How do you sell smartphones to India—a country with over one billion people, many of whom have never used the Internet before?
To get insights into the opportunities and challenges of the market, The Wall Street Journal's Joanna Stern spoke with Vikas Jain, co-founder of the Indian phone giant Micromax Informatics. Here are edited excerpts of their conversation.
Journal Report More in WSJ.D Live Huge numbersMS. STERN: How many smartphones do you sell in a month?
MR. JAIN: We do about 3.5 million mobile phones a month. That's more than 100,000 a day.
MS. STERN: You're making a lot of phones as well. The most successful smartphone company, Apple, makes about two new phones a year. You make 30 new phones a year. Are people interested in 30 different phones?
MR. JAIN: In India the operator revenues are so low that the operator can't subsidize the hardware. You buy the hardware at the actual cost of the hardware.
[So each different price level of phone ends up being targeted at different parts of the market. It's like different models of automobiles.] If you take any of the automobile brands, they have multiple models. The target group changes after a certain price segment.
MS. STERN: In the U.S., people are on their fifth or sixth smartphone. They're used to using the Internet. In India, you're opening the Internet to them for the first time. What does that look like on a smartphone?
MR. JAIN: As a brand, we don't sell technology. What we are proud of is an experience, things like the design of the phone and ease of use. That drives people toward our phones.
Inadvertently, they end up using the smartness of the smartphone, all of its capabilities. And then, as they come to use more of the features, they want more, and that then drives them toward the second or the third or the fourth smartphone.
MS. STERN: Let's talk about the competition. Xiaomi, how are you staying ahead of them?
MR. JAIN: It's a big economy. It's a big country. You don't need to see who's on your left and right in terms of competition if you just script your own growth story.
A population of 1.2 billion, with the life cycle of the mobile phone shortening to about 14 months. Just imagine the number of mobile phones to be sold.
So I don't think that it's an industry where we need to bother about the competition.
Moving abroadMS. STERN: Are you planning to head to other markets? The Chinese companies have come to you.
MR. JAIN: Besides India we are operational in Nepal, Bangladesh [and elsewhere]. We are in the markets of Russia and the U.A.E. Who knows, China might be next.
MS. STERN: Your phones are made mostly in China, or also in India?
MR. JAIN: So, close to about 50% of the sales that we do in India are actually manufactured in India. And for about 50%, we still use the China ecosystem.
MS. STERN: Smartphones are many people's first and pretty much only form of computer in India. Does that mean the upgrade cycles end up being slower or faster?
MR. JAIN: It's faster. In India, the life of the mobile phone is truncated to about 14 months. That's largely because when I buy my first phone, the idea is to get connected to the Internet. When I evolve on the Internet, I realize that this is not the device or the phone factor I need. And then I move to the next.
I think the expectation of the consumer is also evolving. As a company we were one of the first ones to bring in the 5, 5½-inch screen size. What we realized was that the consumers were using phones for video. And obviously you need big phone factors.
MS. STERN: We heard from Xiaomi, the Chinese phone company. You're focused on phones. They're focused on bringing in lots of other types of devices. Is that an interest for your company?
MR. JAIN: I would not say we're focused on phones. We are focused on display. It could be laptops, it could be televisions, it could be smartphones, it could be feature phones. As a company, as a brand, today we are present in feature phones, smartphones, laptops and televisions.
Source: Vikas Jain Explains Why the Smartphone Is Different in India
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