Samsung looks to shed its 'Goliath' tag even as it partners Flipkart for exclusive dealAbhash Kumar & Ramya Venugopal
Taking a leaf out of Motorola and Xiaomi’s books, Samsung Corp has partnered exclusively with Flipkart for its Galaxy S5 Mini phone, which went on sale today, the online retailer announced in a statement.
The era of Online exclusive deals
Flipkart is no stranger to exclusive deals. Motorola Mobility was its partner for its flagship phone launches earlier this year. The deal was Motorola’s bid to make a reentry into the Indian market and it turned out to be a roaring success with the company selling over a million units of its Moto X, Moto G and Moto E devices. Continuing with the deal, Moto G (2nd gen) and the new Moto X are also being sold on the same platform.
In July, China’s Xiaomi captured the imagination of Indian consumers when its Mi3 phones sold through Flipkart in India sold out in seconds. The exclusive deal with Flipkart saw over 100,000 units of its flagship device being sold in less than three months time. The company has since defocused itself from Mi3 sales and is currently focused on selling its low-priced RedMi 1S via the same platform. The device priced at 5,999 has already sold 80,000 units in two flash sales which lasted for 4.2 and 4.5 seconds, respectively.
Other e-commerce companies are not too far behind. Global major Amazon Inc, which has recently sharpened its focus on the Indian market, has also announced tie-ups with Microsoft Corp for its entire range of interactive gaming devices, such as the X-Box and Kinect.
Snapdeal, the other leading e-commerce destination, also has announced exclusive deals with Jolla phones and Clay Craft, a bone chine and ceramic tableware maker. Snapdeal is pushing its expansion plans aggressively. After cracking a partnership with Tata Value Homes, the Delhi-based company today announced a tie-up with Mapmygenome India to offer DNA testing service on its portal.
Consumer product companies vie for tie-ups with online retailers as it pretty much guarantees that the seller will put in an aggressive market plan for the launch and create enough buzz online for the product.
That works not just for electronics, but for books and other online merchandise as well. Note for instance, a front page advertisement of author Chetan Bhagat’s forthcoming novel, by Flipkart which has a sole tie up with Rupa Publications for its distribution.
Samsung’s Galaxy S5 mini, a lower-priced variant of its current flagship the Galaxy S5, will also run on Android’s 4.4 KitKat OS with a Quad Core 1.4GHz processor and is compatible with Samsung’s wearable Android devices. It retails on Flipkart at Rs. 25,999.
Samsung facing attack on all fronts
Samsung’s move was no doubt a result of the heat it has been facing in India after home grown Micromax overtook the South Korean giant’s lead to become the country’s biggest handset supplier in the April-June quarter this year.
According to a report by Counterpoint research, Samsung’s mobile phone market share was 14.4 percent, behind Micromax’s 16.6 percent share, while in the smartphone segment, the Indian phone-maker at 19.1 percent is breathing down Samsung’s neck, despite the Korean firm’s 25.3 percent share, an 8 percent decrease from the last year.
In China, Xiaomi shipped 15 million smartphones in the second quarter of 2014, compared to 4.4 million in the same period in 2013. Samsung had sold 13.2 million smartphones in China in Q2, 2014, a significant decrease from the 15.5 million it sold in the same period a year ago.
While local players continue to beat Samsung on their turf, giants like Google are localizing solutions to fit customer’s needs.
Take for example the Android One smartphone program from Google. This program strives to provide a feature set for smartphones that is unified across devices and is tailored-made for the particular market. The program has already three Indian phone makers on board as partners - Micromax, Karbonn and Spice. For Samsung, which is rapidly losing share in emerging markets, a push from Google to fulfill the fast growing local demand for lower priced phones spells serious trouble.
India, which is the third fastest growing market for smartphones, offers a good testing ground for the program. An improvement in quality, that Android One promises to bring to the cheaper handsets, will lead to a surge in demand. Interestingly, many consumers in India will be buying a smartphone for the first time and if they like the low-cost product, Samsung will be under even more intense pressure to cut on its margins and reduce prices.
Google is projecting that the Android One phones will be priced under $100. Samsung does sell phones at sub-$100 prices, but its marketing is focused around the high-priced devices. The South Korean giant might have to rethink its strategy for the lower-end and mid-priced devices.
There are other thorns in the Samsung flesh as well. Mozilla announced its super-low-cost $33 phone in India, the Spice Fire One.
With other Chinese handset makers entering India, the competition will only grow fierce.
“We will see intensified competition in the Indian smartphone space as Asian OEMs such as Xiaomi, Gionee, Huawei and Asus enter with premium-like hardware at an aggressive price-point attracting young tech-savvy but price-conscious urban buyers,” Neil Shah, director at Counterpoint Research, concluded.
The disruption has already begun. Will the Goliath fall down again? Or does it have a trick up its sleeve? Let’s wait and watch.