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With over 220 million active smartphone users, India has become the second-biggest smartphone market in the world, surpassing even the United States of America. However as per a report by Counterpoint Research, India still has a long way to go in the mobile phone space, as the smartphone penetration of the total potential population is still below 30 per cent.
This is the reason Indian smartphone market has gradually become a battleground of smartphone markers around the globe, who foresee Indian Territory as a land of opportunities. While Chinese companies keep dominating the space by offering feature loaded affordable Android handsets, Indian smartphone makers are also punching hard to meet the standards and market needs.
That said, one such Indian manufacturer is Intex, which has a portfolio of more than 16 product categories ranging from feature phones, smartphones, power banks, wearable devices, home theatre solutions, multimedia speakers, and more.
The company is manufacturing about 2 million phones per month in five of its manufacturing units across the country and further plans to meet the demands of consumers in the Indian market by expanding its product portfolio that also includes digital services ecosystem and value added services (VAS).
We spoke to Nidhi Markanday, Director & Business Head, Intex Technologies, on company's plans, strategy and how Intex plans to face the competition in the already crowded Indian smartphone market. Here are the highlights of the conversation.
What’s your take on Demonetization? Have you faced any effects on your sales in the market?
As responsible Indian citizens, we commend and support government's move on demonetization for fighting black money and corruption in the country and we will continue to support this initiative to the best of our capabilities.
From a business point of view, demonetization has affected business not just in the mobile and CDIT industry but across various other sectors. The slump in sales was palpable across the entire mobile and CDIT industry as well; where we experienced a sales dip of as high as 90% in the first week of demonetization.
The overall industry monthly sales of mobile handsets across different brands came down by 50% impacting the overall sales of mobile handsets especially in the average price range of Rs 5000 as the products in that price range are usually purchased through cash transactions.
Over the last month, the sale has gradually picked up and has come up to settle at 60-70% sales dip now against 90% in the first week. The consumers are gradually adopting digital payment services like paytm, mobiwik, freecharge etc adapting to this new trend but that is technically contributing only a meagre % in the overall sales across our industry.
Since cashless transactions are also limited to a segment of consumers which has consequently led to the inventory piling up. It will take some time for the brands and retailers to liquidate them until the cash crisis reduces. The retailers are also having a tough time liquidating the digital payments they receive. To survive in this situation, distributors have increased the credit cycle for the retailers so that they can accept digital payments and continue doing business at a healthy pace.
How do you see Demonetization as an individual?
While the recent demonetization by the government has slowed down the Indian economy; the positive effects of this move have been seen at an individual as well as at an industry level. Although, this process may have a short term impact across sectors, however, we at Intex, are confident that in long term the process will bring numerous positive benefits to the economy.
We believe that this has already given a push to initiatives like ‘Digital India ‘paving way for consumers' acceptance for digital payment services which in turn will drive an increased demand for mobiles & smartphones across country including tier II, III cities and rural India.
Mobile brands will also see a significant opportunity in digital wallets in a big way. This move has driven people towards digital payment methods such as mobile wallets, Internet banking and debit/credit cards. With our Intex MyWallet service, we are already allowing users to recharge, transfer money, shop online, book tickets, and do lots more right from their smartphones.
We will also be implementing retailer portal across the country which will help the consumers to carry out their daily monetary transactions through our offline merchants. While the changes take effect, we are optimistic that mobile wallets will gain major traction in the wake of demonetization.
Given the fact that this year a lot of new products are coming to India within Q1, Is there anything from Intex that is coming?
As a homegrown brand, we always strive to offer our users innovative products in sync with the latest technology embedded in our devices at competitive pricing. Last year, Intex tied up with Reliance Jio to launch their new 4G phone series. Users of the new 4G-enabled Intex series can avail the free voice calling service for 3 months on Reliance Jio's network.
At the moment, 90% of our smartphones are 4G-enabled and we plan to introduce the new 4G feature phones to gain from recent developments. On an average, Intex feature phones contribute 30-35% to our overall revenue generated through mobile segment.
We currently have over 30 running models in the smartphone category and over 60 more models in feature phone segment in India. This year, we will continue to strengthen our feature and smart phone segment through services. Our focus would be at strengthening our digital services ecosystem and VAS which will now be more deeply integrated in our mobile handsets.
If it is smartphone, is there something which will stand against Vivo's latest Dual Camera smartphone or Huawei's Honor 6X? And how do you plan to fight the Chinese manufacturers on product and marketing fronts in 2017?
Like I mentioned before, on product front, we are building a deeply integrated digital service ecosystem within our devices, ranging from variety of services based upon the evolving user behaviour needs, such as entertainment based services like Video store, game store and utilities like payment, health and Regional Operating services to cater to segmented markets.
We have already hit the market with our new innovative in built left screen solution branded as "LFTY" which is a single stop for the user to explore endless possibilities in just a swipe. We are looking at these digital services to contribute about 10-15% to company's overall revenue which is expected to grow by 20-25% in next 1 year.
We are also strengthening our marketing ecosystem on the basis of our affordable and durable offerings, and a vibrant marketing strategy. At Intex, our aim is to be present where the consumers are and we have successfully catered to the needs of consumers across quality, technology and price segments.
As a consumer focused and innovation-based company, our strategy is to offer products at competitive prices with strong offline and online distribution and robust after-sales services. We have 80,000+ retail partners for mobile segment.
In 2015, to further strengthen ournetwork, Intex began opening its exclusive branded stores - ‘Intex Smart World' as experience zones for consumers and today we have close to 80 stores across the country covering more than 50 cities. This approach has enabled us to grow consistently and we are confident of continuing the trend.
Are you planning to foray into IoT and home automation space in coming future?
No, but we see a steady adoption of Artificial Intelligence in the coming years. The future for both consumers and brands to engage in a more personalized and interactive manner will be Artificial Intelligence.
We foresee an adoption of AI across digital services and various stakeholders within the ecosystem. AI will definitely have a significant impact in various digital sectors ranging from mobile advertisement, shopping, health, search or just simple interaction with the devices.
We, at Intex, are in sync with the potential AI carriers, but the catch 22 lies in the nature of implementation which will be adopted by different stakeholders. We want to leverage on the AI by making our devices and digital services enriched with this technology in a manner which is easily accessible and localized.
Given an option, what would you like PM Modi to do for the smartphone manufacturers in an upcoming budget?
The mobile handset industry is a fast growing Industry and has become part of the consumers' everyday life. The trend of owning a mobile phone is fast catching up in tier II and tier III cities and rural areas as well.
Smartphones will act as catalyst to government initiate for a holistic ‘Digital India' and all other government initiatives like "Skill India", Make in India, Smart cities, and has further created a need after the recent demonetization. We expect the following from the budget 2017 which we believe would speed up a few things for a continuous growth in the industry.
1) Build a long term policy on mobile manufacturing in India: Although Mobile Handset Industry is working toward agreed phased manufacturing programme, the speed can be increased if we have stable policy with stated long term goals.
2) We hope to see the policy on research and development laid out clearly if we wish to succeed in highly technical industry
3) We hope to see a strong and sufficient technical manpower for mobile manufacturing
4) The affordable mobile handset or consumer durable items up to certain value, shall be given a concessional duty treatment to increase the great initiate taken by government to create a digital India
5) More clarity in the GST rules for manufactured items and traded items
We recently heard a company-named Aqua claiming that the Intex Aqua branding is based on its nomenclature. What’s the current status of Intex-Aqua dispute? Have you filed an appeal confronting the same?
"Intex has decided to challenge and file an appeal to this order dated 24.12.16 preferably before Division bench of Delhi High Court. As off now, we have got a stay on the matter and as the matter is sub-judice, hence we cannot comment upon further."
Based on our conversation with Intex, we can say that the company plans to strengthen its feature and smart phone segment in country by focusing on services it offers to consumers.
While this can help the brand establish a trust in the Indian smartphone space, which is crowded with myraid of Chinese smartphone manufacturers that often fails to deliver on after sale service support, Intex also have to make sure it delivers on feature loaded handsets to fight the Chinese counterparts. The digital services ecosystem and value added services will be the focus of Indian smartphone maker in the year 2017.
Besides, the company wants to leverage on Artificial Intelligence and might soon adopt the technology across digital services and various stakeholders within its ecosystem. However, Intex don't seems to be interested in 'Smart Home' and IoT segment, which is gradually becoming the next big thing in the technology market and is seeing huge investments from a number of Indian and global brands.
We believe the Indian smartphone maker is missing a huge opportunity here and IoT products can add a huge value to product's portfolio.