In A few weeks ago, two leading mobile telephony firms in India, Bharti and Reliance Communications (RCom), and one relatively lesser known firm, Lakshmi Access Communications Systems Pvt Ltd (LACS), have launched low cost media tablets in the Indian market. RCom unleashed a seven inch tablet PC priced at about US $280 (Rs 13,000); Beetel Teletech, a unit of the Bharti group, took the wraps off of Magiq, priced at US $220 (Rs 9,999); and LACS went even lower by pricing its Magnum Pepper range of tablets closer to US $99 (Rs 5000).
Is a Price War Inevitable? Does Quality Matter?
This rapid series of low priced tablet launches has triggered a catalytic event; mobile telephony firms along with handset makers and new market entrants are throwing their hats into the fray with their own low cost tablets.
Most intriguing is that, contrary to what one would expect, these low cost tablets' technical specs are almost on par with those of the high cost tablets available in the market. The Beetel Magiq boasts a one Ghz Qualcomm processor, 512MB RAM, 8GB internal memory, 16GB external expandable memory, and all high speed connectivity options, including Wi-Fi, 3G, HSDPA, and EDGE. The device runs on Android 2.2 Froyo and has a seven inch Resistive touch screen. The RCom 3G tab, on the other hand, runs on Android 2.3 and has an 800 MHz processor and a capacitive touch screen. The low cost Magnum Pepper seven inch display tablet runs on Android 2.2 and is equipped with a capacitive LCD touch screen, a front VGA camera, two GB of internal memory, Wi-Fi connectivity, USB, an 800 MHz processor, and 256 MB of RAM. While the RCom tablet is expected to be a rebranded ZTE tablet, Beetel's Magiq is manufactured by Huawei and LACS's Magnum Pepper is designed indigenously but is built in China.
For mobile telephony firms, tablet sales will ensure robust data consumption rates, especially as voice tariffs drop. More mobile telephony firms will be joining the fray with attractive schemes to lure the mass market in tier two and tier three cities. For domestic mobile handset makers such as Lava, Micromax, Spice Mobile, and G'Five, this may be an opportunity to replicate phenomenal mobile handset market success in the tablet market. Most of these companies are capitalizing on the opportunity with expected tablet launches in 4Q 2011 or 1Q 2012.
Cautious Optimism is Key
India's tablet market is still in the nascent stage with quarterly shipments estimated at 25,000 to 50,000 units, i.e., 1% to 2% of quarterly PC shipments in India. However, with more than 50 tablet models available in the market in different price brackets, the Indian consumer has plenty of choices. Quarterly tablet shipments are expected to pick up as more and more low priced tablets hit the market.
Considering the value of these tablets for money conscious consumers in India, companies should be cautiously optimistic about the success of low cost tablets in the Indian market. Low cost mobiles have been very successful because they managed to identify the key and specific needs of lower and middle income consumers in tier two and tier three cities and rural areas. We might witness similar phenomena for low cost tablets if they can move up the utility graph with localised content and tap into the same consumer segment. The indigenous Magnum Pepper tablet is already providing localised features such as multi-language support; more such localisation is needed.
However, it remains to be seen whether the target customer will embrace tablets over laptops and PCs as a means of accessing the Internet in the same way that mobile phones were embraced over fixed line phones.
Author: Aishwarya Singh, Research Analyst, ABI Research
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