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    South Asia
     Oct 28, 2006
Indians smash cell-phone sales record
By Siddharth Srivastava

NEW DELHI - A new world record has been set in India. On October 19, an auspicious day to purchase new products in the country, mobile-phone maker Nokia reportedly sold more than 400,000 handsets, a number not achieved in a single day anywhere else in the world, including China, one of the most rapidly growing mobile-phone markets.

The firm's previous sales high was about 100,000 phones in a single day.

On average, 150,000 new cellular-phone connections are sold in

the country every day (about 6 million a month), across all brands, including Samsung, LG, Motorola, BenQ, Ericsson and Bird.

It may be recalled that it is festival season right now when Indians, high on the annual Diwali bonus combined with the auspicious shopping period Dhanteras, go on a spending spree, with mobile phones being one of the most desired consumer goods.

It is a gadget that is now accessible to people at almost every income level, with most handset manufacturers aggressively playing the price-cutting high-volume game. Airtime rates in India are among the cheapest in the world.

In a nation where the World Bank has estimated that close to 80% of the population survives on less than US$2 a day, mobiles have become the "poor man's phone".

The Indian retail market for mobile phones is pegged at Rs750 billion ($750 billion) and is growing at more than 20% per year. The number of mobile-phone users in India reached the 100 million mark in April, making it the fifth-largest market in the world. The subscriber base is expected to grow to 300 million by 2010. At the beginning of 2000, India had just 1.6 million cell-phone subscribers.

China, of course, remains far ahead, with the world's largest mobile-phone market by volume, and one of the fastest-growing. According to government estimates, the country will have close to 450 million mobile-phone users by the end of the year and 600 million by 2009. Almost 40 million people signed for their first mobile phone in the 12 months to July.

Apart from low cost, one of the main factors facilitating the spread of mobile phones in developing countries such as India is the huge number of people who have never had a phone of any kind. In developed countries such as the United States, fixed lines are the norm for the overwhelming majority, reducing demand for cell phones considerably.

Mobile phones also provide communication for people in remote areas where there is limited fixed-line telecom infrastructure.

It is estimated that connecting a fixed line in a remote area costs $1,400, while a mobile connection costs about a third at $500. The convenience of over-the-counter purchase of connections and lower costs being passed on to consumers in the form of cheap rentals in a highly competitive market, and good finance schemes, make cell phones a very desirable alternative to fixed lines.

Last year, the Indian music industry earned more than $35 million - 20% of its revenues - from mobile music. Media houses such as Star, Sony and BCCL have formed separate divisions to tap into mobile content. Star chief executive officer Peter Mukerjee said mobile telephony should eventually bring in 30% of the company's revenues.

In 2005, the number of legitimate music-download sites reached 335, up from 50 two years ago. In just two years, the volume of music made available online by record companies has increased more than sixfold to more than 2 million songs. Mobile music downloads in the domestic market are currently valued at $50 million, according to Soundbuzz India.

Royalties worth about $15 million were paid to the music industry in the past 18 months. About 400,000-500,000 ringtones are downloaded daily.

It is estimated that the Indian mobile gaming market, which generated $30 million in revenue in 2004, will rise to $336 million by 2009.

According to a report by industry consultants ARC Group, worldwide mobile entertainment revenues are forecast to grow to $25 billion by 2007, driven by the games sector. In the Asia-Pacific region alone, mobile gaming is expected to generate nearly $2 billion in revenue by 2008. In East Asia, mobile gaming has generated more than $850 million.

Mobile commerce is another area receiving attention. Recent Internet and Mobile Association of India figures estimate that the domestic e-commerce market will cross the $600 million mark by 2006-07, a nearly 100% increase over last year and more than 300% over 2004-05.

Siddharth Srivastava is a New Delhi-based journalist.

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Walking the talk in India (Sep 2, '05)


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