Post on 25-Feb-2016
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Plausible Competitive Scenarios Smartphones Market
AGENDA
A. Current Industry Structure
B. Industry Drivers
C. Future Scenarios
D. Implications for LG
Current Industry Structure: AS IS
• The urban market is already seeing saturation in mobile penetration with more than 88% penetration, however rural market still has low mobile penetration
• The mobile handset market in India is the second largest market after China. The market is expected to grow at a CAGR of 11.8% from FY 2009 to FY 2016.
• Nokia continues to be the leading market participant but there has been a decrease in market share over the last year.
• Indian manufacturer Micromax had the highest shipments in FY 2010 after Nokia and Samsung.
• Market is fragmented with both Global, Domestic, Low Cost players, with total number of players ballooned to 68 in 2010Nokia, Samsung, Sony Ericsson, LG, Philips, Sharp, Panasonic, Toshiba, Haier, Sanyo, Vizio, Micromaxx, Lava, Karbon, Maxx, INQ , Videocon, BPL, ONIDA, TCL,
• Market Share(%) of major players Q3 201036.3
33.2
8.2
7.3
15
Nokia
Samsung
Micromax, Spice, Karbon, Lava
G’FiveOthers
AGENDA
A. Current Industry Structure
B. Industry Drivers
C. Future Scenarios
D. Implications for LG
Multiple forces are shaping the future of handsets & pocket devices*
• Mobile broadband technologies(HSDPA, LTE) are emerging as critical necessities• Telcos are aggressively deploying BB pan INDIA• 3G adoption would trigger sales of smart devices
Broadband Technologies
Pocket devices : Mobile handsets: smart phones ; PDA’s, Tablets
Digitization• Media & entertainment Industry becoming big with DTH,
IPTV, Broadband technologies penetrating
• Use of video and other data services will grow as internet data traffic multiples and mobile broadband consumptions increases• iPhone triggers consumption of Apps and others followData Traffic
• Communications and content will become seamless with open access enabling interaction with any device, service providers• Access of same content with TV, Phone, Tablet• Consequently increasing number of players offer combination of products
Convergence
• One in five phones and laptops sold will be a Smartphone and a Tablet resp; devices with mobile internet access Smartphone sales expected to reach more than half a billion by
2014 Strong growth rates are estimated
~26% CAGR from 2009-2014 Low Cost Tablets have started to slowly penetrate the market
Mobile Pocket Devices
Both supply & demand side drivers are pushing adoption of mobile devices , however market restraints giving challenges…
Pocket devices : Mobile handsets: smart phones ; PDA’s, Tablets
Driver Next 3-4 yearsConsumer Income increasing HighLowering of Price points (ASP)/Cost of Material reducing HighIncreasing local manufacturing base in INDIA HighReplacement market HighAdoption of 3G services MediumGovernment investing heavily on BB HighUrban Market saturated & ready for next-gen devices & ultra-low cost devices; Untapped Rural market
High
Inhibitor Next 3-4 years
Unequal & high VAT rates HighRural network coverage low HighRegulatory hurdles to import from China LowData Charges by telecom players MediumNetwork quality High
AGENDA
A. Current Industry Structure
B. Industry Drivers
C. Future Scenarios
D. Implications for LG
Along with industry drivers, number of uncertain critical variables will shape future industry scenario
Economic& Regulatory
Uncertainties surround critical variables…
Fast BB Availability
Device to Device Communication
Demand for Data Services
Newer Verticals in Digitization
Unified Communication
Mobile Bazaar
Clash of Leaders
Rise of a CE Patron
… along drivers around Dominant Themes
To provide dimension that defines possible scenarios
Addressable Market
Market Growth
1
2
3
In face of favorable industry drivers many kinds players would push for their share in huge mobile opportunity
Size of the Bubble indicates Growth Aspirations, Readiness to Change
Capa
bilit
ies
to M
ove
wit
h Fa
st C
hang
ing
Mar
ket
Low High
High
LowEase to Change/Influence Market structure
Global
Low CostChinese
Domestic/Home Grown
• Global Players : 2 kind of players: Mobile Manufacturers only Apple, RIM,
NOKIA Players who have attained leadership position and are focused on only mobile business
CE Patrons: Players who have a diverse portfolio in Consumer electronic space
• Low Cost Players : 2 Kind of players Chinese players : Chinese handset
manufacturers entered India
Home Grown Players : Indian players leveraging china sourcing selling mobile handsets in INDIA
• Allied Players: Players from other industries like Telecom Players, DTH players have either entered in handset business or plan to
Global players like Google, IBM, Microsoft who are mainly platform players (Internet, Software) are creating ecosystem to be present across all CE devices
Allied
What is the competition doing and what is the competitor capable of doing?Pick 2-3 examples of key players likely to change the war game
What are the strengths and weaknesses of the competition?
What assumptions are made by the competitor’s management team?
Motivation Drivers
Competitors Assumption &
Perception
Past & Likely Future Moves
Competitors Capabilities
1 2
3 4
Drivers• Financial goals • Corporate culture • Organizational
structure • Leadership team
backgrounds• External constraints • Business philosophy
Future Competition Scenario - Framework
ACTIONS
DRIVERS
Illustrative Example : Global players :
Drivers Strategy• Be the world leaders in consumer• Electronic• Take an increasing share of the• consumer’s electronics budget• Maintain a higher than average level of profitability• Be an innovation leader• Have a strong global presence
• Focus on the top of the market• Emphasize good design and high quality• Maintain high margins• Promote industry standards in order to expand the market• Promote proprietary standards where they provide the opportunity to create consumer lock-in • Design products for regional markets
Assumptions Capabilities• Consumers’ disposable income will• continue to rise worldwide• Consumers will spend a growing portion of their disposable income on Electronics• Consumers want both functionality and style, although regional tastes Vary• Style and quality are differentiators that lead to sustainable higher Margins
StrengthsStrong reputation for good qualityGlobal distributionIncreasingly integrated product lineStrong market share in all regions of the globeWeaknessesIncreasingly high manufacturing cost gapCompetenciesExcellent product design capabilities
Source:
Types of players are vying for their share in the mobile opportunity
Likelihood
Rationale
Global
Platform players Google, Yahoo, • With Google’s Nexus & Android platform & it has built a strong ecosystem to make Google platform on all devices
Software Technology players Microsoft, IBM, • Continue to strengthen mobile services to stand in front of RIM, Apple,
• With its successful game console business Xbox & necessary mobile platform Windows 7, and already launched smart phone Kin
PATRONSConsumer electronic players Godrej,
WhirlpoolExisting handset global ODM’s Nokia,
Motorola, SS• Motorola plans to enter Tablet PC
business• Already globally a strong player in
mobile handsetLow Cost Low Cost mobile handset
playersMicromax, Lava, Karbon
• More than 30 such players in INDIA, but only 2-3 players are going to marking it big
Allied
DTH players Tata Sky, Dish, Videocon
• Players like Videocon already in telecom, DTH space might enter
Fixed line players BSNL, MTNL, • Not likely to enter device business as mostly fixed line incumbents
Retailers Croma • Players like TATA might want to leverage their CE Retail infra with DTH capabilities
Mobile Carriers MNOP’s , MVNOP’s
Airtel, Reliance, Virgin Mobile
• RIL plans to pick stake in Notion Ink Indian tablet PC manufacturer
Source:
Types of players are vying for their share in the mobile opportunity
Likelihood
Rationale
Global
Platform players Google, Yahoo, • With Google’s Nexus & Android platform & it has built a strong ecosystem to make Google platform on all devices
Software Technology players Microsoft, IBM, • Continue to strengthen mobile services to stand in front of RIM, Apple,
• With its successful game console business Xbox & necessary mobile platform Windows 7, and already launched smart phone Kin
PATRONSConsumer electronic players Godrej,
WhirlpoolExisting handset global ODM’s Nokia,
Motorola, SS• Motorola plans to enter Tablet PC
business• Already globally a strong player in
mobile handsetLow Cost Low Cost mobile handset
playersMicromax, Lava, Karbon
• More than 30 such players in INDIA, but only 2-3 players are going to marking it big
Allied
DTH players Tata Sky, Dish, Videocon
• Players like Videocon already in telecom, DTH space might enter
Fixed line players BSNL, MTNL, • Not likely to enter device business as mostly fixed line incumbents
Retailers Croma • Players like TATA might want to leverage their CE Retail infra with DTH capabilities
Mobile Carriers MNOP’s , MVNOP’s
Airtel, Reliance, Virgin Mobile
• RIL plans to pick stake in Notion Ink Indian tablet PC manufacturer
Bipolar Demand from Mature market & untapped market will lead to new entrants & consolidation
Strong GrowthFrom Untapped
Rural Market
Fragmented market players with new entrants from allied industry & consolidation/M&A
within low cost handset incumbents
Fragmented market with many players
Strong ReplacementGrowth
From High IncomeUrban
Consumer
Mobile Bazaar
Rise of CE Patron• Players like Samsung or
Panasonic with deep pockets & very aggressive in growing segments(Smart phones, Tablets)
Clash of Leaders• Paradise lost for Nokia
with continuous efforts to make MeeGo strong
• Google ruling the Open/free handset OS will collaborate with device maker to lead
• Microsoft already
• Not in near future, but Global leaders like Apple entering niche segment in Urban India
• Other Global leaders Nokia, HTC with differentiating strategies to tap bipolar demand
• Top 3 Nokia, Motorola, SS continue together to lead
• However low cost players Micromax, Lava reaching scale in low segment
• Allied players entering market Dell
• Followers like LG facing margin pressures
Scenario 1 Mobile Bazaar:
Scenario Characteristics
Industry Structure
As Is Future• Currently fragmented
market with many players• Nokia is still the
leader (35%) with gradual shrinking market share
• Many Handset players , WITH NO 1-2 BIG PLAYERS Leveraging open platforms like Android, ODM’s from Taiwan & China come with chipset vendors Qualcomm’s & Mediatek’s to be able to replicate economies of global leaders.
Gainers & Losers
• Low cost players are main gainers
Players like Samsung who are moving aggressively with market developments to collaborate will gain
Scenario Drivers
• Huge Demand across consumer segments due to rise in income across segments• Google’s free open source Android platform gives power to
low cost ODM’s/OEM’s• Huge demand in Pocket devices encourages platform,
software tech players
Likely Realization
• This is less likely to happen in mature markets, but in developing, emerging markets where brands have not made any significant impression• Untapped rural market will be opportunity to sell ultra low
cost handsets provided network access is available• The strategic success factors will vary, particularly between
mature markets and growth markets• In growth and emerging markets such as India following
success factors will apply: Product design, user interface, pricing. Ability to adapt and imitate successful strategies fastAbility to deliver large volumes flexibly.
Scenario 1 Mobile Bazaar:
2010
Global Players : 78%
Low Cost : 22%
49.52
18.48
6.52 2.63
NokiaSamsungLGOthers
Others includeSony Ericsson 1.69%Motorola 0.5%Motorola 0.37%Apple 0.05%
CURRENT: 2010
FUTURE : 2015
7.31
7.42
5.84
1.43
Micromax
GfiveSpiceMax
KarbonLavaVidecon Onida
Others
Scenario 2 Rise of CE Patrons
Scenario Characteristics
Industry Structure
As Is FutureCE players currently except Samsung are not aggressive in mobile space
Consumer Electronic player like SS emerge as leaders. Portable devices like Tablet PC’s Smart phones would connect with other CE devices. CE player is present across categories to leverage scale
Gainers & Losers
• Strong consumer electronic players with robust position across categories & specialist in one area• Nokia would lose• Low cost players would struggle
Scenario Drivers
• Interoperability through CE devices connecting TV, Mobile, Fridge• Cloud computing & Mobile would be the new
remote control• The mobile BB is the next global computing
platform
Likely Realization
This is most likely to happen if players like Google colloborate with Samsung, in case if Google chooses to play only in the platform game & let a device maker rule
Scenario 2 Rise of CE Patrons
2010
Global Players : 78%
Low Cost : 22%
49.52
18.48
6.52 2.63
NokiaSamsungLGOthers
Others includeSony Ericsson 1.69%Motorola 0.5%Motorola 0.37%Apple 0.05%
CURRENT: 2010
FUTURE : 2015
7.31
7.42
5.84
1.43
Micromax
GfiveSpiceMax
KarbonLavaVidecon Onida
Others
Scenario 3 Clash of Leaders Most Likely to happen
Scenario Characteristics
Industry Structure
As Is Future• Global players like
Apple, Google are not present in India. But both has plans to do so• Nokia, Low cost
players , Samsung are ruling the market
• Smartphone's & Tablet PC would compel new market leaders. Google, Microsoft not in near future to play big in Indian market But continue to create strong favorable ecosystems.
• However In next 3-4 years Apple/Google would emerge as leaders along with existing global leader Nokia
• Demand for Mobile Internet would help Google leverage its strong presence in platforms & with Android Google plans to be present on all CE devices
Gainers & Losers
• Nokia is still ruling though share is dropping • Samsung is moving
up the ladder , but low cost players are collectively giving pressure
• Nokia would lose• Apple, Google, Microsoft would gain• Samsung would gain• Applied players would enter• Low cost players would continue to juggle between
positions with few M&A’s
Scenario Drivers
• Current BB penetration is very low in INDIA
• Mobile Internet would be next megatrend through Pocket devices • Internet Penetration to increase in INDIA• Interoperability through CE devices connecting TV, Mobile,
Fridge• Open free Platform are readily accepted by OEM’s, ODM’s• Google is strong in Web
Likely Realization
• Variability is high in this scenario as it largely depends on the Broadband infrastructure• Also if player like Samsung partners with Google for device
& cloud computing platform it can win the market jointly.
Scenario 3 Clash of Leaders
2010
Global Players : 78%
Low Cost : 22%
49.52
18.48
6.52 2.63
NokiaSamsungLGOthers
Others includeSony Ericsson 1.69%Motorola 0.5%Motorola 0.37%Apple 0.05%
CURRENT: 2010
FUTURE : 2015
7.31
7.42
5.84
1.43
Micromax
GfiveSpiceMax
KarbonLavaVidecon Onida
Others
Potential scenarios have different impact on various players
Low Cost Players
Allied Players
Global Players
1 2 3
CE Patrons
• Will be able to compete on price & differentiation because of size• Would be paradise lost for
players like Nokia
• Within this group followers would get Brand & Cost pressure from Japanese & Chinese players resp.
Mobile Bazaar
Rise of CE Incumbent
Clash of Leaders
• They will mostly play in low cost segment and rural markets in future
• They will mostly play in low cost segment and rural markets in future
• Take advantage of vast appliance portfolio to leverage convergence• SS or Panasonic have
chances to gain
• Face huge margin pressures if not change strategy
• If continue to innovate would sustain in market
• Would play niche or partner with strong CE player
• Struggle for share in urban market but low cost players will stick to low segment
• Face huge margin pressures if not change strategy
• Would play niche or die
• Likely M&A, consolidation leaving only 1-2 strong players
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