Smartphone Analysis
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The document provides an overview and analysis of the smartphone market in India. Some key points: - Smartphone shipments in India are expected to rise from 27.8 million in 2012 to 155.6 million in 2017, making India the third largest smartphone market. - Major drivers of growth include decreasing mobile prices, increasing consumer incomes, and expanding mobile internet access. Challenges include low rural penetration and security/privacy concerns. - Android dominates the Indian market with over 75% share, followed by Blackberry, Symbian, iOS, and Windows. Large screens, dual SIMs, and multi-core processors are emerging trends. - Samsung leads the Indian market, followed by Micromax,
Smartphone Analysis
- 1. Smart Phones (Handset) Market in India Mona Swarnakar Date: 28/05/2013
- 2. Table of Content 1. Executive Summary 2. Introduction 3. Global Smartphone Market 4. Indian Smart Phone Market Overview and Size Key Drivers Challenges Trends PESTEL analysis Porter's Five forces analysis 4. Competition Analysis Vendor segmentation and analysis of vendors Top 4 vendors in India Samsung Micromax Sony Nokia 5. Bibliography
- 3. Executive summary • Market Smartphone shipments in India are expected to rise to 155.6 million units in 2017 from 27.8 million in 2012. India expected to become the third largest smartphone market by 2017 Samsung is the leading smartphone manufacturer in India. • • Drivers Drivers & challenges Trends Major players • Continued decrease in mobile prices Increasing standard of living and buying behavior of consumers • • • • • Challenges • • Low penetration in rural area Security and privacy concerns Growing popularity of large display mobiles Trend of Android mobile phones Multicore processor High resolution touchscreen display
- 5. Global Smartphone Market • Global Smartphone: Vendors shipped 219.4 million units in Q4 2012, which represents 45.5 percent of all mobile phone shipments, the highest percentage ever • On an annual basis, 712.6 million smartphones were shipped globally in 2012, which was 44.1 percent more than the 2011 figure • Future Forecast: Globally, smartphone shipments are forecast to edge out feature phone shipments in 2013 for the first time, with vendors expected to ship 918.6 million smartphones in 2013 • China to remain the leading market: China will remain the world’s largest market for smartphones, specifically low-cost handsets using Google’s Android operating system and to a lesser degree on Apple’s iOS
- 6. Country level smartphone market share 60% 51% 50% 49% 40% 30% 21% 20% 21% 21% 18% 5% 10% 2% 3% 2% 2% India Brazil 5% 0% China USA 2011 • • • UK Others 2012 China is the leading country in terms of smartphone shipment in 2012, moving slightly ahead of the 2011 leader, the US The developing nations such as India and Brazil are far behind in the smart phone space and contributes only 3 percent and 2 percent respectively UK is among the leading countries in Europe with market share of 5 percent
- 7. The future of worldwide Smartphone Market China #1 China market share in smartphone market in: 2012: 20.7 % 2016: 20.2 % 2016 scenario ---------------------------• United State #2 US market share in smartphone market in: 2012: 20.6 % 2016: 15.3 % Brazil Brazil market share in smartphone market in: 2012: 2.3 % 2016: 4.7 % Smartphone Market • India India market share in smartphone market in: 2012: 2.9 % 2016: 9.3 % India and Brazil, are projected to enter the top 5 countries for smartphone shipments. The growth rate for India is expected to be significantly higher than most other countries
- 8. Global market - Vendors 2011 & 2012 Unit shipment Global Smartphone market share 16.0% 250 200 6.0% 40.0% 150 6.0% 100 50 6.4% 25.6% 0 Samsung Apple Nokia 2011 • • • 2012 HTV RIM Samsung Apple Nokia HTV RIM Others Samsung is the leading player in smartphone shipments in 2012. Samsung covers 40 percent market Apple follows Samsung with a market share of 25 percent, followed by Nokia at 6.4 percent, and HTC and Research in Motion (RIM/ BlackBerry) at 6 percent each Other players in the market are Sony, LG, and Motorola. Also the market has regional players such as Micromax, Karbonn, etc.
- 9. Global Market – smartphone penetration Top 10 countries with smartphones penetration Singapore 92% • Sweden 86% Australia 79% US 78% S. Korea 76% • Hong Kong 87% Switzerland 76% Denmark 75% UK 74% Norway 74% The above representation shows that Singapore, Hong Kong and Sweden are the top three countries in terms of smart phone penetration, indicating their strong consumer technology economies. Each of these countries have a relatively small total population, ranging between 5 to 10 million The US is the fifth most penetrated country with 78 percent of its adult population using smartphones. South Korea and the UK have the 2nd and 3rd largest populations among the top 10 penetrated markets, with roughly 50 million and 60 million respectively
- 10. Global Market – operating systems Top smartphone operating system Others 4% Linux 2% Windows Phone 3% Blackberry OS iOS Anroid • • • • 5% 19% 68% The above graph represents that Android is the preferred platform among smartphone users, with 68 percent of market share BlackBerry devices were being used by just 5 percent of all respondents, when it's believed to be one of the most popular business smartphone in the world iOS has 19 percent market share globally and after that Windows and Linux are next most common operating systems in the global market Windows OS is introduced in the market with Nokia Lumia and it will take time to acquire more market share globally
- 12. Smartphone shipments to India are forecast to rise to 155.6 million units in 2017 from 27.8 million in 2012 Market overview (snapshot): India • • • • • • In India, smartphones sales more than doubled in 2012 to reach 27.8 million units India to become third largest smartphone market by 2017 India’s smartphone market is expected to grow sharply because of a variety of factors, including greater availability of low-cost devices and emphasis on less populous regions. In addition, expansion of 3G network coverage and the rollout of 4G networks is expected to boost smartphone sales in the country India’s year-on-year smartphone shipment growth is expected to be the highest among the top countries – China, US, UK, Japan and Brazil Currently only 10 percent of the mobile consumers in India use smartphones, but that is expected to change in the next few years India will become the third largest smartphone market by 2017 after China and the US
- 13. Top 5 Mobile Operating Systems in India: 2012 • 4% 2% 2% 2% • 15% • 75% Anroid • Blackberry OS Symbian OS • Apple iOS Windows Phone OS Linux Mobile OS The above chart shows that Android is the preferred platform among smartphone users, with 75 percent of market share The surprising bit was that BlackBerry devices were being used by just 4 percent of all respondents, when it's believed to be one of the most popular business smartphone in India • • • 66 percent Smartphone users in India are youth and young adults aged 16 – 34 years. Facebook updates, SMS and Email are the top three activities by Indian Smartphone users Number of Internet enabled Smartphones to reach 264 million by 2016 India is the third largest country in terms of Android App downloads. However, majority of the app market growth is still being driven by free apps In 2012, Smartphone market in India recorded commendable 87 percent growth In 2012, 221.6 million mobile handsets were shipped, out of which 206.4 million handsets were feature phones or smartphone feature phones. It projects a big opportunity for local and global Smartphone makers to tap the Indian market aggressively
- 14. Key Drivers • Increasing standard of living and buying power of consumers is leading to growing usage of smartphones. • Availability of low cost mobile phones is also leading to the growth of the market. The handset manufacturers are providing low cost smartphones to consumers – manufacturers such as Micromax, Karbonn, and Lava are providing feature packed low cost phones • Improving features is also driving the growth. The manufacturers are providing multiple and innovative features to attract customer such as large display, latest version of operating system, hi-end graphics, etc. • Increasing usage of mobile internet is also driving the growth
- 15. Challenges • Low penetration in outer and rural areas in India • Security and privacy concerns • The smartphone prices are higher as compare to other value phones, hence there are still many consumer using low priced mobiles • There are business phones such as blackberry that are still used by the corporates • The battery charge cycle of smartphones are less as compare to value phones • Tabs are introduced by the mobile phone manufactures, which can prove to be a challenge in the future
- 16. Trends Large display mobile phones Demand of touch screen large display mobiles has increased considerably over the years Android operating system has market share of more than 50 percent in India. More consumer are looking for Android mobile phones, which has better features Rise of the phablets Android-based mobile phones Phablet is a class of smartphones with screen sizes ranging between 5.0 and 6.9 inches, designed to combine the functionalities of a smartphone and tablet, and avoid the need to carry two devices
- 17. Trends Multi-SIM smartphones Another visible trend is the rise of dual-SIM phones. All the manufacturers are increasingly providing dual SIM phones at low rates Mobile manufacturer are providing multi core processor smartphones which provides advantages such as better speed and reliability Usage of Mobile Internet Multi-core Processor Another trend is usage of internet in smartphones. Checking emails, reading books, using networking sites such as Facebook, Twitter etc. are common now a days
- 18. PESTEL analysis smartphone market in India Political • • • The political situation of country more or less stable Import and export oriented economy. Internet regulations. Technical High growth technology country New discoveries of technologies Speed of technology transfee. Economical Social • Fastest growing economy in the world • Inflation rate is on higher side. Consumer purchasing power is increasing. Increasing need of communication. Environmental Legal
- 19. Porter’s Five Forces Model Analysis : Smartphone Market in India Threat of new entrants High • • • Bargaining power of suppliers High • • Presence of large number of handset manufacturers presents the suppliers with multiple opportunities New handset manufacturers are entering the market Smartphone market is a high growth market Growth opportunity in most of the markets/ regions are high Still enough space for introduction of low priced smart phones Rivalry among existing players High • • • There are many players in market Competition among the players is high Every year the mobile companies are coming up with new technologies with focus on all levels of consumers Threat of Substitute products Low • Although Tabs are introduced, they are not as mobile as smart phones Bargaining power of buyers High • • • Presence of large number of manufacturers with similar features Entrance of new companies Presence of local companies with low priced phones
- 21. Micromax India’s Vendor segmentation for 2012Q4 • • • • • • • Karboon Nokia Sony Samsung(40%) HTC Apple LG Blackberry Others Top 5 smartphone vendors: 1. 2. 3. 4. 5. Samsung Micromax Sony Nokia Karboon Samsung is the major vendor of smartphones in India and have more than 40 percent of market share In India Samsung has recently launched Samsung Galaxy S4, the world’s first quad core processor smartphone, inspiring both international and domestic vendors Micromax is 2nd largest smartphone vendor. It has recently launched Canvas HD with high definition screen Sony is in 3rd position and has launched new xperia in the market with new up gradation Nokia is in 4th position in smartphone market. Nokia has launched Nokia Lumia with windows 8 operating system Karboon has made it to the top 5 for the first time; launched new range of attractively priced smartphones that were launched in 2012 HTC, LG, BlackBerry, etc. are the other vendors who provides smartphone to the market. Local players in India's market are Lemon, Spice, Lava, etc.
- 22. Company Information: Products and services: • Samsung group is a South Korean multinational conglomerate company. It was founded in 1938. Samsung Electronics Co., Ltd. is the largest world’s technology company in terms of revenues. It is the largest mobile phone maker and television manufacturer and is the second largest semiconductor chip producer. Samsung has acquired more than 40 percent of market share in the smartphone space. • • Consumer Electronics (CE)/ Audio Visual (AV) Business Home Appliances (HA) Business Information Technology (IT) Business Office and center in India: Headquarter: Samsung Town, Seoul, South Korea. Office: Japan, India, Key People: Vice Chairman & CEO: Oh-Hyun Kwon President & CEO: B D Park Director: Gee-Sung Choi. Han-Joong Kim &Byeong-Gi Lee Founded : 1938 Revenue : US$ 247.5 billion (FY 2011) Website : http://www.samsung.com/ Samsung latest Smartphone: Samsung Galaxy S4 & S3 Samsung Galaxy Grand Duos. Samsung Galaxy S duos
- 23. Key ratios 2010 2011 2012 ROA 13.1% 9.5% 14.2% ROE 19.9% 14.4% 21.4% Debt/EBITDA 0.38 0.50 0.34 15 EBITDA/Interest Expenses 48 45 76 100 10 Net Margin (%) 10.4 8.3 11.9 50 5 Asset Turnover 1.25 1.14 1.19 0 0 Financial Leverage 1.52 1.52 1.51 Current ratio (%) 154% 161% 186% Liability/Equity (%) 50% 53% 49% Debt/Equity (%) 12% 14% 12% Net debt/Equity (%) - 13% - 12% - 19% PER (X) 8.95 11.88 9.88 PBR (X) 1.81 1.77 2.13 Price/Sales (X) 1.04 1.09 1.29 Financial snapshot 250 23.8 201.1 200 150 USD (Million) 154.6 165 16.1 13.8 2010 2011 Revenue 25 20 2012 Net Profit Financial key summary • • • Samsung smartphone sales has increased as compare to last years Samsung covered more than 40 percent market share in India Company revenue was USD 201.1 million and Net profit was USD 23.8 million in 2012 PE 9.74
- 24. STRENGHT SWOT Analysis • • • • Hardware integration with many open source OS and software Innovation and design Low production costs Largest share in mobile phones and first place in smartphones sales WEAKNESS • • • OPPORTUNITIES • • • • Growing smartphone market in India Growing mobile advertising industry Growing demand for quality application processors Obtaining patents through acquisitions Low profit margin Lack its own OS and software Too many products, hence may loose focus THREATS • • • • • Saturated smartphone markets in developed countries Rapid technological change Declining margins on hardware production Breached patents Price wars with other players
- 25. Company Information: Micromax, is the 12th largest handset manufacturer in the World. Micromax’s product portfolio embraces more than 60 models today, ranging from feature rich, dual-SIM phones to QWERTY, touchenabled smart-feature phones and 3G Android Smartphones. Globally, Micromax caters to a varied target audience having their focus majorly on the youth. Its overseas product portfolio is tailor-made to suit the needs and aspirations of the growing consumer base in the international markets. Founded : 1991 Revenue : US$ 368 million (2012) Website : Micromaxinfo.com Products and services: • • • • Phones Datacards Funbook Consumer Electronics Office and center in India: Head office: Gurgaon, Haryana, INDIA Offices: Bangladesh, USA, Nepal, Hong Kong, UAE, Brazil Key People: Rajesh Agarwal Sumeet Arora Rahul Sharma Vikas Jain Micromax latest Smartphone: Micromax A115 Canvas 3D Micromax A116 Canvas HD Micromax Canvas 2 A110
- 26. Financial snapshot Key ratios 2009 Revenue 3,000 3000 2,299 2500 1,978 2000 1,565 1500 1000 500 120 344 0 2008 2009 2010 2011 2012 2013 E Total Operating Income Growth in PAT (after Defer Tax) (%) ROCE(%) Long term debt equity ratio Current ratio Average Inventory (Days) 2010 2011 173.02 355.03 46.86 93.75 108.41 303.48 182.59 17.2 85.51 0.02 1.45 0.01 1.5 0 1.17 25 18 35 Financial key summary • • • • Local brands such as Micromax has also raised its share in the smartphone market in India Revenue of Micromax has increased in the last five years Revenue is expected to climb about 50 percent in 2012/13 after a 14 per cent fall the previous year Micromax profit also increased in 2011 to 146.59 crore from 110.35 crore in 2010
- 27. STRENGHT SWOT Analysis • • • • • Provide long list of functions at much lower costs, e.g.- touch screen, camera, wireless FM, ultra long lasting battery life Regional languages support, Indian calendars, Torch Most phones are dual SIM/Triple SIM phones Due to Java support a lot of basic applications can be run on these phones Using most demanded operating system for smartphones WEAKNESS • • • OPPORTUNITIES • • High growth in the developing regions Low price phones are in high demand, hence will present growth opportunity for Micromax Poor after sales support Build Quality is inferior, tacky looks, low resolution and small screens, higher radiation levels, complex User interface for not so tech-savvy consumers, unreliable THREATS • • • Threat from low priced well known brands Other lower end phone brands Low-end phones market has become very competitive
- 28. Company Information: Sony Mobile Communications AB (formerly known as Sony Ericsson Mobile Communications AB) is a multinational mobile phone manufacturing company and a wholly owned subsidiary of Sony Corporation. In 2001, as a joint venture between Sony and Ericsson a Swedish company, under the name of Sony Ericsson. In 2012 Sony has acquired Ericsson shares in the venture. Sony mobile is world’s 10th largest mobile manufacturing company in the world as on third quarter 2012. Founded : 2001 Revenue : EUR 5.212 billion (2011) Website : http://www.sonymobile.com Products and services: • • • • • Smartphones Mobile phones Mobile music devices Wireless systems Wireless voice devices Office and center in India: Head office: Tokyo, Japan Offices: Japan, India, Sweden, china, US Key People: Kunimasa Suzuki (President and CEO) Bob Ishida (EVP and Deputy CEO) Sony latest Smartphone: Sony Xperia™ L Sony Xperia™ ZR Sony Xperia™ SP
- 29. USD (Million) Financial snapshot 8,000.00 7,800.00 200 7,770.71 95.29 0 7,600.00 -200 7,400.00 -400 7,200.00 -600 7,000.00 6,811.52 -800 6,800.00 -1000 6,600.00 -1200 -1,474.44 6,400.00 6,200.00 -1400 -1600 2011 Revenue 2012 Profit Financial key summary • • • Sales for the year ended March 31, 2012 decreased 12.4 percent year on year The decline reflects certain component shortage from the great east earth quake, floods in Thailand and lower number of features phones shipped The net loss in year 2012 is because of decrease in units shipped and impact of intense price competition for smartphones and increase in restricting charges
- 30. STRENGHT SWOT Analysis • • • • • • • • • • • Diversity among products Research & Development done in vast number of Countries including Sweden, China, Japan, the US and the UK Creation and Innovation of Fantastic Products Most attractive & innovative Global Brand WEAKNESS • • • • • OPPORTUNITIES Mobile phones market in developing High % of young market Strong Customer demand for innovative product High Disposable income in emerging markets. Network capabilities and low tariff of service providers. Untapped Markets – such as Rural markets More Demand for luxury products from high end user Lack in understanding Customer Preferences Less technology advancement Lack of user centered designs Lack of Brand awareness globally Less importance given to Promotional activities THREATS • • • • • Landline penetration and introduction of Sky phones for rural areas. Intense competition. Bargaining power of consumers. Strong Competition from Samsung which has 48 percent share New competitors are entering in market
- 31. Company Information: Nokia Corporation is a Finnish multinational communication and information technology company. Nokia’s mission is connecting people through building great mobile products for billions of people in the world. Nokia was the world’s largest vendor of mobile phones from 1998 to 2012. However, over the last five years it has suffered declining market share as a result of innovation and some smart decisions from other smart phone manufacturers. The new Nokia smartphones are incorporating Microsoft's Windows operating system replacing the Symbian OS. Founded : 1865 Revenue : EUR 30.176 billion (2012) Website : http://www.nokia.com Products and services: • Mobile phones • • • Smartphones Mobile computers Networks Office and center in India: Head office: Espoo, Finland Offices: Key People: Fredrik Idestam (Founder) Leo Mechelin (Founder) Stephen Elop/ President& CEO Nokia latest Smartphone: Nokia Lumia 920/ 720/ 620 Nokia Asha 310
- 32. Financial snapshot EUR Millions EUR (Million) 45,000 40,984 42,446 40,000 2000 1,850.00 35,000 30176 891 30,000 3000 38659 0 25,000 20,000 -1,164.00 -1000 15,000 -2000 10,000 -3,106.00 5,000 -3000 0 -4000 2009 2010 Revenue 2011 2012 Net Income Financial key summary • • • • 2009 2010 2011 2012 Gross margin 32.4 30.2 29.3 27.8 Book value par share 5.11 4.15 2.85 2.66 Return on Assets 4.94 -3.09 -9.39 -7.91 Return on Equity 13.47 -8.87 -31.16 -26.29 Current Ratio 1.55 1.46 1.43 1.29 Quick Ratio 1.13 1.04 1.06 0.99 Financial Leverage 2.72 3.05 3.72 3.72 Debt/Equity 0.29 0.63 0.63 0.45 Inventory turnover 13.5 11.27 11.26 10.54 1000 Nokia’s revenue decreased in 2012 as compared to previous year’s due to increase in number of smart phones launched by competitors such as Samsung, Sony, Micromax etc. Net Loss in 2012 was -3106 million (EUR) ,where in 2011 net loss was -1164 million(EUR) Although Nokia is the largest phone manufacturer in world but the company is running into losses The company’s huge challenge is to hang onto the low end phone market while also converting many of its Symbian smartphone users onto Nokia-branded Windows Phone products in the future
- 33. STRENGHT SWOT Analysis • • • • Largest distributer of mobile phone in the world Highly qualified personnel User friendly with many accessories High re-sale value compared to other brand of mobile phones WEAKNESS • • • • OPPORTUNITIES • • To expand with a wide range of products, features and different price range to suit different people Adopting new OS like Windows to increase its market share in the smartphone market Poor after sales service Very few service centers High cost on R&D The companies high end product is weak as compare to other competitors THREATS • • • . Inexpensive phones, advanced features and good after sales services from other competitors High and increasing popularity of Androidbased smartphones Availability of inexpensive Android phones
- 34. Smart phone price and specification - Comparison Micromax Sony Price (INR) Operating system Samsung Galaxy 4 40,300 Android Jelly bean 1.6GHz Quad Core + 1.2GHz Quad Core Processor 1 GB Yes Yes Yes Samsung Grand Duos 19,500 Android Jelly bean 1.2 GHz Dual Core Processor 1 GB Yes Yes Yes Micromax Canvas HD 15,000 Android Jelly Bean 1.2 GHz Quad Core Processor 1 GB Yes Yes Yes Micromax Canvas 3D 10,000 Android Jelly Bean 1 GHz Dual Core Processor 512 MB RAM Yes Yes Yes 37,990 Android Jelly Bean 1.5 GHz Qualcomm Snapdragon S4 Pro Quad Core Processor 2GB Yes Yes Yes Sony Xperria SP 25,000 Android Jelly Bean 1 .7 GHz Qualcomm Snapdragon S4 Pro Dual Core Processor 1 GB Yes Yes Yes Nokia Lumia 920 Nokia Model Sony Xperria Z Samsung Brand Processor Ram 3G Wi-Fi GPS 32,000 Windows Phone 8 1.5 GHz Dual Core Krait Processor 1 GB Yes Yes Yes Nokia Asha 311 6,250 Series 40 1 GHz Processor 128 MB RAM Yes Yes Yes
Editor's Notes
- #24: * EPS : Annual net income / Weighted average of outstanding common shares less treasury shares (based on audit report)* BVPS : Total equity / Total number of shares outstanding* Revenue per share : Annual revenue / Total number of shares outstanding* PER : Year-end stock price / EPS* PBR : Year-end stock price / BVPS* Price/Sales : Year-end stock price / Revenue per share