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Philips to re-enter Indian mobile handset market

The Economic Times :  May, 2014

New Delhi: Philips will launch a range of smartphones and feature phones on Wednesday, as the Dutch consumer electronics maker re-enters the extremely competitive and crowded Indian smartphone market which is one of the fastest growing in the world. A company spokesperson said that Philips brand of feature phones and smartphones will be launched on May 28 in New Delhi by Sang Fei Consumer Communications Co.

Sang Fei, a joint venture between Royal Dutch Philips Electronics and Shenzhen SED Industry Co, will introduce the devices in India, almost seven years after China Electronics Corporation (CEC), the parent group of Sang Fei, acquired the global mobile phone business of Philips in February 2007.

As per the company's website, Sang Fei has developed a new series of Philips mobile phones which are sold in both domestic and overseas market. Sang Fei's head of SAARC operations SS Bassi, who has worked with Lenovo India and Reliance Communications in the past, will oversee the India business, the website showed.

Philips used to sell feature phones in India till before the acquisition. Its handsets slowly disappeared from the market as home-grown device makers began taking buyers' mindshare with low-cost offerings. The price range that Philips will offer to customers wasn't shared by the spokesperson, but it needs to take a leaf out of Motorola, which has made a hugely successful re-entry into the Indian market through feature-heavy and attractively-priced smartphones which have been sell outs.

Apart from the slew of established players like Samsung, Apple, Nokia Sony, home bred players Micromax and Karbonn, and the resurgent Motorola, Philips will have to take on China's popular device maker Xiaomi and former Apple CEO John Sculley's Obi brand of phones that will enter the market shortly.

India's handset making industry is fast changing colours as cheaper smartphones drive penetration of multi-media devices into the multi-billion dollar market where a large majority of people still use feature phones. According to IDC, about 78% of Indians still use feature phones while only 22% use smartphones, as of December 2013.

The smartphone market itself has nearly tripled to 44 million devices shipped in 2013, compared to 16.2 million shipped over 2012, as per IDC. In the three-month period ended March 2014 alone, 14.5 million smartphones were shipped into India, of which Samsung, Micromax and Nokia had cornered 67% share, according to CyberMedia Research.

The smartphone market is expected to boom in 2014 as entry-level smartphones may be available for as low as Rs2,500, which may further propel the transition from feature phones to smartphones. Given the pace and scope for growth in India, Philips may have a chance to create a dent provided it can offer high quality devices at affordable prices, say experts. Still, the task will be tough with multinational companies, including Apple, Sony and Motorola, playing aggressively, increasing sales in a short span of time.