Compromise is the new disease plaguing mobile handset manufacturers in the country. They are

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feeling the pinch while having to satisfy customers’ ever-changing preferences, maintaining low prices, keeping up with technological changes and cutthroat competition. Chinese mobile phone makers continue to barrage the market with feature-rich handsets at low price points. They have proved to be the toughest competition for the global companies as well as the upcoming Indian manufacturers. Though Nokia continues to lead the pack, the gap between the top player and the others kept narrowing through this year.

“The big global brands will continue to face competition from local and Chinese brands as some of the latter build capabilities to compete at a larger level covering broader consumer segments,” says Anshul Gupta, principal research analyst at Gartner. “G’five, Karbonn Mobile and Micromax occupied third, fourth and fifth positions after Nokia and Samsung in the third quarter.”

According to Gartner, Indian mobile handset sales would reach 23-crore units by 2012, an increase of 8.5 per cent over this year. The share of global vendors is declining as local and Chinese makers are on their way to control more than 50 per cent of the market.

About 150 global and homegrown brands compete in the segment. Amidst the tough competition, global brands that used to dominate the segment are finding it hard to keep up with ever-increasing customer expectations.

“That is the biggest challenge now,” says Prakash Katama, director of Nokia’s Chennai factory operations. “Even entry-level users seem to need all the features at low price points. Two years ago there was clear demarcation on what different segments of consumers needed. That has some how disappeared now. Entry-level users want their phones to have internet access as they do not have PCs at their homes. They also want high-resolution camera, music, value-added services and high battery life. We can only do so much at low price points. There are definitely some compromises while meeting popular demand.”

Apart from the entry-level phones that contribute to volumes, feature and smart phones are contributing to value. They now add about 25 per cent to the total sales in terms of value. Though Nokia is the overall leader, Samsung overtook it as the No 1 smart phone manufacturer last quarter with its Galaxy range. Nokia’s tie up with Microsoft for its Lumia range (to be launched this month in India) is expected to turn the table in its favour again.

Meanwhile, Chinese companies are in no mood to spare the high-end segment. The third largest mobile phone seller in India G’five has tied up with Chennai-based Munoth group to exclusively sell smart phones. The partnership is meant to focus separately on high-end handsets, especially touch phones, to gain significant market share, said Winston Zhang, chairman of Munoth G’Five Telecom, the joint venture company.