WION's Ankit Tuteja in conversation with Amit Boni, VP - sales and marketing, Smartron India. Photograph: (WION)
The smartphone industry is not innovating as aggressively as they would do in the recent past. As a result, all phones today look and offer pretty much the same - something that has been bothering consumers, tech pundits, enthusiasts and critics, alike. And therefore, to understand the change in the way the mobile industry is progressing, where it stands today and where it is actually heading, we spoke with former Motorola India head Amit Boni - who is now serving Smartron India as VP for sales and marketing. Serving the mobile industry for a long time, Amit shared with us some interesting insights on the innovation lull in the smartphone arena and what is going to be the next defining factor in the mobile world.
WION: How far do you think the smartphone market has come ever since the introduction of the first iPhone in 2007 and where does it actually stand today?
Amit: Well, if you are talking specifically in India context, I think, we are still a long way to go. If you see, the per capita smartphone penetration in India is still low. The TAM (Total Addressable Market) in India on the phones is probably upwards of 200 million units, probably a little more than that. But if you see the number of smartphones only, we are still looking at 120-125 million as the Total Addressable Market for the year.
So, fundamentally there is still a lot of people out there who are going for feature phones. And then you have a bunch of people, who are really buying not-so-great-quality smartphones in entry-level price tiers. So from purely India context, there is still a long way to go before we say everyone in India has a smartphone in hand. So the prospects out here, the transition out here, it will still unravel over the next 4-5 years.
You can practically accuse the industry of lack of innovation. There is very limited work happening in terms of hardware innovation.
WION: But Amit given that every phone today has something similar to offer, what do you think is holding the phone companies back from standing out - lack of innovation or market saturation or something else?
Amit: From my perspective, that is definitely not market saturation. You can practically accuse the industry of lack of innovation. There is very limited work happening in terms of hardware innovation. Most of the work that is being done is happening at the chipset level. Those guys are doing some really good work; let’s say, Quick Charge from Qualcomm and so on and so forth.
So, there is a lot of good stuff that is coming on that side. But otherwise, from a pure hardware side, very limited work has happened over the last 5-8 years - in terms of innovation. I think, a lot of it has got to do with how the industry is structured, how a lot of people essentially look at success - not necessarily in terms of innovation, but in terms of how they do market shares.
If you see even in India, there are these articles that come out every three months saying now this is number 1, that is number 2 and that is number 3. And there is a huge hyperbolic conversation that starts happening around that, which tells you the mindset that a lot of companies come out with. They think about how do I make the numbers, how do I sell more rather than thinking how do I generate tremendous amount of intellectual property, how do I innovate and what makes me come out with some great products for end consumers.
WION: So where do you see the mobile industry going, or rather, say what do you think is going to be the next defining factor in the smartphone space?
Amit: Before I answer that, let’s take a step back. If you see fundamentally phones, we look at them as a standalone product. So, over time, there is a good device or there is not such a good device, it’s essentially spec-to-spec comparisons. People will say, there is more RAM, this is a bigger display, there is more internal storage. This is what people generally talk about.
As long as that stays, there is not much that is going to happen. But I think there is a growing understanding and I can tell you from Smartron perspective that when we are doing a bunch of devices, we are focusing on mobile ecosystem, because we understand that it’s not only about putting in great hardware, what consumers are looking for is great use cases.
WION: Amit, having said that there is lack of innovation in the smartphone space, there are still companies that have been striving to make things better and coming up with new concepts, and one such is the modular concept. But how do you see this concept emerging, how far can it make as an approach or do you think if it has the potential to appeal to masses out there?
Amit: I think modularity is a phenomenally good concept. Unfortunately, I don’t think companies so far have been able to come out with something that truly does justice to that thought process. As a concept, if somebody tells you that you don’t have to replace your overall device but you can go, and for example, replace a camera if there is a new camera sensor coming in or you can just replace the speaker with a better speaker, it’s interesting.
I think, at an eclectic level, there are some really interesting thoughts out there, but it also need to be seamless for end consumers. It cannot be either highly priced so much so that your modular solutions are, at times, costing as high as your device itself or that the use cases are difficult to do.
There have been various attempts by a multitude of companies. They have tried to do modularity in one form or the other. But I think there is some way to go on that. I think the future of smartphones or may be, a lot of other consumer electronics will be modularity. Are we there yet? No. I think it’s going to be another 4-5 years down the line till you see modular use cases coming, which will be more widespread.
I don’t see GST changing anything with respect to manufacturing strategies. But what GST will interestingly do is it will alter the dynamics of last 3-4 years as you have seen between online and offline.
WION: And talking about innovation, how promising do you find the concept of Augmented Reality-ready smartphones?
There is a bunch of work that can happen - right from as simple thing as sports-themed cafes to actually doing a lot of education work. I think, AR and VR could play really interesting work. In next year or two, they will start becoming a lot more mainstream in a lot of ways.
But, as I said, a lot of this is dependent on your players in the market. If somebody thinks, you are not important enough as a country to get a flavour of AR and VR or IOT, then people are not going to do that. One of the problems that we have in India is that a lot of people think of market share as their primary driver. They want a run on those musical chairs.
As a result, nobody focuses on what consumers really want out there. They give them products that they believe are going to sell more without realising how you could make a user’s life better. But I think if there are a bunch of people, who take that stance saying that this has use cases for Indian consumers, I think, you will see it becoming more mainstream over next 12-18 months.
WION: As we all know, India is one of the sought-after markets when it comes to smartphones, and a lot of companies are setting up their manufacturing units in India, but now with GST into the picture, how do you see the game is going to be like for manufacturers out there?
Amit: I don’t see it changing anything for the manufacturing , because I am sure that the government is cognisant of the investments that have been made in terms of having a better manufacturing ecosystem in the country. I am pretty sure that they are going to be supportive of that. I don’t see GST changing anything with respect to manufacturing strategies. But what GST will interestingly do is it will alter the dynamics of last 3-4 years as you have seen between online and offline. Because suddenly now there is no arbitrage in terms of VAT that existed earlier for online players. It’s a much more better-level playing field. I think it needs to be seen how the market shifts.
WION: And Amit, there is one trend that I have been observing for a long time. A lot of companies enter the the high-end segment of the Indian mobile market at attractive prices. They keep the pricing really competitive for a couple of years and then eventually, they move to the price brackets where premium phones from top-notch players compete. I first noticed this trend with Motorola, then Google’s Nexus lineup and now OnePlus is on the same path. What is the thought or better say, strategy behind it?
Amit: There are two things. So, a lot of players, when they enter the market, see pricing as an entry strategy. If you can increase the value for an end-consumer without spending that much money in marketing and brand building, you are probably going to have a much better price point. And those price points are interesting to consumers and they come in hoards to buy that.
In terms of really taking the price points up, I think it’s singularly focused on pricing as a strategy. It’s not a sustainable strategy, because supply chains globally in the phone industry give you a limited leverage - in terms of one’s cost structure better than somebody else’s. But I think there is not a lot of difference in those cost structures. So, if you keep on harping on those same price points, as a company, you are not going to survive.
So, companies need to make sure that they have a portfolio that spans a few product price points. May be, then they want to do a pricing play on a couple of products, which is plausible. But anyone, whose focus clearly is on pricing to begin with and then wants to move up, that doesn’t work. But why they are forced is because sometimes, the economics come to bite back and say, a company cannot keep on doing those price points because they are not sustainable.
WION: We all know that how you played an instrumental role in Motorola India’s business. So what is your plan for Smartron, a company which is yet to hold some grounds in the market? What is the way forward?
Amit: Smartron, essentially, is not a smartphone company. We are an Internet of Things company. We have multiple areas of interest in terms of hardware as well as software. We have multiple categories - we have phones, wearables, computing and smart homes, to name a few. We will have play on the enterprise and infrastructure side of it. so, there is a bunch of things that we are looking at doing at Smartron.