CDMA Dominates Ultra Low-cost Handset Market in India

(Top News, 20 Mar 2008)

CDMA dominates the ultra low-cost handset (ULCH) market in India, according to the CDMA Development Group (CDG), as based on a Yankee Group study. Research also suggests that the availability of low-cost CDMA handsets has been a key driver towards increasing teledensity in the region.

"Availability of low-cost CDMA handsets changed the competitive landscape in India," said B.V. Raman, CDG's representative in India. "In India and other parts of the globe, this healthy competition is making wireless telecommunications more affordable and is contributing not only to CDMA's rapid expansion but increasing teledensity worldwide. Given CDMA's aggressive and highly economical evolution path, the strength of the ULCH market has positioned CDMA2000 operators to benefit from the Indian government's imminent spectrum allocation for 3G."

Other key findings from the report, based on comprehensive import data from Indian government sources between January and October 2007, include:

- 62 percent of all handsets imported into India were below $50
- 78 percent of all sub-$50 imports were CDMA models from 13 vendors
- 94 percent of CDMA imports were below $50
- Total CDMA import volumes exceed GSM by a margin of 52 percent to 48 percent
- The average selling price (ASP) for all imported CDMA handsets is 68 percent lower than the GSM market average—on average over the period, the cost of CDMA handsets across the entire device portfolio is $72 less than GSM

The Yankee Group also determined that India's total mobile teledensity has increased as a result of the availability and variety of CDMA ULCHs from multiple vendors. According to the Telecom Regulatory Authority of India (TRAI), GSM and CDMA subscriber bases grew 13.4 percent and 12.12 percent respectively in the third quarter of last year. The TRAI data indicates an increasing growth rate for CDMA subscribers, up from 10.05 percent in the previous quarter.

"A number of factors including, but not limited to service provider competition, service quality, brand affinity, effective marketing and distribution, device vendor competition, increasing per-capita GDP, and general demand factors including choice, are driving growth," commented John Jackson, Vice President of Yankee Group's Enabling Technologies Group. "CDMA has helped create this healthy growth environment. Trending in the data analyzed is clear. We expect CDMA handsets to continue dominating the low cost market for the foreseeable future."

Low-cost CDMA handset pricing is not limited to India. More than 82 very low-end (VLE) CDMA2000 handsets (under US$50 wholesale) are available globally from 19 suppliers in highly competitive emerging markets such as Bangladesh, China, Ghana, Indonesia, Mexico, Nigeria, Pakistan, Sri Lanka and Venezuela. Very low-cost CDMA handsets are also becoming available in developed markets with the debut of the "Cricket EZ" handset sold by Cricket Communications in the United States for $49.99—a trend which will rapidly transform the wireless industry.

The Yankee Group study, entitled "CDMA Imports Driving Ultra Low-Cost Handsets in India: Price Trending Analysis," is available now on the CDG Web site: www.cdg.org/technology/3g/resource/yankeegrp_ultralowhandsets.asp.