{"id":2248,"date":"2015-10-25T13:02:15","date_gmt":"2015-10-25T07:02:15","guid":{"rendered":"https:\/\/bbf.digital\/new\/?p=2248"},"modified":"2017-09-09T22:30:04","modified_gmt":"2017-09-09T16:30:04","slug":"mobile-mania-a-look-into-the-frenzied-market","status":"publish","type":"post","link":"https:\/\/bbf.digital\/new\/mobile-mania-a-look-into-the-frenzied-market","title":{"rendered":"Mobile Mania – A Look into the Frenzied Market"},"content":{"rendered":"

Mobile telephony, among others, has a tremendous future in Dhaka \u2013 the most populated city in the world that is still growing at an unprecedented rate, as are its middle class. Although there are 67.2 million unique cellular subscribers as of Dec. 2015 estimates, 90.8 million still remain unconnected through telecommunications, mostly living in rural areas.<\/em><\/span><\/p>\n

Promoting mobile connectivity is one of the most sure fire means of achieving maximum digital inclusion \u2013 one of the key MDGs (Millennium Development Goals) of the current government towards making Bangladesh a middle income nation by 2021. According to one GSMA report, Youtube reported in October 2014, that 50% of its global traffic was generated through mobile devices. This has tremendous implications for future developments in our country. It means that people with the lowest income levels can potentially reap the benefits of the Internet highway through mobile devices.<\/span><\/em><\/p>\n

Plethora of Handsets<\/span><\/h2>\n

While the six telecom players in the Bangladeshi telecom market continue their price wars, offering ever lower prices for monthly prepaid expenses \u2013 as low as $1.41 \u2013 42% of the population live without a cell phone because they can’t afford one. The mobile handset markets offer a plethora of brands \u2013 from the upper class Apple and Samsung handsets down to scores of low priced Chinese brands for the masses. You will find a wide assortment \u2013 with a growing number being featured as “local phones”, although Bangladesh still lacks the technical expertise to manufacture or assemble cell phones, according to industry insiders. All “local” phones like Symphony, Walton, Winmax, Winstar, OK Mobile, Goldberg and the newcomer Okapia are Chinese products customized for our market, targeted at certain demographics and labeled “Bangladeshi” phones.<\/span><\/p>\n

\"okapia-ma-edi\"<\/a>The Okapia Ma<\/a><\/span> is a unique example. Launched in June this year, not only is it an easy grip feature phone with extra large keys and numbers for better visibility, Bangla keyboard, FM radio, limited internet and a camera, it also includes a special SOS service through a red and large emergency button capable of calling five preset numbers. No wonder Walton phone sales have plummeted over the past year in the face of such stiff competition. To make the competition even more vicious, Indian brands are coming in gradually. You can see Lava phone ads on the back of your CNG auto-rickshaw \u2013 not to mention the more popular brands like Micromax and Intex that come with similar offerings as Chinese handsets.<\/span><\/p>\n

The days of market domination by Nokia bar phones are long gone. Not only has the Finnish handset giant been \"x2015_06_06_3_6_b.jpg\"<\/a>swallowed up by Microsoft last year, the Bangladeshi mobile devices market is today led by the “local” brand Symphony. Chinese brands \u2013 Maximus, Xiaomi, Lenovo, ZTE, Huawei, Asus, Haier, Coolpad, and more recently Gionee and Oppo, are also following suit. According to Dhaka Tribune, the National Board of Revenue (NBR) reported that 96.46% of the total imported handsets came from China during the second half of 2013. The declared value of those sets made up 91.54% of the total handset import value of the country, with the rest being other global brands. “The local users want a beautiful set at an affordable price and, Chinese handset makers are offering this,” said Mostafa Aminur Rashid, chairman of Symphony.<\/span><\/p>\n

The Great Reliance on Import<\/span><\/h2>\n

The cell phone market is growing fast, with 2.6 crore handsets being imported in the fiscal year 2013-2014, according to The Daily Star. However, this rate is being hampered by the recently imposed government tax amounting to 21.5%, from the previous tax rate of 16%. According to Rezwanul Haque, General Secretary of BMPIA (Bangladesh Mobile Phone Importers Association), “between January and May, only 15.85 lakh handsets were imported on average, down from the preceding six months’ average of 25.55 lakh. But customers are coming back, with 27.38 lakh units having been imported in June, up 75.2 percent month-on-month”. The cell phone industry authorities demand that the government tax be reduced and maintained between 5 to 10%, following the example of the neighboring state, India. They also believe that the high tax of 21.5% will discourage consumers from using smart phones or drive them to resort to illegal imports, which are hardly visible but lead to massive losses in government revenue.<\/span><\/p>\n

The BMPIA president Mustafa Rafiqul Islam said, “Proposed taxes will give a rise in smuggling. Lower income consumers will also be affected. So the taxes should be withdrawn and kept as it is now, or set in accordance with that of the ICT sector. As the government aims to build a “digital Bangladesh,” such tax hike on mobile import will not be consistent with that goal”.<\/span><\/p>\n

Impact on Society & Economy<\/span><\/h2>\n

The development of the ICT sector can essentially have far reaching implications for the Bangladesh economy. According to a recent GSMA report on Bangladesh, mobile penetration and even jobs created in the telecom sector have direct effect on the country’s GDP:<\/span><\/p>\n

“The World Bank has found that in low and middle-income c<\/span>ountries, such as Bangladesh, every 10% increase in broadband penetration accelerates economic growth by 1.38%. Other research suggests that for every new job created in the Bangladeshi mobile sector, 11 are generated in the wider economy. In terms of social benefits, mobile supports a wider ecosystem which enables millions of Bangladeshis to benefit from the exchange of ideas and information, as well as improved access to healthcare, education, financial and agricultural information services.”<\/em><\/span><\/p>\n

Related: GSMA MOBILE WORLD CONGRESS 2015 SHATTERS PREVIOUS RECORDS<\/a><\/span><\/p>\n

\"BBC<\/a>A great example is the BBC Janala project, available through a mobile app, on the internet, in Bangla daily Prothom Alo and also a weekly show in ATN Bangla. By dialing 3000 users can access hundreds of English learning audio lessons and quizzes using cheap basic handsets, free of charge. Also available on the internet, this tool has proved to be a great success in helping bring English language to learners in the remotest corners of the country. This, and numerous other initiatives to transform Bangladesh into a knowledge based economy will be significantly slowed down if rural customers are unable to purchase mobile phones. One is pressed to deny that using mobile phones<\/a> is the most practicable means of internet penetration, with a view to improving the lives of the Bangladeshi masses. The simplest feature phones were available at prices as low as TK 950 last year. At the end of Q3 2015, cheapest handsets cost TK 1500.<\/span><\/p>\n

Related : The Spread of Online Culture<\/a><\/span><\/p>\n

Cut-throat Competition<\/span><\/h2>\n

The official total number of mobile subscriptions stand at 128 million, according to AMTOB (Association of Mobile Telecom Operators of Bangladesh) statistics. But the demand for handsets will continue to rise since the number of unique subscriptions is 66 million according to GSMA, and also due to the fact that the average life of a handset is about 2 years. Hasan Mehdi, Head of Mobile at Samsung Electronics, says, “In the fast-growing mobile device industry, rapid shifts in technology and consumer preferences lead to very short product life cycles, and this is the crux of all the competitive madness”. Even after the much debated tax hike and huge losses on the part of mobile importers, the monthly industry sales stands at a whopping 1.5 million units.<\/span><\/p>\n

While neck to neck competition can be a win-win situation for both the seller and buyer, illegal imports and fake handsets are a major threat towards taking our cell phone economy to a more promising frontier. As Mr. Hasan Mehdi said, <\/span>“Competition becomes a big challenge when a level playing field is not there. Standardization of quality (definition of “real” smartphone), control of copyrights (Bangladeshi-Chinese brands copying Samsung right, left and center) and control of parallel imports and unauthorized products (non-warranty grey Samsung with high price gaps) these are the three difficult challenges we’re facing”.<\/span><\/p>\n

Dealing with the Underdogs!<\/span><\/h2>\n

BMPIA president Rezwanul Haque says, approximately 20% of all mobile device imports into the country are illegal. These handsets enter the country without paying the government taxes. At the same time, they reach the customer without any warranty. Thus, this unethical practice not merely deprives the government in terms of revenue, but the customer is also deprived of after sales services. The other issue is that of fake handsets.<\/span><\/p>\n

According to industry insiders, a large number of fake handsets are sold, no warranty, and no aftersales services. In addition, illegal handsets are a serious threat to the country’s security, as criminals gravitate towards unauthorized mobile sets, an official of a law-enforcement agency said. “New online shops should be brought under tight scrutiny as illegal handsets are randomly traded through those shops,” he said about the virtual bazaar. Fake and illegal handsets are particularly attractive for anti-social activities as these products either lack the IMEI (International Mobile Equipment Identity) numbers or have fake ones.<\/span><\/p>\n

As a result, law enforcing authorities cannot trace such mobile phones. One of the major and popular mobile phone stores \u2013 Gadget and Gear – happens to be among the largest illegal handset vendors in the city, where police confiscated several hundreds of sets not so long ago. These had no proper paperwork to prove they entered the country legally.<\/span><\/p>\n

Smartphones’ Smartways<\/span><\/h2>\n

The other phenomenal shift that our handset market is witnessing is the switch towards smart phones. This has been significant for merely a couple of years \u2013 yet it has reached dramatic proportions. Smart phone sales comprise no less than 40%, according to some insiders. Availability of 3G, high-end features, all within an affordable price have fueled this shift in consumer lifestyle. Although Walton has maintained a smartphone only marketing strategy, the largest market share, in terms of number of shipments, goes to Symphony.<\/span><\/p>\n

Symphony is in leading position with 46% and 40% shipment share in the smartphone and bar phone (feature phone) market respectively. Walton and Samsung smartphones come in 2nd<\/sup> and 3rd<\/sup> place by a large gap while Winmax, and Microsoft followed the market leader during Q4 of 2014. The smartphone market grew by 83% over the year 2014, as reported by the India based Counterpoint Research. Despite the presence of numerous global brands at competitive prices, Symphony dominates the market by a large margin for a number of reasons. Not only does it have a solid distribution system and brand visibility countrywide, it has pioneered in meeting the needs of local people in terms of user friendliness and affordability.<\/span><\/p>\n

The Market Ahead<\/span><\/h2>\n

According to Counterpoint Research, there is still immense potential for growth in smartphone sales, by simply targeting the first time users in the country, especially with the availability of 3G technology nationwide. Despite this, the overall market share of these multi-featured devices is still far below that of bar phones. While smartphone usage is between 5 to 10% in rural areas, a survey based on random sampling among various age groups of users in Dhaka reveals that nearly 60% users carry a smartphone with an Android operating system. Another survey by CyberMedia Research India shows that the most preferred brand in our megacity is Symphony. While the cheapest bar phone costs about TK 1500, the lowest price of a standard smartphone is at least four times, yet have an even shorter functional life. In a nation where the masses have an average monthly income averaging TK 7,000, it is indeed far-fetched to expect smartphone sales to surpass that of bar phones. Also stating a reliable statistics in this regard is difficult, as the media is rife with unreliable data.<\/span><\/p>\n

Partnering with Telcos<\/span><\/h2>\n

Cell phones are reaching customers through the telecom operator as well. Our mobile devices market is far from the kind of model where the device is sold almost exclusively through a carrier, as when I-phones carry the AT&T logo in the USA or you see the T-Mobile logo on your device and wonder if this is a phone brand or a carrier. Nonetheless, our telcos are opting to promote certain handsets through bundle offers, such as during festivals like Eid, Valentine’s Day, etc. Grameenphone \u2013 enjoying 46% of the national subscriber share, as reported by BTRC (Bangladesh Telecom Regulatory Commission), continues to launch the boldest offers.<\/span><\/p>\n

Very recently, they were offering Samsung Galaxy Note 5 at TK 70,000, with EMIs (equal monthly installments) extending up to 24 months, along with a host of other offers such as cheap data, in the bundle. Other phones being sold through GP are Symphony Helio S1, and also the Symphony D54i feature phone, at the low cost end.<\/span><\/p>\n

Banglalink, on the other hand, decided to tap into the low-end smartphone market with Amra Phone \u2013 the newest “local” kid around the block, currently marketing the Amra A10B. Also, the other smartphones backed by banglalink are cheap smartphones like Symphony Play W17 worth only about TK 4,000 \u2013 targeted at first time users.<\/span><\/p>\n

Last but not the Least<\/span><\/h2>\n

The market potential for mobile devices \u2013 both the low-end bar phones as well as the more expensive smartphones \u2013 indeed has considerable promise \u2013 going forward into 2021, with the hope of digitizing the entire country. But to ensure that quality is maintained, and that customers receive the after sales services they deserve for their handsets in such an unmonitored market environment, stricter consumer laws, import laws, etc. ought to be enacted. These, coupled with increasing awareness among consumers, regarding fake handsets at cheaper prices, will pave the way towards a more secure mobile handset market in the country.<\/span><\/p>\n

Written by<\/span><\/p>\n

Mahinoor Osman, MBA<\/span><\/p>\n

Former Adjunct Faculty, ULAB<\/span><\/p>\n

\u00a0<\/p>\n\n

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