Handset market has played the most pivotal role in the overall growth of Pakistan’s telecom industry. For me the handset market has played a kind of un-sung hero role in-comparison with the local Telco’s who have taken much of the limelight in the phenomenal growth of Pakistan’s telecom industry during these 6 years.The 1st H of 2008 was a difficult period for telecom industry in general with plenty of political uncertainty, negative economic indicators, ever rising inflation & unfavorable budget policies played their role in restraining the growth pattern of previous years.
The hardest hit area in this declining growth pattern has been the handset market of Pakistan.
Till Dec, 2007, the growth of handset market was excellent with around 1 Million handsets were being sold on monthly basis. However in July, 2008 the figures came down to 600 K units per month (depicting 40% decline in volume during 6 months). While the picture looks grim, i am pretty sure that volume will start to pick once the clouds of uncertainty settles (positive indicators including decline in inflation & Pak rupee getting strong against $).
Handset Market – Current Scenario
Pakistan’s handset market is primarily a low-end market with majority of volume comes from low-end mobile phones. Another important aspect is that our handset market is extremely price sensitive just like any other handset market of a developing country.
To comprehend the local market dynamics, below is the price segmentation analysis along with the market share each price segment comprised upon.
If we look at how the current market stands with respect to market share of each handset manufacturer, Nokia still has a sizeable lead though their market share has been deteriorating steadily (from 65% in 2006 to 48% at the end of July, 08). The progress of Samsung has been phenomenal from 8% market share in 2006 to the current 30% with indication of further progression in 2009. LG is the second biggest gainer (approx 17% share for a player who has just been active since 2 years) with most of the success came from its 2 successful models LG KG195 & KG270. Sony Ericsson & Motorola represent 2 of the biggest loosers in the handset market with only 5% & 1% share in the total pie.
I believe that these figures might be shocking for some people, since in Pakistan most of the guys still think Sony Ericsson is the second major player in the Pakistan’s handset market which isn’t correct any more… As I mentioned earlier Pakistan is primarily a low end market with approx 63%-65% volume generates from phones worth less than 3k & if you look into SE local product portfolio you will not find a single SE model in this price range, strangely enough their majority of portfolio compete in a price segment (High-end) which is just a mere 5% of the total handset market.
Motorola is just vanishing in Pakistan, the disaster of their F-3 model started a vicious slide from which they never recovered with the future seems more bleak.
The Koreans are playing their cards really well with the success of both Samsung & LG they are really flying high. Especially the success of Samsung is very impressive with a very strong portfolio (the most balance portfolio in the industry covering all price segments with good products). This success in Pakistan has come down from the global success Samsung Mobile has been enjoying from the start of 2007. Their flagship model SGH C-160 targeting the low-end category is making waves in the most lucrative (volume vise) price segment in Pakistan’s handset market. With more emphasis on R&D & product development the future looks bright for this giant conglomerate.
LG has also succeeded really well through getting direct benefit from the absence of any substantial products by SE. But the question mark on the product quality is hurting the brand to grow exponentially; I believe that they need to work very hard in building their brand image (development of high perceived value through High-end Flagship model) as LG still have very low brand image in comparison with the competition.
What to say about Nokia, the global leader in the world is still the player to beat in Pakistan’s handset market with the resounding success of Nokia 1200 & 1208, this global giant has so much to offer in-terms of quality products. In Pakistan, Nokia plays a major role in 3 main price categories (Low-end, Low Mid & High) which comprised upon 82% of the total market.
Below is some known specification highlights of HTC TOUCH HD, meanwhile the Touch HD is said to be due in Christmas means we can expect its announcement really soon…
Shariq Syed
