chief executive of Unicom, said the deal would help Unicom to "focus on the development of our GSM mobile business and the building of a solid foundation for our forthcoming 3G business".

He added that the tie-up with Netcom would create a fully integrated telecoms operator, able to provide a "full spectrum" of services.

China Telecom, for its part, has pledged to spend at least 80bn renminbi on its newly acquired mobile network and could pose a decent challenge to China Mobile's hegemony. It has stated an aim of having 100m CDMA subscribers in three years.

Vodafone has a 3.3pc stake in China Mobile, while Telefonica, the Spanish company, will have roughly a 3pc stake in the merged Unicom business.

Tough call for iPhone in India

Nokia, Motorola, Sony to take on Apple in Sept.

Global mobile phone majors Nokia, Motorola, Sony Ericsson and others are offering a slew of products including touchscreen and music capable handsets in India to counter the might of Apple's iPhone, which is expected to hit the markets in September.

Handset vendors in the world's fastest growing mobile phone market have worked out the strategies, to be ready for the onslaught of the iPhone.

US-based Motorola, which already has an array of smart phones in the country, recently launched ROKR E8 in India. A music phone, it has features such as FastScroll navigation wheel (a navigation wheel like that in iPods) and haptics technology that transforms the device from a phone to a music player in one touch. This is in addition to other touchscreen phones including the MOTOMING A1200 and MOTOROKR E6.

"Customers are interacting more on their mobile phones — making and receiving calls, messaging, listening to music, taking photographs and sharing content with colleagues among others. As a result, the mobile phone has evolved to a lifestyle device intrinsic to everyday communication," Motorola Mobile Devices Senior Director, Sales & Distribution (India & Southwest Asia), Lloyd Mathias said.

Sony Ericsson is launching several new models in the high-end segment. Some of these include the X1i (a touchscreen phone with Qwerty keyboard and GPS facilities) under its Xperia series, the W980i (Walkman range) and C905i under the Cyber-shot range (with an 8-mega pixel camera).

"We are confident our line-up of current and forthcoming models will help us consolidate our leadership among the top-3 GSM handset players in India," Sudhin Mathur, General Manager, Sony Ericsson India.

Besides the basic telephone service, there is a huge potential for different value-added services in mobiles. We believe the introduction of Next Generation Network in India will truly enable users to experience the power of 3G-enabled handsets, he added.

Nokia, the leader with over 40 per cent of the global market share, is gearing up to offer touchscreen products soon. The Finnish company, which sold 60.5 million devices globally in 2007, has already rolled out 13.3 million converged devices in the second quarter of 2008.

According to a Nokia spokesperson, "The iPhone is an interesting device and it is great to see other companies share our vision of connected multimedia devices. We strongly believe that traditional single-purpose, non-connected devices such as MP3 players and cameras will be marginalised and overtaken by converged multimedia devices in the future."

Samsung is expecting its SCH-M800 Instinct, a high-end touch screen mobile phone, and Samsung F700 (another smart phone) to take on the new iPhone.

Two major GSM service providers - Vodafone Essar and Bharti Airtel - are bringing the iPhone to India.

Retail Hiring Slows Down

The slowdown in the economy has affected the India's booming retail sector witnessed in the past two years and there appears to be a slow down in the fresh hiring, particularly at the middle and senior management levels with a flowdown in the previous quarter that is expected to continue ito the present quarter as well.

According to a news report in the Economic Times retail sector hiring will be flattish in the coming months. "On the managerial side, we have already filled a major part of our requirements. Since the back-end is firmly in place, we do not need to add too many people." Reliance Retail president and chief executive (Lifestyle) Bijou Kurien said.

The retail sector is also expected to see some rationalisation in salary levels. Increments this year are expected to hover around 10%-15% compared to an average 25% last year.

The retail sector is also in a cautious mood now because of the depressed macro-economic environment and high rentals severely impacting consumer spending and growth plans, respectively.

In fact, there is a ready pool of talent waiting to be absorbed as several small brands struggle to survive and employees are restless to move from companies that have not been performing too well. "This is a good time to hire talent at sensible salaries," Tommy Hilfiger India CEO Shailesh Chaturvedi said.

However, the slow down will not affect the front-end job growth, yet. According to the Retailers Association of India, at least 200,000 people would be required by the industry in the next 2-3 years, a major chunk being on the front end where there has been a continuous shortage.

Companies are also likely to increase the scope of work of existing employees. They seem to have gone into a consolidation phase in the last three months.

After enjoying a rather unexpected, lucky and historical run of high growth rates averaging 8.8% during the last five years giving a sense of confidence abroad about the Indian economy, the picture has now changed for the worse. Lower growth is anticipated in the current year. Early projections by different agencies vary from a low of 7% by JP Morgan Chase to a more optimistic 8-8.5% by the ministry of finance and the Reserve Bank of India.

These projections in the state of economy have started affecting the retail consumer. The slow down is already visible in the hotel industry and retail sales are expected to slow down. The uncompleted Malls have slowed down their completion plans. In such a scenario, retail sales are bound to come down and the industry is pro-actively gearing up for the change.

Indian Retail: An Overview

As organised retailers carve out a bigger piece of the retail pie for themselves it’s an exciting time for the retail sector. By Dominic K

Emerging markets such as India and China are the final frontier for retail taking the focus away from saturated Western markets. Since 2001, 49 global retailers entered 90 new markets, but at the same time, 17 retailers left markets in 2005.

The Indian retail industry in valued at about $300 billion and is expected to grow to $427 billion in 2010 and $637 billion in 2015. Only three percent of Indian retail is organised. Retailers of multiple brands can operate through a franchise or a cash-and-carry wholesale model.

Retail is India’s largest industry, accounting for over 10 percent of the country’s GDP and around eight percent of employment. Retail in India is at the crossroads. It has emerged as one of the most dynamic and fast paced industries with several players entering the market. That said, the heavy initial investments required make break even hard to achieve and many players have not tasted success to date. However, the future is promising; the market is growing, government policies are becoming more favourable and emerging technologies are facilitating operations.

Retailing in India is gradually inching its way to becoming the next boom industry. The whole concept of shopping has altered in terms of format and consumer buying behavior, ushering in a revolution in shopping. Modern retail has entered India as seen in sprawling shopping centres, multi-storeyed malls and huge complexes offer shopping, entertainment and food all under one roof.

The Indian retailing sector is at an inflexion point where the growth of organised retail and growth in the consumption by Indians is going to adopt a higher growth trajectory. The Indian population is witnessing a significant change in its demographics. A large young working population with median age of 24 years, nuclear families in urban areas, along with increasing working-women population and emerging opportunities in the services sector are going to be the key growth drivers of the organised retail sector.

Initially, this was about Indian corporate houses rolling out malls and supermarkets, but with Wal-Mart coming into the Indian market, the era of the superstore is dawning. Unlike the kirana stores that served us for decades, this new breed of retail chains is heavily dependent on IT.

Wal-Mart, the world’s largest retailer, and Bharti Enterprises have signed a Memorandum of Understanding (MoU) to explore business opportunities in the Indian retail industry. This joint venture will mark the entry of Wal-Mart into the Indian retailing industry.

The biggest competitor for Bharti-Wal-Mart is likely to be Reliance Retail, the retail wing of Reliance, which had planned to establish 10,000 stores by 2010. It had already opened 11 pilot stores under the “Reliance Fresh” format in Hyderabad.

All these trends and developments present a great business opportunity for software and hardware vendors from across the globe. Indian solution providers are targeting this segment have reason to rejoice. For while organised retail occupies a miniscule two to three percent of the overall Indian retailing industry, that is poised to change.

In spite of the prospects being good things aren’t quite as rosy when it comes to awareness of IT systems. In most cases, organised retailers in India have installed solutions that help them automate transactional systems.

With the retail sector in India undergoing a transformation due to the entry of large corporate houses, IT managers and CIOs are now looking forward to know how IT can help them achieve the business goals of their organisations.

Standards-based architecture and software support all kinds of mission-critical IT applications for enabling greater efficiency, significant cost savings, and new business value. The critical activities that can be handled by IT are finance and accounting, business intelligence, vendor development and management, supply chain management, merchandising and inventory management, facilities management, stores management, customer relationship management, branding, marketing, sales promotion and HR.

Like any other vertical, retail also stands to benefit from elaborate IT set-ups. However, this is subject to the scale and size of the organisation, as well as an objective assessment of its requirements. Key common challenges that can be tackled through IT implementations include accurate merchandising, improved planning, increasing profitability, enhancing customer experience, strengthening store operations, improved workforce management, and improving the supply chain. This is in fact one of the key imperatives facing retailers in India, to have a robust and scalable supply chain that will facilitate rapid growth.

Since a basic objective is to make data available to users and customers, proper IT implementation and superior IT infrastructure ensure that in spite of getting minimal details, the retailer captures the right information, which flows to everyone from the back office staff to the head office managers. The entire information flow must be seamless. A retail business works on a network environment because the stores connect to one another as well as to supplier sites. This is because in the retail business quick response is the key to success. Proper IT implementation also ensures that investment in retail reduces substantially.

This article was first seen on: http://www.networkmagazineindia.com/200703/coverstory01.shtml

Dark days for mobile grey market

The organised mobile retail sector is fast clamping down the grey market for mobile handsets. According to Indian Cellular Association (ICA), the share of the grey mobile handset market came down from 60% in 2006 to just 10% in 2007.

“The share of the grey market has come down considerably due to various factors, the most important being the reduction in duties. Many enforcement measures have been taken over the years to check the mobile handset grey market,” said ICA national president Pankaj Mahindroo.

The import duty on mobile phones has been reduced from about 16% to around 4%. Industry participants also believe that the shift from grey market to the legal market is by and large on the account of growing number of mobile retail stores.

“The mobile stores provide accessibility to the consumers. Our mobile stores are at all the visible locations, so consumers can walk in anywhere and get the best deals possible,” said Subhiksha marketing vice-president Mohit Khattar.

Industry analysts say that a huge grey market exists because of the differential of around 10% to 25% between legal and grey handset prices.

With growing competition in the organised mobile retail market, players are offering products at lower prices. This, in turn, helps counter the grey market and bolsters footfalls in these stores.

“Consumers can buy high-end, genuine branded handsets with guarantee of replacement or repair through the mobile retail stores. Trust is the predominant factor that consumers are turning towards the branded retail stores,” said HotSpot CEO Sanjeev Mahajan.

Consumers are opting for accessibility and do not mind paying extra for it. The grey markets operate from a few areas in a city. On the other hand, mobile stores are more easily accessible as they are located in all prominent markets.

The growing brand consciousness among the people, analysts say is also propelling the consumers to approach branded mobile retail stores. Mobile phone retail chains like Mobile Store, Mobi Retail, RPG Cellucom, currently account for just 7% of the overall mobile handset market, which has a market share of Rs 15,000 crore.

“Currently, the impact of mobile retail stores on the grey market is minimal. However, considering the rapid growth rate of organised mobile retail, its contribution is set to increase in the next 3-4 years,” said retail consultancy Technopak Advisors chairman Arvind Singhal.

Though the grey market in mobile phones has reduced, a large (75%) grey market still exists in mobile phone accessories such as batteries and chargers, which are often available at one-tenth the price of company branded accessories. Last year, the mobile phone makers asked finance ministry to reduce 34% duty on imported accessories, but nothing concrete has happened as yet.

Motorola sues ex-mobile exec over Apple iPhone job

Financially ailing Motorola has slapped Michael Fenger, a former executive of mobile phones, with a lawsuit for allegedly violating a non-compete pact and landing in a position to reveal trade secrets at Apple, a company that has taken Motorola's crown with the second-generation iPhone.

The lawsuit alleges that Fenger -- who is now Apple's VP of global iPhone sales -- received "millions of dollars in cash, restricted stock units, and stock options" in return for inking an agreement not to work for a competitor for two years after leaving Motorola.

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Fenger took the job at Apple on March 31 of this year, less than a month after leaving his position at Motorola, where he was senior VP of mobile devices for Europe, the Middle East and Africa (EMEA), according to Motorola's complaint.

Filed in Illinois on Thursday, the suit doesn't claim that Fenger stole any documents, but it does purport that Fenger "cannot perform his duties for Apple without inevitably disclosing Motorola's trade secrets."

Motorola's phone sales have taken a nosedive over the past two years due to its ongoing failure to produce a successful follow-on to the Razr.

After the ousting of Ed Zander as CEO last year and the subsequent departure of Padmasree Warrior, who moved on to Cisco, many other staff departures followed in a massive restructuring fueled by the desire of majority shareholder Carl Icahn to spin off Motorola's mobile phones as a separate division. Now that Icahn is also snapping up Yahoo stock, the activist shareholder is becoming an increasingly influential figure at yahoo. too.

Motorola's Brain Drain have included the resignations in March of Stu Reed, who had briefly headed up Motorola's Mobile Devices Unit, and Kenneth Keller, who'd been in charge of Motorola's marketing.

Motorola's lawsuit also charges that Fenger helped to lure two other Motorola employees to Apple. Motorola is asking the court to stop Fenger from working for Apple for two years and to prohibit him from soliciting or hiring Motorola employees, or disclosing confidential information about Motorola.

Meanwhile, this week, Rita Lane, former chief of Motorola's supply chain division, also reportedly joined Apple.

The suit against Fenger isn't the first action Motorola has taken against an ex-employee. In another legal case, Motorola sued Rob Garriques, another former head of its mobile unit, who is now at Dell. Motorola has also prevailed in enforcing a non-complete agreement signed by its former COO, Mike Zafirovski, who left the struggling Motorola to become Nortel Networks' CEO.

MTN debacle may upset RComm’s GSM plans

Anil Ambani-led Reliance Communications Ltd’s (RComm) failure to seal a merger deal with South African giant MTN could hamper its ambitious pan-India GSM rollout plans.

An alliance with MTN would have helped RComm build a vast GSM network, given the South African firm’s GSM operations across 21 countries. It would also have emboldened the company to negotiate from a stronger position with vendors because of its operational scale.

Telecom analysts feel the MTN fiasco, on issues related to right of first refusal (RoFR) with Reliance Industries Ltd (RIL), would severely inhibit any future M&A deal of the company.

RComm, the country’s second largest mobile operator, provides CDMA-based mobile services pan-India, while its GSM footprint is minimal with presence across eight category C circles. However, last year, under the dual technology policy, the government cleared its GSM plans and allocated it start-up 4.4 Mhz GSM spectrum in the remaining 14 circles.

The company plans to begin GSM services by the end of the fiscal, and according to some reports, is planning to build a capacity of 80-100 million lines.

A deal with MTN would have catapulted RComm ahead of Bharti Airtel Ltd, the country’s largest service provider, which currently has a subscriber base of over 69 million with a market share of 32.71%. It would also have created the world’s seventh largest telecom entity.

In the GSM space, where RComm’s wholly-owned subsidiary Reliance Telecom is present, it has up to eight million subscribers with a 3.63% marketshare, according to the latest figures from the Cellular Operators Association of India. RComm has 42 million subscribers in the CDMA segment, going by the latest figures of the Association of Unified Service Providers of India.

According to analysts, it is clear that RComm would have to venture in the GSM domain on its own as there’s hardly any scope for an acquisition in the domestic market. The process of consolidation is more or less complete in the domestic market with BK Modi-led Spice Communications being recently acquired by AV Birla Group’s Idea Cellular Ltd for over Rs 2,700 crore. Though there are new licencees available for deals, acquiring them does not make sense as they have neither a subscriber base nor networks.

Meet tomorrow's mobile phones

The cookie-cutter approach to designing mobile phones could disappear in the next few years as designers get more daring and more personal.

"All phones today do the basics well," says Shiv Bakhshi, an analyst at research firm IDC. "But that won't be enough in the future."

We asked a dozen designers and industry leaders to predict how mobile phones will change and to guess when the technology behind the new concepts will be available.

Here are some concept phones, which, like concept cars, are meant to demonstrate new ideas, not serve as prototypes of actual soon-to-be-released devices.

Noika Corp's Morph is made of flexible materials that mimic the suppleness of spider's silk. It is designed to, well, morph between what looks like a traditional mobile phone and a bracelet. "Using nanotechnology, the phone can change its personality to become whatever is most suitable for the task at hand," says Tapani Ryhanen, head of strategic research at the Nokia Research Center in Ruoholahti, Finland.

The phone's electronics are expected to be so small that they'll be invisible to the naked eye. This will let designers make the phone transparent, Ryhanen says.

The Morph could also help you live more healthfully, says Nokia. An array of microscopic sensors could measure environmental hazards, such as carbon dioxide levels, or sense a diabetic's blood-sugar balance.

• Technology timeline: Seven to 15 years

Created by Massimo Marrazzo of Turin, Italy-based design firm Biodomotica, the Handphone has a microphone shaped like a ring that slips on the end of your pinky. The speaker is on another ring that slips on your thumb, and a circular phone controller and radio sit on the back of your hand, held on by elastic string.

Anyone who has ever motioned toward his mouth and ear with outstretched pinky and thumb to imitate making a call will know how to use Handphone. "The gesture is natural for people," says Marrazzo.

By definition, Handphone is not hands-free, but dialing, picking up and hanging up can be done with voice-activated controls.

• Technology timeline: Available now

The P-Per is a thin device that looks like two iPhones glued together. "It has a [touch] screen on each of its two sides," says Karole Ye of independent design firm Chocolate Agency, in Shenzhen, China. "Mobile phone and messaging are on one, and a camera on the other."

• Technology timeline: Three or four years

Istanbul, Turkey-based designer Emir Rifat Isik's Packet phone is a foldable device that's about a centimeter thick and just 5 centimeters (about 2 inches) square when it's folded up.

"The idea was to put all the possible functions in the smallest area and make them easy to use," says Isik.

If you fold open the top and bottom squares, the Packet looks like a traditional flip phone with a speaker and screen at the top, a microphone at the bottom and a dial pad in the middle.

If you want to type an e-mail or surf the Web, you fold open the two sides to create a cross-shaped smart phone. There's a split keyboard at the sides, a pointer at the center and a screen at the top. "All interaction will be by touching the screens," says Isik.

• Technology timeline: A couple of years

James Scott, a researcher at Microsoft Research Cambridge in England, is developing a phone with force sensors embedded at corners so that hand actions like stretching, squeezing and bending can be used as commands. For instance, you could turn the phone on and off by squeezing or pulling it, or advance a Web page by twisting the device

Gee Pee handsets are here

BHUBANESWAR, July 20: Gee Pee Infotech private limited, the Kolkata-based telecom conglomerate launched its exclusive range of GSM mobile phones ‘Gee Pee, Always with you’ in the state here yesterday. The mobile phone brand had earlier been launched in West Bengal, Jharkhand and north-east India in its first phase of expansion.
The immediate target sales for Orissa after launch will be 5000 pieces per month, while after three months the target will be 25,000 pieces per month, Gee Pee sources said.
“Due to immense response and queries we received nationally after the test-launch of the mobile brand in West Bengal, we were forced to launch it nationally before our scheduled time frame”, said Mr Bijay Agarwal, managing director, Gee Pee Infotech Pvt Ltd. Among others state culture, energy and IT minister Mr Surjya Narayan Patro and textile & handlooms, fisheries & Animal resource development minister Mr Golak Bihari Naik were present at the launch ceremony.
"The mobile phones, ranged between Rs 1200 and Rs 6000, come in eight attractive yet affordable colour models," Mr Agarwal informed. The unique features of the mobile phone, as claimed by the MD are, dual sim-cards in single phone, business double cards in single phone, display FM with antenna without headphone, high colour resolution, super long standby batteries, MP3/MP4, phone without battery, low end basic phones, touch screen and all other regular features.

Videocon likely to buy Motorola' handset biz

Diversified business group Videocon today said its talks to buy out the mobile handset business of US-based Motorola are at 'initial' stages.

"The talks with Motorola are at very initial stage," group CMD Venugopal Dhoot said at an Assocham seminar here, while declined to give a deadline for the deal.

With Motorola planning to separate its mobile business from other operations, consumer electronics major Videocon had said that it had bid to acquire Motorola's mobile handset business.

According to analysts, Motorola's handset business is worth about $3.8 billion and its handsets account for 15 per cent market share globally.

Videocon is in the race for Motorola's handsets as the company feels the company will have synergy with its upcoming telecom services operations with such a business under its fold.

The company has got licences for 22 circles and will be launching the services in the circles soon, through its subsidiary Datacom.

Videocon recently said it would start rolling out telecom network from mid-August and is eyeing to garner about 10 per cent market share in the Indian telecom market in five years.

Videocon, which has got licence for pan-India operations, has got spectrum in three circles and is awaiting for the rest.

The company is also ambitious about 3G services. "With our technical tie-up with various companies it would be very easy for us to roll out 3G also as soon as the government announces," he added.

Sangeeta Mobile retail chain - An introduction

Sangeetha one of the top few chains of mobile phone showrooms in India...sangeetha always offered innovative and customer friendly schemes. It was the first to introduce, interest free installment deals, insurance on handsets like long free service installment deals, and many more for the customer’s real benefit.
This "throng” and popularity have remained at the same pinnacle from the days of Gramophone in 1974,When sangeetha commenced operations, till Today’s age of cell phones.

Why should they patronize sangeetha?
Because……….

• It is one of the top few chains of Mobile Phone showrooms in India even when big players with deep pockets have entered the race.
• Sangeetha always offered innovative and customer friendly schemes. It was the first to introduce, interest-free installment deals, insurance on handsets life long free service and many more for the consumer’s real benefit.
• Sangeetha has a tie-up with Tanishq.
• Sangeetha has a ti-up with 70mm online DVD rental company.
• Sangeetha has won the national award for the best interiors in the Telecom retail category.
• At different periods sangeetha offers its customers fantastic schemes like return air tickets, 5-star hotel stay etc.

This has happened with the utmost trust and faith of legion of Sangeetha’s patrons increased from the Gramophone days. Trust that Sangeetha would be in the fore front whenever any new and interesting market development happens.

L . Subhash Chandra
CEO` Sangeetha Mobiles

Subhash Chandra serves as CEO of Sangeetha Mobiles. He is an innovator, leader and visionary who believes in leading from the front. He has been an inspiration to all the employees in his organization and an excellent role model to the people in the mobile industry. Born on 21st Jan 1966, he graduated from National College in flying colors. At the young age of 16, he started his career as a sales person in sangeetha mobiles. His hard work, dedication and creativity have made him the head of one of the top chains of mobile phone showrooms in India.

Sangeetha always offered innovative and customer friendly schemes. It was the first to introduce interest free installment scheme. One of the largest Mobile retail outlets chain in India, with more than 40 showrooms, is safe in the hands of the experienced leader, Subhash Chandra. The credit and responsibility of leading this successful organization rests on his broad shoulders.

Consumer satisfaction has always been his priority. Little wonder, that an organization which had the turnover of 1 crore in 1981 is expecting a turnover of 200 crores this year.

His dynamism, efforts and leadership qualities are exemplary.

A pioneer, a Leader and a legend, that’s Subhash Chandra

Mobile retail chain launched in Bangalore

Mobile NXT, India’s first retail chain specialising in mobile products and services will be launched in Gurgaon within a week.

The concept stores will offer a complete range of handsets from top five brands, 100 accessories, after sales services, value added services, data transfer facilities and an exchange programme. They will also have kiosks from which music, ringtones and wallpapers can be downloaded, he said.

Romy Juneja, Founder and COO, MobileNXT, says the Bangalore headquartered company is being backed by a consortium of investors with $5 million investment.

According to founder and CEO Vijay Menon, the chain store model in telecom business is proven globally.

• In the first year, 31 stores will be opened, followed by 97 in the second and 170 in the third year.
• A Rs 380 crore turnover is our business plan for the third year.
• Primary focus will be on Tier-II and Tier-III cities.

I think the company has identified a definite business opportunity as the Indian mobile user is indeed underserved as far as the after sales service is concerned. The average lifetime of a mobile is 18-24 months and if the chain manages to keep the customer happy, he will continue to give business by way of service fees, accessory sales and handset upgrades. Mobile content and other VAS offer the upside to such businesses. The key to success in any service business is customer service and responsiveness to his needs.

It also remains to be seen if the strategy and execution succeed in making it a viable business and how do they address the following issues.

• Capital expenditure required for setting up a nationwide retail chain
• Choice of retail route - in Malls, Superstores or Shopping area
• Thinning of margins on hardware
• Cost of human-support and service

Indiantelevision.com's interview with Essar Telecom Retail CEO Rajiv Agarwal

The mobile retailing space is hotting up in India. Essar Telecom Retail, an Essar group company has entered mobile retailing in India with the launch of its "The MobileStore" outlets across the country. The basic aim is to be a complete telecom solutions provider.

It has tied up with global media firm Virgin to provide the backend solutions like customer care. This marks Virgin's entry into India's burgeoning mobile sector. Virgin founder Richard Branson believes that this is an opportunity for the two parties to fundamentally change the face of mobile retailing in India.

Indiantelevision.com caught up with Essar Telecom Retail CEO Rajiv Agarwal for a quick chat on the plans.

Excerpts:


Could you give me an overview of Essar's mobile retailing initiative?
This is a chain of retail stores that will serve as one stop shop for the needs of the mobile consumer. We are looking to fill a void that is present in the retail market. Today we have international players on the operators side, on the manufacturers side. But on the retail side we do not have an organised player. The customer is the most important element as all these people are working for him/her.

As the number of mobile subscribers, users becomes more and more the market is becoming more complicated, which has created a void. Our aim is to come up with total telecom solutions for the customer.

What are the different products and services being offered?
One can buy cell phones, get repair services, do bill collection. We also have value added services like ringtones. We have media services like games, DTH connections, ipods, cameras. All are fast moving.

What is the synergy that the group has in setting up telecom retail?
Essar has decided to be in retailing in all their core businesses. We have been in telecom over the last 12 years. Our aim is to get closer to the customer. We have knowledge and awareness about telecom.

As per research, what does the mobile user expect from a mobile retail chain and how is Essar going about fulfilling his/her needs?
The mobile customer is looking for a range of products that he can touch and feel. He/she wants a store that is next to his house. He wants value for money, after sales service.

Why did you decide against going the franchise route for your stores?
There would have been the risk of our brand value being diluted. Also you have to manage many entrepreneurs if you walk down that road. This is a business where you cannot allow your service proposition to get diluted.

The franchise route would have meant that there would have been no difference between us and any other mobile store.

'We have media services like games, DTH connections, ipods, cameras. All are fast moving'


Given that Indians are an extremely price sensitive won't it be difficult for mobile retail to make a margin and have sustained revenue?
That is the case for any product. We have developed our business model keeping this in mind.

What is the investment being made and how many stores are being set up?
In the next three years we are setting up 2,500 stores at an investment of Rs 1,250 crores (Rs 12.5 billion) across 600 cities.

Over 70 stores have already been launched in places like Mumbai, Delhi, Kolkata, Hyderabad. In the next six to eight weeks we will have opened up another 100 stores. In the next six months we would be operating 700 stores.

The stores are in three formats - large (1,000-1,500 sq ft), medium (800-1,000 sq ft) and compact (200-500 sq ft). The ratio being identified is 20:60:20 across large, medium and compact stores respectively.

We are looking at a breakeven of three years for the business. The stores will cost between Rs 500,000 - Rs 5 million each to set up.

What are the factors looked at to select each location?
You look at places where customer footfalls are high. This could be in a mall or on a busy street. We will have the shop in shop concept to a certain extent going forward. Around 15-20 per cent of the stores will be in Metros.

In terms of revenue how much comes in from where and who are the companies you have tie-ups with?
Handsets contribute to 75 per cent of our revenues. We have tie-ups with all the major manufacturers like Nokia, Motorola, Sony. Mobile repairs are our core area. We have trained people in our stores who can look after the problem. We have straight tie-ups with the manufacturers and operators.

We have a tie-up with Mauj Telecom for mobile games. For DTH there is Tata Sky, Dish TV. There are also opportunities for in-store advertising and merchandising.

Could you talk about the back end solutions that have been put in place?
We have a tie-up with Virgin. They bring retail knowledge in terms of softer skills in terms of customer relationship management. The deal is for brand licensing, technical and consultancy services.
Virgin will provide their expertise in the areas of branding, marketing, customer care, store operations and staff training.

We chose Virgin as that brand stands for good quality, brilliant customer service, innovation, fun and good value.

Finally what marketing activities are being done to create awareness?
We are airing ads during the broadcast of the cricket World Cup. A large portion of mobile users will be watching the event. We will also be doing a lot of print and outdoor activities.

This Article was first seen on: http://us.indiantelevision.com/interviews/y2k7/executive/Rajiv_Agarwal.php

Chinese hi-tech handsets for Rs 2000!

Nearly six months after the Chinese government de-licensed its mobile handset industry, the Indian markets are being flooded with unbranded Chinese phones.

And this time, these are not entry-level phones but mid-level, feature-rich products at aggressive prices between Rs 2,000 and Rs 5,000. Most of these, branded mobile manufacturers said, would cost consumers at least three to five times more if they came from them.

Mobile manufacturers through the Indian Cellular Association (ICA) estimate that 600,000 to 800,000 Chinese unbranded phones are making their way to India every month, accounting for 8 to 10 per cent of GSM-technology mobile phones sold in the country.

According to research firm IDC, China shipped 85 million GSM handsets in the last fiscal. And it says China's percentage share is likely to go up since these phones offer swanky features ranging from 3 megapixel camera, terrestrial TV, music and MP3 players.

Also leading branded mobile stores have started stocking such phones and are even offering warranties. For instance, Spice Group-owned mobile retail chain HotSpot imports Chinese mobile phones and provides its own warranty and back-end service support for the handset.

"Demand for feature-heavy phones is increasing by the day, and Chinese phones are extremely high-end ones in the price range of Rs 2,000 to Rs 6,000," said Sanjeev Mahajan, CEO, HotSpot, adding, "The margins for such products are also more lucrative for us. On a Chinese phone we can earn margins up to 15 per cent; on branded phones we earn merely 5 to 6 per cent."

But branded mobile manufacturers are stumped with the growing numbers. The issue of anti-dumping duty has been discussed with the government but rejected because most of the leading branded manufacturers too make and import phones from China.

"This is an open and competitive industry and these products come through an open channel. The entry of Chinese products follows a fair amount of competition for all players," said Sunil Dutt, country head for Samsung's mobile business in India.

There are others who are concerned. "It will be a compromise on the part of the consumer in terms of quality and value for money," said Lloyd Mathias, marketing director, Motorola, highlighting the need for stricter norms for quality control.

Article courtesy: http://www.rediff.com/money/2008/jul/19mobile.htm

New comp? Hit a mobile store!

The next time you walk into your trendy branded mobile retail store you might come out buying an MP3 player, a Sony Play Station or even a laptop rather than a mobile phone.

Saddled with very low margins which are making the business not viable in many cases, mobile branded retail stores are now increasingly turning their focus on their non-mobile handset business.

Organised retail, which started off with a market share of less than 1 per cent two years ago, has now grown in stature with the big boys entering the fray, and currently has a 15 per cent share. Companies such as Spice's Hot Spot, RPG group's RPG Cellucom, Essar's Mobile Store, Subhiksha and Kishore Biyani's ConvergeM (which has three mobile branded stores) have all entered the business hoping to make big bucks.

And their share of the total business is expected to increase to 40 per cent in another two to three years. The retail market for mobile phones — handset, accessories and airtime — is valued over Rs 70,000 crore and growing at the rate of 15-20 per cent.

That is the good news. The bad news is that sales margins of mobile phones are being squeezed due to cut-throat competition from the mobile players who are playing the pricing game in order to gain market share.

Worse, prices of phones are being reduced continuously, adversely impacting margins of the retailers. And new players especially telcos such as Reliance Communications are also planning to get into the business by leveraging their large retail reach through the Reliance Web World.

"Turning to other products that can be used on the move, including MP3 players, cameras and mobile accessories, is a natural evolution that's taking place in this market" said Sanjeev Mahajan, CEO, Hotspot (mobile retail arm of Spice Group).

He points out that while the profit margins in the mobile handset business is 3 -4 per cent, profit margins in mobile accessories are almost 40 per cent and in other music and gaming products, it is 15 -20 per cent. So it makes sense to stack other related products too.

The company has already shown a tangible shift in this direction. Last year, the company earned 95 per cent of its revenue from the mobile hand set business, which declined to 85 per cent this year and is expected to go down to 60 per cent in the next few years.

Similarly, RPG Cellucom, a part of the RPG group, is aiming at balancing its mobile hand set business with its non-mobile business that includes laptops, mobile accessories and music devices.

"We get 75 per cent from our mobile business, 15 per cent from our laptop business and rest from other products. Our focus is on establishing ourselves as mobile service providers which includes other products other than mobile handsets," says Biswajit Pandey, head, marketing, RPG Cellucom.

This article was first seen on: http://www.business-standard.com/common/news_article.php?leftnm=10&bKeyFlag=BO&autono=328550

Hot Spot appoints OMS as media agency

OMS (Optimum Media Solutions), the specialist media independent division of Mudra Group, has been appointed the media agency for telecom retailing chain – Hot Spot. The scope of work includes media planning, buying and implementation and the size of the account is estimated to be about Rs 18 crores.

Sanjeev Mahajan, CEO, Hot Spot, said, "Hot Spot retail currently has approx 300 stores across the country which we intend to take up to 1500 stores by year-end. Given our aggressive expansion and growth plans, we felt the need to partner with an agency which shared our passion and brought value to the table when it came to innovative thinking and a strategic direction."

Sanjeev Mahajan adds, "The Indian consumer needs a better shopping experience in mobile retailing. A mobile phone is something that everybody wants to own today, and while working on this concept, we want the customers to have a wide range of choices before him through our retail stores. We are targeting specific communities as we want to be in every major town and every major market, the idea is to give the consumer a shopping experience in his own area."

Bipin Narang, Vice-president, Marketing, Hot Spot, said, "The marketing plans right now are largely focused on the expansion plans. The consumer today will not walk a long distance to buy the airtime solutions or a handset. The idea behind the expansion is to open a store near the consumer, while offering not just the mobile handset, but all kinds of accessories, including data cards, Bluetooth accessories, airtime solutions and products connected with the mobility arena like MP3, X-Boxes, laptops or anything that enhances the mobility of the person."

Chandradeep Mitra, President, OMS, said "It feels wonderful when clients see media agencies as partners, rather than vendors. Hot Spot has aggressive expansion plans and it will be our endeavor to derive maximum bang for the buck in reaching audiences in newer markets."

Added Niti Kumar, Business director and Head of Delhi branch, "Mass media will play a critical role in Hot Spot's marketing plans, and we're currently in the process of devising unique solutions to tap the diverse markets that the brand is entering."

Sanjeev Mahajan, CEO Hotspot on mobile retailing

It's not difficult to see what's keeping Sanjeev Mahajan, CEO, Hotspot, the mobile retail chain of Spice Corp, on his toes. In the face of stiff competition from rival retail chain brands -- Mobile Store, Subhiksha Mobile and M Bazar, to name a few -- in the telecom products segment, he's turning aggressive to secure a leadership position for Hotspot.

So the over two-year-old chain is targeting 1,000 mobile phone and accessories' outlets under the Hotspot brand name by the end of the year. "We are opening an outlet a day and we already have 325 Hotspots in important cities," says Mahajan.

Interestingly, though, Mahajan is not the only one thinking big. Subhiksha Trading Services' Managing Director R Subramanian also intends to double his Subhiksha Mobile stores � both in the standalone format and the shop-in-shops -- from the current 740 outlets.

"In the last one year, Subhiksha Mobile has grown much larger than the others (read rivals) not only in terms of the number of stores but also in terms of volumes as well, to become the largest telecom products retailer," claims Subramanian.

Clearly, the mobile handset market is buzzing with new branded retail chains such as Reliance and Aditya Birla Group entering the fray and the existing chains expanding their foorprint.

Take Pantaloon Retail's JV with Axiom of Dubai, for instance. The company is re-branding its standalone retail chain Mport to Axiom stores, which is among the largest telecom products chain in West Asia.

The mass market products will continue to be sold under M Bazar, its shop-in-shops at the Big Bazar outlets, while the lifestyle products will find their way into Axiom. By the end of the year, M Bazar will grow from 100 to 428 outlets, while the company will open 35 Axiom stores by then.

The lure of the telecom products market is easy to explain. India's cell phone market adds eight million subscribers every month. The replacement market is close to 55 per cent already (in Delhi, the figure is 60 per cent). A BCG research says that by 2010, India's replacement market will be 70 per cent.

Put together, the size of the handsets market is about Rs 70,000 crore (Rs 700 billion) a year. Commenting on why Pantaloon entered telecom retail, its spokesperson says: "It is a bulk volume business. The margins are made on total volumes sold."

Needless to say, the opportunity is enormous. The industry has been dominated by the unorganised players -- nearly 500,000 mom and pop stores sell phones, recharge cards and accessories.

What's the USP of the branded chains that are rolling out nationally, compared to the neighbourhood shopkeeper stocking mobiles?

"Their inventory is limited while we will stock phones priced between Rs 1,000 and Rs 50, 000," points out Mahajan of Hotspot. Besides, the branded chains promise high-quality service as they enter full-scale servicing tie-ups with different phone brands.

Hotspot hopes to beat competition by offering hi-end cameras, iPods and laptops at its 450 sq feet to 600 sq feet showrooms. This is in addition to mobile phones, memory cards, pouches and other accessories that it already stocks.

On the cards are other VAS (value-added service) products. While music videos were introduced two months ago, a full-length feature film on a chip will be the next big thing at Hotspot. "You could watch this film on your mobile screen. And the USP is that we are offering legal content," says Mahajan.

Subhiksha, meanwhile, is offering "only the lowest and best value on all handsets" at its stores. Subramanian says that the share of sale of VAS products and personal electronics in its portfolio is low "but over the next three to six months we hope to make significant progress in this direction".

Will the mom and pop stores selling phones shut shop as branded chains grow? "No. Have the 'kirana' shops closed down because of branded food chains?" asks the Pantaloon executive. "Besides many of them will become franchisee of the bigger brands," adds Mahajan.

Organised retail, which started off with a market share of less than 1 per cent two years ago, now enjoys 15 per cent share. This will swell to 40 per cent in another two to three years. Of course, once FDI in retail is cleared by the government, Sanjeev Mahajan's job could only get tougher with expert international retailers such as Crazy Jones and Eurosat setting their foot in India.