Trading Up

  • Saqib Malik
  • Publish Date: May 3 2016 11:41AM
  • |
  • Updated Date: May 3 2016 11:41AM
Trading Up

The mobile handset business is booming. The people involved in it explain why

 
Muneer Qureshi had long been running a shop selling consumer durables on Residency Road, Srinagar. But by the turn of the century, it wasn't doing very well. So, in 2002, Muneer decided to drastically overhaul his inventory: he was going to sell mobile handsets.
 
It was a bold decision; mobile services in Kashmir were still in the nascent stage, and unaffordable for most people. As it turned out, though, Muneer's was a prescient decision. It changed his fortunes. From a handful of staff in 2002, Muneer now employees about a dozen people to run his Samsung World Vision showroom.
 
In the years since, as the demand for mobile handsets grew exponentially, thousands of Kashmiri traders went Muneer's way. They aren't complaining as the mobile phone market, now driven by the demand for ever-cheaper smartphones, is showing no signs of cooling off.
 
“Despite the late arrival of mobile phones in Kashmir, the boom in the handset market has taken everyone by surprise,” says Muneer. “Although Samsung is the undisputed market leader, many smaller players have also carved out their own niches.”
 
Umar Jami, a “Samsung Experience Consultant” based out of Lal Chowk, has doubled his monthly revenue to about Rs 8 lakh over just the past year. “We started the mobile handset business only two years back but currently we manage to sell 80-90 handsets every month,” Umar says. For Umar at least, it hasn't been an easy ride. In 2010, when the Azadi protests paralysed the valley, Samsung “laid off” Umar's entire team as dealers. But it wasn't long before they were back in business with the mobile handset giant.
 
“There was no looking back after that. The boom in the sales of Android phones helped revive the mobile phone market here,” Umar says. And what a revival it was. Umar claims every mobile handset dealer overcame the losses suffered due to the unrest in 2008 and 2010 within just a few months.
 
Indeed, mobile phones have become so integral to daily life that Radio Kashmir broadcast the ‘IT Express’ show to address tech-related queries of their listeners. Shakeel Bakshi, who hosted the show for over a year and half, says while the mobile phone market is doing exceptionally well, what could spoil the party is the lack of “hotspot branded showrooms” and mushrooming of multi-branded stores. “The Chinese-made assembled phones have hit the quality of the mobiles here. About 20-25 percent such mobile phones are left unused,” Bakshi says.
 
According to Bakshi, Kashmir saw a “quantum jump” of 18.5% in new mobile connections over the last year. “Owning a dual sim phone or two handsets is a sort of status symbol now. The apps for Android smartphones are so vast that the world of phones goes much beyond games, video calling and social networking,” he says. Muneer adds, “This craze for smartphones is also because there aren't many modes of entertainment such as multiplexes here.”
 
Aamir Mori, Area Sales Manager, for Samsung, says the mobile handset market in the valley has grown from Rs 20 crore just two years ago to Rs 40 crore now. “The impetus has been led by the introduction of 3G services and social media. A transition from feature phones to smartphones has been the driving force behind the growth in the handset market.” And the growth has been such, he adds, that even the dealers and retailers who incurred huge losses due to the 2014 floods have made a swift recovery.
 
While the going has been great for the sellers, it has been anything but for many phone makers. Smaller players such as Micromax have seen a sharp decline in sales over the last two years while Nokia, the overlord of the pre-smartphone mobile market, no longer counts among the top five.
 
“Micromax grew fast due to its affordability but became a non-entity pretty soon. The problem with most Indian brands and Nokia as well was that their system processes weren't sound enough, therefore, they could not compete with the better-made brands,” explains Aamir.
 
In the valley, Samsung is the undisputed leader by a distance. Most handset dealers put it down in large part to the company's dealer-friendly initiatives like the common portal that helps them keep a track of various schemes and suchlike. “Nokia was synonymous with mobile phones before Samsung stormed into the market. Nokia fell off partly because the mobile phone industry is fast-moving and it thrives on a strong chain,” Amir says. Sony Ericsson phones, known for their music players, too have almost vanished.
 
The brands that have replaced them, especially in the lower-end segment, include Micromax, Lava and Intex, says Imtiyaz Ahmad of Radio House showroom in Lal Chowk. “And Gionee, which is a new entrant to the market, is giving tough competition to Micromax. It's one of the six new brands that have entered the market in just one year,” Imtiyaz adds. The Chinese-made Oppo, which is making waves in the European market, too is “selling like hot cakes”. “The reason why HTC and Lenovo phones proved a damp squib was because they did not do their promotions well. Oppo is very well with its in your face advertising, it's registering with the buyers,” Imtiyaz says.
 
Although online phone sales are growing steadily, the retailers aren't worried; what bothers them is the declining profit-margin. Aijaz Qureshi, the president of the Kashmir Mobile Handset Dealers Association, estimates the growth in the traditional market to be in double digits this year. Muneer, of Samsung World Vision, too believes the offline phone market will continue to register growth for some years to come. “But while the market is growing, the profit margins are going down,” he complains.