The total mobile and telecom retail market in India has been growing at a CAGR of 13 per cent and by 2015 it will grow by 14 per cent per annum. The modern retail component is 15 per cent of the total market and it grew by 31 per cent. To achive a share of contribution of around 12 per cent of total modern retail, it is estimated to grow at a CAGR of 35 per cent by 2015. IMAGES Retail spoke to Hitesh Shah, Director, Channel Sales, BlackBerry India to know more about the ongoing trends and future plans of the company.
Journey
According to India Retail Report (IRR) 2013, two years ago, the consumer electronics retail market was valued at Rs. 63,000 crore, which grew at a CAGR of over 20 percent to reach a size of Rs. 95,000 crore by 2012. By 2015, it is estimated to become double that of the current market size. Almost one-fifth of this market is modern today. Over the years, there has been an increase in consumer awareness and introduction of new models. Today, even small towns and cities are witnessing a major shift in consumer lifestyle and there is growing demand for products such as mobile phones, air-conditioners, washing machines and colour televisions.
According to Shah: “BlackBerry has been a pioneer in mobile communications and enterprise solutions that enables enterprises and individuals to maximise their productivity, communication and collaboration. Today, as BlackBerry celebrates its tenth year in India, we continue to deliver on the trust of our millions of customers around the world by pushing the boundaries of mobile experiences.”
“India remains a top 10 market for us. Our BlackBerry OS7 and BlackBerry OS10 devices have seen a lot of traction in this market. Enterprise has been BlackBerry’s strength and we continue to leverage this in the country by reaching out to corporates with our BlackBerry Enterprise Service 10 offering. Additionally, India has been a stronghold for BlackBerry, which rides on the success of its BBM instant messaging platform. BBM remains a primary IM service for the Indian urban youth and we plan to build on this going forward with our BBM Channels offering,” he added.
Innovation
- Talking about the company’s latest in terms of innovation, Shah shares: “BlackBerry is constantly looking to innovate and develop products and technologies that redefine the product philosophy. Keeping that in mind we are looking at making inroads into the market in the following year with some of the most cutting-edge product offerings.”
- The next generation of BlackBerry® Enterprise Service (BES), BES12 will enable organisations to develop enterprise-grade applications that are quickly deployed to BlackBerry smartphones and other mobile devices. The BES12 platform has been designed to offer backward and future compatibility, unifying BES10 and BES5 on to one platform. It will be available by the end of 2014. The flexibility and scalability of the new BES12 architecture will also provide customers with the ability to move securely from on-premise to the cloud effortlessly and securely.
- Enterprise BBM™ (eBBM) Suite is a new family of products and services that work with BlackBerry smartphones and BES and BES10 to provide enterprise-class mobile messaging that brings together the core strengths of BBM with features and capabilities aimed at enterprises. BBM Protected will be the first solution offered in the new eBBM Suite, bringing regulated industries the most secure and reliable real-time mobile messaging in the industry. eBBM Suite is expected to launch this summer and will be available to enterprise customers through a monthly per-user fee.
- BlackBerry® Classic smartphone is an upcoming QWERTY smartphone that merges the power of BlackBerry 10 with the classic BlackBerry design and experience, realised with hard buttons as well as an integrated track-pad. With a new 3.5” touchscreen and keyboard with frets and sculpted keys, the device will feature the familiar workflow and efficiency that BlackBerry fans continue to value in a BlackBerry QWERTY smartphone. BlackBerry Q20 smartphone will hit the market in the second half of 2014.
Presence
As a part of the company’s Go-to-Market strategy, they are focused on building and fortifying new and existing relationship with their channel and distribution partners. Having secured a stronghold in top 80 cities, they now look at expanding their reach to 190 cities and towns, as these cities will drive the next phase of growth for the industry.
They currently have 4,000 retail outlets, which include 500 stores in large format retail. Apart from these, they also have 20 exclusive stores as well as 100 service centres across various cities. “Since the Indian smartphone market is largely driven by retail channels, it becomes important to enhance the retail experience to our target consumers. A unique initiative that we have undertaken is to set up BlackBerry Experience Zones, which are based on the store-in-store concept nationally,” adds Shah.
Additionally, they also have partnerships with the top nine telecom service providers in India, who also help them reach out to enterprise customers. This strategy has worked very well for them over the years and continues to bear fruit.
The BlackBerry Enterprise Service 10 (BES10) has thus far seen more than 1,000 installations in India, which is significant considering that they launched it only last year. BES10 and BlackBerry 10 smartphones have been the first in the market to receive NATO certification, and have set a benchmark in the industry through their mobile device management, mobile application management, and security features.
Online retailing
Today, the channels to reach customers are Retail/LFR/Carrier/Enterprise Partners and Online and, as a matter of fact, all these channels are equally important in India. Each one of them endorses the relevance of any brand in the market. According to Shah: “Online is a growing trend. Acknowledging this fact, BlackBerry has partnered with online portals such as Flipkart but in a segment that we are playing, customers would want to come and understand the product or its features and feel the product. Hence, our own exclusive stores or experience stores would help cater to their requirements too.”
Initiatives
- Talking about the various initiatives BlackBerry plans to undertake for the retailers, Shah said:
- The key initiatives that the company will be implementing going forward for their channel partners, in order to make sure that their business objectives are met, are as follows:
- Focus on the depth of distribution rather than width of distribution: Ensure the top channel partners are on board and they drive the volume rather than having all the channels and them cutting each other and delivering similar volumes.
- Ensure channel hygiene (price difference in channels, cross-territory sales): Trust being the highest priority from a channel perspective is established only when you take measures that channel partners do not lose money due to cross-territory sales and price wars due to a) VAT arbitrage, b) deal prices, and c) grey vs. legit.
- Ensure channel fill with the right products and work on hyper local activities to drive footfall to the channels: Ensuring that the channel has the right product mix and the sell-through based business model driven by local and locally relevant initiatives – one size cannot fit all when it comes to a country like India.
- Ensure different levels of service support for Platinum Retailers: Today, the channel partners are Blackberry’s biggest brand ambassadors and they drive sales for the company.
- “Being in the business of sales where service drives an important force, it is very important for us to ensure that we offer differentiated service to our partners to keep their faith and belief in us. Our customers are important to us and this means both the end customer and the channel, which in a way is our customer, are taken care of,” asserts Shah.
Performance in India
In the last year or so, BlackBerry has achieved some major milestones in India as well as across the globe. From a devices standpoint, the consumer discount offers on the BlackBerry 10 devices as well as the enterprise festive offer on BlackBerry Z10, Q10 and Q5 have been well received by the market and bolstered sales tremendously. With the launch of Z30 in November 2013, coupled with the release of the BlackBerry 10.2 OS update, the company has received excellent feedback. In fact, in India the BlackBerry Z30 was sold out in the first couple of weeks itself.
“In terms of software and services, our enterprise offerings, BlackBerry Enterprise Service 10 (BES10) and BlackBerry 10 smartphones, have been the first in the market to receive NATO certification, and we have set a benchmark in the industry through our mobile device management, mobile application management, and security features. This has resulted in significant uptake of BlackBerry 10 and BES10, particularly amongst the corporate segment in India. Within 6 months of launch, we have nearly 1,000 installations of BES10 servers in India, with BlackBerry 10 devices associated with each server. We continue to record double-digit growth in the software and services business. Some of our key Enterprise customers include Essar Group, Financial Technologies, Indiabulls Delhi and Havells. Lastly, BBM has been a runway success for us with over 40 million newly registered iOS or Android users in the last 60 days. We are exploring a number of revenue paths for BBM (250,000 BBM channels have already been created), which will only add to our growth and profitability in India,” elaborates Shah.
Trend
According to IDC, the smartphone market in India grew by 229 percent in 2013, while the share of feature phones continued to slide further to make 81 percent of the total mobile market in India. The company expects this number to go up significantly, as cited in industry reports that imply a spike in the usage patterns of smartphones in the age bracket of 16 and above years, where numbers have gone from 5 percent in 2012 to 22 percent this year, a four-fold increase. The willingness to stay connected through IMs, e-mails, social network and apps within this age group is what is driving the smartphone adoption in these markets. They are the true ‘mobile first’ markets where people are experiencing the power of the Internet and its social culture for the first time by using their mobile phones. As a consequence, the opportunities the upcountry markets offer are immense and hard to ignore for any smartphone brand!
Demand factor
“BlackBerry is doing well in India. As mentioned earlier, even our BlackBerry 10 devices have seen great traction amongst users in India. Apart from that, it is important to understand that we do not have a sub US$ 150 device as compared to many other brands. Our strengths lay in creating cutting-edge devices that offer superior user experience coupled with great security and we will not dilute that proposition. We will continue to launch BlackBerry 10 smartphones for the ‘urban youth and prosumer’ and for the first-time smartphone adopters; we also have a robust roadmap for the BlackBerry OS7 based devices,” explained Shah.
BlackBerry has been and it continues to innovate itself as an iconic brand. Over the years, BlackBerry has shown significant movement and has evolved from being just a smartphone to a versatile and ubiquitous brand. Today, BlackBerry offers consumers a rich portfolio of devices and services for multiple segments besides a strong platform that enables improved productivity, enhanced security and overall communications experience.
According to IDC, India is slated to become the third largest smartphone market by 2017, with burgeoning demand from Tier-II and -III cities, apart from the urban areas. Increased literacy, better incomes, improved Internet and telecom connectivity coupled with a 24×7 digitally connected young population is fuelling smartphone adoption in the upcountry markets of India. Realising the potential that these markets offer, BlackBerry has introduced products and services that are apt for consumers in these areas, which include the BlackBerry OS7 devices that have seen great traction amongst users in these markets.
SMEs
Small and Medium Enterprises (SMEs) have been the backbone of India’s economy. They play a critical role in the growth of the nation by contributing to the GDP, industrial output and generating millions of employment opportunities. In India, we are aggressively targeting large, mid-level and small businesses alike. Shah points: “For the SME and enterprise space, our focus will remain on enhanced aides to demonstrate the power of BES10 and focus on growing the customer base in India. We have strategic ‘built-for-BlackBerry’ applications like Tally ERP 9, which specifically address the SME requirements.”
Spreading wings
Shah explains: “We’ve recently structured our business into four operational units including Enterprise Services, Messaging, QNX Embedded business and the Devices business. This structure will help us drive greater focus on services and software, while establishing a more efficient business model for the devices business and yes, this model has already shown great results. In the last few months, the results have been as follows in the below-mentioned operational units:
Enterprise Services: In Enterprise Services alone, the installed base of BES10 increased to more than 30,000 commercial and test servers, up from 25,000 in September 2013.
Messaging: BlackBerry registered more than 40 million new iOS/Android users in the last 60 days; more than a dozen Android OEMs preloaded BBM, including LG, Micromax, Zen and Spice from India.
Devices: We are banking on our joint device development and manufacturing agreement with Foxconn, and we will initially target the Indonesian consumer smartphone market starting early 2014.
QNX Embedded Business: We are working at developing new technologies in this sector. We are already doing mission critical work with NASA, US Road Rail, and other healthcare and automobile industries.”
Expansion plans in India
Talking about the company’s expansion plans in India, Shah said: “Our plan for India going forward is to ensure the channel remains profitable but at the same time we intend to bring the right value proposition to the customers. At BlackBerry our focus is to work with the right partners across the various channels and ensure the right experience is given to the customer, especially on BlackBerry OS10 as for an avid BlackBerry user there is a small learning curve involved and giving the right BlackBerry OS10 experience is important.”
Outlook for 2014
The company anticipates maintaining its strong cash position and further reducing operating expenses as it continues to implement its previously announced cost reduction programme in the upcoming year.
When it comes to smartphone sales, channel partners and distributors have been focused on features such as the camera and data capabilities such as e-mail and instant messaging to make a sale. As phablets become more mainstream and operating systems more sophisticated, they have had to invest time becoming familiar with this new form factor and what it is capable of. What this means is that in 2014, your local phone retailer will be talking multimedia, video, gaming and entertainment on the go when asked about the latest smartphones in their store.
A lot of consumer schemes and incentives will see a greater demand from a channel community standpoint given its ability to help move inventory, increase sales as well as develop demand for high-end and high-margin device. As mentioned earlier, what you will also hear the channel use as USPs of various devices is the apps and services that come bundled with it.
