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It’s a riot in India’s burgeoning <a href="http://www.businessinsider.in/searchresult.cms?query=Vijay+Shekhar+Sharma">smartphone</a> market. Chinese <a href="http://www.businessinsider.in/searchresult.cms?query=Vijay+Shekhar+Sharma">smartphone</a> brands have turned it on its head forever. A recent IDC study revealed the top 5 Indian cities make up approximately 60% of the online <a href="http://www.businessinsider.in/searchresult.cms?query=smartphone+sales">smartphone sales</a>. <a href="http://www.businessinsider.in/searchresult.cms?query=Samsung">Samsung</a> came at the top in leading 30 Indian cities. More ‘value for money’ brands like <keyword id="71696" type="COMPANY" weightage="60" keywordseo="Micromax">Micromax</keyword>, <a href="http://www.businessinsider.in/searchresult.cms?query=Lenovo">Lenovo</a> and <keyword id="11148" type="CITY" weightage="60" keywordseo="Motorola">Motorola</keyword> followed. 
 While the numbers suggest the chaos is limited to the metros and tier I cities, tier II and III cities are expected to play a major role in the near future. At a time when the <keyword id="28168" type="TECHNOLOGY" weightage="80" keywordseo="Smartphone">smartphone</keyword> market is growing 18% YoY and constitutes 40% of the 250 million units shipped to India, the dusty road is where the market lies. 
 
Business Insider sat down with the India Heads of two big bad boys in this war - <a href="http://www.businessinsider.in/searchresult.cms?query=Coolpad">Coolpad</a> and <a href="http://www.businessinsider.in/searchresult.cms?query=LeEco">LeEco</a> to understand where this battle’s headed, and if there will ever be peace. 
 
What’s Changed – Everything 
The Chinese influx started way back in 2015. They saw an opportunity in the affordable smartphone market. Cut to 2016, that’s gone for good. Now, they’re up against home-grown brands like Micromax and Lava. Basically what Micromax did to <a href="http://www.businessinsider.in/searchresult.cms?query=Nokia">Nokia</a> years ago? Marketing brands like <a href="http://www.businessinsider.in/searchresult.cms?query=Xiaomi">Xiaomi</a> have locked horns with the likes of <keyword id="13722" type="CITY" weightage="60" keywordseo="Lenovo">Lenovo</keyword> and Motorola. The former doesn’t even have a brand ambassador in India! 
 Newer Chinese brands like <keyword id="1731609" type="UNKNOWN" weightage="100" keywordseo="Oppo">Oppo</keyword> and <a href="http://www.businessinsider.in/searchresult.cms?query=LeEco">LeEco</a> are kicking serious ass too. They’re bringing in the money power of their rich Chinese dads, but considering ROI on investment, it’s very difficult to sustain their current models due to stiff competition. 
 Remember, back in the days <keyword id="35621" type="UNKNOWN" weightage="80" keywordseo="e-commerce">e-commerce</keyword> players were offering subsidies to host online sales. After 2016, only the manufacturer will have advantage as the Flipkarts, Snapdeals and Amazons of India will not offer too much in discounts, and this will reduce cost-efficiency in business models. 
 
There are two options now - go offline with huge marketing investment, or stay online with a cost-effective model. 
 “There will be challenges in manufacturing and marketing”, <keyword id="3093045" type="UNKNOWN" weightage="80" keywordseo="Syed-Tajuddin">Syed Tajuddin</keyword>, <a href="http://www.businessinsider.in/searchresult.cms?query=Coolpad">Coolpad</a> India Head accepts. 
 
By the end of 2016, most marketing brands will find it difficult to sustain. They’ll burn most of their liquidity. That’s where direct manufacturers come into the picture with long term goals. They will have extreme control on their supply-chains. 
 
Online Vs. Offline Game 
As the numbers suggest, Indian metros and Tier I cities already have mass online penetration. Till now, most Chinese brands weren’t even interested to look beyond, but are now being forced to because of the tax complications state governments have set up. Entering the offline market also means being cowed down by heavy investment for retailers and distributors. 
 
“Offline will remain and prosper. The only thing that might happen is that the offline sales in Metros might slip a bit into online”, Syed agrees. 
 Offline brands like <keyword id="10591" type="CITY" weightage="80" keywordseo="Samsung">Samsung</keyword>, Lenovo and Micromax that still have a huge portion of the offline market, need to check inflation. You ask why? 
 
Because brands like Oppo have brought some of their Chinese distributors to India. These brands will give a tough time standing up to Indian brands, and it’s only a matter of time before Samsung feels some heat in its collar too. 
 
Rather than investing and promoting on the marketing front, brands like Micromax have to focus on improving their product’s value proposition. If you’ve noticed, Micromax hasn’t spent a fortune on advertising since the Sliver 5. 
 
Believe it or not, <a href="http://www.businessinsider.in/searchresult.cms?query=LeEco">LeEco</a> and Oppo are going into Tier II and Tier III cities, and holding small marketing campaigns there. Earlier the distributor drove sales, now it’s the brand. Indian brands are not able to cope up here. 
 
 “Just an online strategy will only help reach a certain consumer-base. We’re planning t have our own stores and offline distribution very soon. Half of our business in Feb came from the non-metros and non-Tier I cities”, Atul tells me. 
 
To reduce, or not to reduce – Price, that’s the question! 
In a day and age where the average life of a smartphone is down to less than a year in India, is there any chance of the price war cooling down anytime soon? 
 
“Around 30% customers, basically the young crowd will continue to focus on hardware vs. price. The high-end market will have an eye for aesthetics, and would prefer to have a look and feel”, Syed says. 
 “You have to be present offline to ensure you get the bigger consumer-base. We’ll launch into offline in the next 3-4 months”, <keyword id="350911" type="PERSON" weightage="80" keywordseo="Atul-Jain">Atul Jain</keyword>, India Head, <a href="http://www.businessinsider.in/searchresult.cms?query=LeEco">LeEco</a> says. 
 
If the hardware craze is limited to tier I and metros, does it matter if a phone is priced at Rs. 10k, Rs. 9,999 or Rs. 9,990? 
 
“It doesn’t matter. Price is just one component. The consumer decision is based on at least 6 factors like design, availability, battery and price. Consumers could be sensitive to pricing, and as manufacturers we’ve to take that into account”, Atul says. 
 
Do Flash Sales Work? 
 
Both <a href="http://www.businessinsider.in/searchresult.cms?query=Coolpad">Coolpad</a> and <a href="http://www.businessinsider.in/searchresult.cms?query=LeEco">LeEco</a> agree flash sales can be used as a tool to drive initial volume. Brands with constraint in delivery in the first phase chose that model. By the time they catch up in terms of numbers, they open it for all. That was typically in a month or two. 
 
However, Indians are now wary of waiting. They have options. Micromax’s Yu brand previously did flash sales for over 3-4 months. Now their flash sales don’t last that long. 
 
Basically, two quarters on, there will be lesser flash sales. 
 
Increasing Market Share 
So how do you increase market share in a market overcrowded with fiery competition that’s baying for your blood? 
 
For one, the era of marketing is over. You have to significantly control costs. Supply chain will become the foremost focus, R&amp;D comes second. Ones you have R&amp;D, you can experiment, and the supply chain will help reduce cost. 
 
“We’re setting up a global R&amp;D centre in Bangalore that’ll work on software and screen technologies”, <a href="http://www.businessinsider.in/searchresult.cms?query=LeEco">LeEco</a> India Head says. 
 
In case you don’t live under a rock you must have noticed there are two segments for every ‘new’ smartphone brand, a regular model, with exceptional value proposition, and a flagship segment with high-end specs. 
 
“We’re coming up with a flagship soon. However, we’re very skeptical about marketing. Marketing gimmicks never work”, Syed says. 
 
Offline Prices 
Price and specs have been the biggest weapons for newer brands launching in India. The notion is that when you set up an offline distribution network, prices go up. That’s what happened with Samsung, and other brands too. However, if the prices are higher offline, it’s not fair to the consumer. 
 
“The distribution cost is what gets added when a product goes offline. That’s built into the overall costing”, Atul winks. 
 
Differentiation: 
So how do you create differentiation? It continues to be quality at affordable price. Atul let me in on a secret. They’re actually at a loss on a per device basis. 
 “We’re an ecosystem company unlike Samsung, <keyword id="6354427" type="CITY" weightage="60" keywordseo="Apple">Apple</keyword> or Oppo, and can sell the <keyword id="310615" type="PERSON" weightage="60" keywordseo="Le">Le</keyword> 1S at Rs. 10,999 even when the industry pegs the cost of production at Rs. 16k. We can ensure that pricing because of our large volume in China and India, and don’t believe in making profits from hardware”, Atul says. 
 
<a href="http://www.businessinsider.in/searchresult.cms?query=LeEco">LeEco</a> is perfectly fine with the loss. 
 
“For us phones are just screen, we have a 650 CDN networks of which 10 are in India. Nobody has that. It helps deliver content”, Atul says. 
 
The plan is <a href="http://www.businessinsider.in/searchresult.cms?query=LeEco">LeEco</a> will churn content to earn that money back. Atul say that way the company can also monetize second hand phones. To conclude, they think they’ll win because they make it, and don’t just market it. 
 
“That’s the difference between us and marketing brands. We’ve been manufacturing in China for the last 24 years”, Syed boasts. 
 
Image credit: Indiatimes

The Future of India’s Smartphone Price War: LeEco and
Coolpad let us in on their trade secrets

Chinese smartphone maker <keyword id="299328" type="COMPANY" weightage="100" keywordseo="Coolpad">Coolpad</keyword> today launched a made for India smartphone. Now if you are wondering what really makes the phone ‘made for India’, well, it has not one, not two but three sim slots and the third sim slot is apparently meant for <keyword id="6354504" type="UNKNOWN" weightage="20" keywordseo="Reliance-Jio">Reliance Jio</keyword>, Syed Tajuddin, CEO, Coolpad India says, “Normally three sim card phones are not available globally. Since no one expected <keyword id="2003276" type="UNKNOWN" weightage="20" keywordseo="Jio">Jio</keyword> to come with such complimentary offer, this to tell people in India to use your two regular numbers and one for data in the same device.” 
 The company is collaborating with <keyword id="10926" type="CITY" weightage="20" keywordseo="Reliance">Reliance</keyword> Jio and through the partnership, Coolpad users can avail the <keyword id="3588457" type="UNKNOWN" weightage="20" keywordseo="reliance-jio-sim">Reliance Jio SIM</keyword> at reliance stores by sharing the device’s purchase invoice. And of course, the users will get all benefits provided by Reliance under the JIO scheme. 
 
Also Read: <a href="http://www.businessinsider.in/Reliance-Jio-takes-half-the-time-taken-by-Instagram-to-cross-the-50million-subscriber-mark-by-signing-6lakh-customers-a-day/articleshow/55682464.cms">Reliance Jio crosses 50million subscriber mark by signing 6lakh customers a day</a> 
 Priced at Rs. 6999, Coolpad Mega 3 does come in an India friendly price range. And apart from sporting 3 SIM slots, the phone has a display of 5.5-inch IPS HD (1280 x 720 pixel) resolution, 3,050 mAh battery, 8MP front camera with LED flash along with 80.1°FOV (Field of View), The phone comes with 16GB of internal memory, which can be further increased up to 64GB. It will be available in three color variants, Gold, Grey and White. These devices will be available in India from December 7th onwards exclusively on <keyword id="18635" type="CITY" weightage="20" keywordseo="Amazon">Amazon</keyword>.in. 
 
Given the number call drops and poor data speed we have to deal with, it really does make sense to have choice of three operators in your hands just so that things can function smoothly.

Coolpad launches “made for India” smartphone with a third sim slot “meant for Reliance Jio”

Cash is a dominant mode of transaction in the devices market and the government's decision to demonetize the high-value currency which accounts for more than two-third of the cash supply is having an immediate but temporary impact on the devices market, according to <keyword id="6377157" type="CITY" weightage="20" keywordseo="IDC">IDC</keyword> there has been a 17.5 per cent drop in smartphone sales in CY Q4 2016. All smartphone companies felt the impact but in their own ways. 
 Starting with the low to mid range phones where the market is ruled by Chinese smartphone makers like <keyword id="874458" type="COMPANY" weightage="20" keywordseo="Xiaomi">Xiaomi</keyword>, LeEco, <keyword id="299328" type="COMPANY" weightage="20" keywordseo="Coolpad">Coolpad</keyword> and others. All these smartphone makers sell their devices mostly priced between Rs. 6000 to Rs. 15,000 through online and offline platform. The sale of devices is expected to hit not just offline retail but online channel as well, where Cash-On-Delivery (COD) contributes to a substantial portion of the sales. Major impact of demonetization will be more prominent in smaller cities, where small retail shops transact more in cash and penetration of digital payments is yet to reach the levels seen in bigger cities. After having launched a<a href="http://www.businessinsider.in/Coolpad-launches-made-for-India-smartphone-in-partnership-with-Reliance-Jio/articleshow/55707972.cms"> ‘made for India’ phone</a>, Syed Tajuddin, CEO, Coolpad India said, “Demonetizaion is a painful thing, yes, business has been affected both online and offline platform suffer. Around 30% of smartphone purchases online are COD, can’t expect people to stand in queue for one week to buy out phones, by end of the year there would be 25%impact on decline in the sales”, the company expects the market will be in a much better shape by April next year for lower range phones. 
 High to premium range phones has not seen much of an impact as they are mostly dependent on online payment methods. The segment itself attracts consumers who are already using non cash payment methods for all purposes. One such brand that has not seen much impact of demonetization on the sale of its smartphones is <keyword id="2210217" type="UNKNOWN" weightage="20" keywordseo="oneplus">Oneplus</keyword>, this Chinese smartphone maker has made a place for itself in the high range segments with phones costing over Rs. 25,000. Vikas Agarwal, General Manager – India for OnePlus said, “Oneplus has been an online only brand and because of it demonetization has not really impacted Oneplus as much as offline brands have been impacted. Online people are used to paying through debit and credit cards the COD transaction were impacted but not to that extent as those users are now using electronic channels to make the payment so for us we do not anticipate any big impact of demonetization on sale of Oneplus device”. That’s true especially because the company chose to<a href="http://www.businessinsider.in/OnePLus-3T-launched-at-Rs-29999-Heres-what-has-improved/articleshow/55749779.cms"> launch its latest smartphone OnePlus 3T today</a> in India also in close succession to OnePlus3 which has been one of the top rated phones globally. 
 Now if we look at the premium phones, <keyword id="6354427" type="CITY" weightage="20" keywordseo="Apple">Apple</keyword>’s iPhone7 and iPhone7 Plus are the most expensive phones in the country today priced at upwards of Rs. 60,000. Government’s move to demonetize Rs. 500 and Rs. 1000 currency notes somehow provided a much needed helping hand to Apple to sell its latest iPhones. As reported by Economic Times iPhone sales shot up in India in the three days immediately following demonetisation as consumers rushed to buy these devices with their phased out high denomination notes. And as per trade estimates, over 1 lakh iPhones were sold in these three days alone, which is around three ¬fourth of this handset’s average monthly sales. 
 
So smartphone makers across all segments have felt an impact of demonetization but it’s immediate and short-lived. And now they are trying to tackle the after-effects of demonetization by starting to offer lucrative deals to try and make up for the slow-moving demand from currently cash crunch-hit consumers.

Here’s how smartphone companies across all segments were affected by demonetization

You Searched For "Syed Tajuddin" and got 3 results

The Future of India’s Smartphone Price War: LeEco and Coolpad let us in on their trade secrets

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Coolpad launches “made for India” smartphone with a third sim slot “meant for Reliance Jio”

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Here’s how smartphone companies across all segments were affected by demonetization

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