Indian e-commerce industry is on the growth trajectory, with several retailers getting a massive influx of revenues. Amazon (NASDAQ:AMZN) CEO Jeff Bezos is in the country to chart further growth for Amazon’s Indian outfit, and there have been significant investments over the course of the year in other major e-commerce stores like Flipkart.

However, it looks like there will be a major change in the mobile segment as it was revealed earlier this month that Samsung (KRX:005935) is mulling a move to an offline-only business model. Such a model does not make much sense considering that e-commerce stores offer better deals and discounts to users, but it is believed that several brick and mortar retailers across the country have largely contributed to Samsung’s decision to go offline.

The bid to go offline

There have been significant rumblings in the offline distribution channels over the course of the year as brick and mortar stores have seen their customer base dwindle due to the rise of the e-commerce stores. Several retailers have been vehement in stating that they would refuse to carry Samsung products unless the manufacturer decides to offer them exclusively online. The main reason why retailers are so worried about e-commerce sites is that there isn’t any method to control the prices. For instance, the Galaxy S5 price online in India is $575 (Rs. 35,400) whereas in an offline store it is in the vicinity of $633 (Rs. 39,000).

This led to the creation of a union of sorts called the All India Mobile Retailers Association, which is the coalition of brick and mortar stores from across the country. The stores have banded together to ensure that the price hygiene – the price of a handset across cities and states – stays fixed. Samsung’s incentive in going offline is that it can retain a healthy margin, which an executive has said has dwindled to single digits due to low pricing from e-commerce stores. Samsung met with AIMRA members in New Delhi last month to discuss the move to go offline, and while the South Korean manufacturer hasn’t offered a statement confirming the decision, it is looking likely that its upcoming products like the Galaxy Note 4 will be available only through brick and mortar stores.

The move does not mean that Samsung will cease to sell all products online, as the manufacturer has stated that it will look to offer exclusive deals to e-commerce stores in selling select devices. For instance, the Galaxy K Zoom is available exclusively via Amazon in the country. However, it is unlikely that devices in the Galaxy Note line will be available online in the future. Another contributor must also have been effective pricing: Samsung wants more control on setting the prices on its devices, which it does not have online. By going offline, Samsung can assert more control in terms of pricing its handsets and setting limits on the amount of discounts retailers can offer. We may see this sooner rather than later as the Galaxy Note 4 price in India is claimed to be in the vicinity of around $894 (Rs. 55,000), which is very similar to what the price of the iPhone 6 Plus is rumored to be in the country.

Oddly enough, Samsung isn’t the only one who would be following an offline-only model in the country. Chinese vendor Gionee also sells its handsets exclusively through offline channels in the country, and was quick to quote that it was able to sell 5 million handsets this year. Gionee is making significant inroads into the Indian market by advertising aggressively and maintaining a strong presence at brick and mortar stores.

Samsung doesn’t need to worry about market presence, as its wares are constantly featured in advertisements and billboards. With a total of 48 devices available to consumers across all price segment in the country, the manufacturer offers an abundance of choice. What customers don’t get with Samsung is great value for money, which sums up why the manufacturer is thinking of shifting to an offline-only strategy in the first place.

Turbulent times for Samsung

Although Samsung was the largest handset vendor in the country in 2013, it lost its position to Micromax this year. A combination of lackluster device launches combined with high pricing has led to the South Korean vendor’s shift in fortunes. With the introduction of Motorola’s Moto G, Moto X and the Nexus 5, and the more recent entry of devices like the Xiaomi Mi 3 has meant that Indian consumers are spoilt for choice when it comes to handsets that offer a great set of features at an affordable price. Samsung not only lost out in the mid-tier segment this year, but also in the high-end category as the Galaxy S4 and Galaxy S5 failed to meet the vendor’s sales targets.

Xiaomi has been highly successful in generating a lot of attention for its handsets thanks to its unique flash sale model, which has seen over 40,000 devices being sold in under five seconds. Xiaomi’s devices were also in great demand as the manufacturer was offering hardware that was available for a third of what Samsung was charging.

More recently, Google (NASDAQ:GOOGL) made its move into the entry-level segment with the announcement of Android One, which will serve to further consolidate the market share of local vendors in the country. Samsung is noticeably absent from the list of Android One vendors, and while the manufacturer is set to launch its own offering that targets this segment, it is unlikely it will match what the Android One handsets offer, both in terms of hardware as well as software features.

With the handset vendor losing ground in India as well as other global markets in light of stiffer competition, it remains to be seen whether a move to offline-only sales is a smart choice in the long run. For now, however, it is looking likely that consumers in India have to head to a brick and mortar store if they want to get their hands on a Galaxy Note 4.

The post Samsung Considers Going Offline In India To Boost Margins appeared first on VR World.

Earlier this month, Google (NASDAQ: GOOG) introduced the Android One platform in India, with three local vendors launching the first generation of Android One handsets. As Google has done with the Nexus program, the search giant is collaborating with silicon vendors and component vendors to create a unified experience across form factors and manufacturers. While the Nexus and the Google Play edition devices are targeted at the mid-tier and the high-end segments, Android One is solely aimed at the entry-level market.

Overview of the Android One initiative

With Android One, Google is offering a turnkey hardware solution to manufacturers, which saves them time and resources in creating a brand new handset. Under the initiative, Google will offer handset manufacturers a list of pre-selected hardware components, which the manufacturers can then choose from. There is no defined rule in terms of hardware, although handset manufacturers are encouraged to include features that are considered essential in the entry-level segment, like dual-SIM connectivity when we’re talking about the Indian market. While manufacturers must meet a minimum hardware criteria, they have free reign when it comes to the design of the handset.

The software side of things will be managed entirely by Google, with no intervention from vendors. The search giant will offer stock Android on all Android One devices, similar to what it does on the Nexus line. Quick rollout of new Android updates has always been a major issue when it comes to local manufacturers, and with Google taking back control in this regard, Android One handsets will be among the first to receive updates to the latest versions of Android. Google has already mentioned during the launch of the handsets that it will be issuing Android L updates to all Android One handsets as soon as it is ready to roll out.

The first wave of Android One handsets include devices from the likes of Micromax, Karbonn and Spice Mobiles, and while internally all three handsets share the same hardware, they all come with a different external design. This, essentially, is the crux of Android One: No matter what handset vendor you choose, you are guaranteed to get a similar experience.

In broad strokes, these devices feature 4.5-inch 854 x 480 screens, 1.2 GHz quad-core MediaTek CPU, 1 GB RAM, 4 GB internal memory, microSD card slot, 5 MP camera, Wi-Fi 802.11 b/g/n and 3G connectivity along with a 1700 mAh battery. They may not be the fastest devices in the world, but Google is not going after benchmark crushing numbers; it is rather focusing on giving the next billion users access to an affordable entry-level handset that comes with a decent set of features. As such, the first batch of Android One handsets cost in the vicinity of $104, which is great value for money considering the hardware they offer.

We say that these are the first wave of devices because Google clearly has bigger ambitions for the Android One platform.

Future growth

During the Android One launch in India, Google announced that while the country was ground zero for the platform, Android One will not be limited to India, and that other countries in the South-East Asian region will have access to Android One handsets by the end of the year. Google touted a host of hardware collaborations with international vendors including HTC, Asus, Acer and others. Notably missing from the list were Samsung, Sony and LG; Google did not mention whether they would be added at a later stage or not, but from the look of things, it seems unlikely as all three vendors have their own offerings in the budget segment.

In addition to international hardware manufacturers, Google has also mentioned that it is bringing silicon vendor Qualcomm into the fray later this year. The addition of Qualcomm is very interesting, as this will be the first time the manufacturer will be offering its SoCs in the $100 segment. Qualcomm recently announced the Snapdragon 210, an LTE-enabled quad-core SoC targeted at the entry-level segment. While Qualcomm has focused its attention in the mid-tier and high-end segments, to an extent that is has an effective monopoly in these areas, MediaTek has managed grab a significant chunk of the market share in the budget segment thanks to offerings like the MT6592, a quad-core Cortex A7 based SoC that was widely available in $150 to $200 devices launched last year and early this year.

The introduction of the Snapdragon 210 changes all that, with Qualcomm aiming at $100 devices with the SoC. It is entirely feasible that Qualcomm makes the Snapdragon 210 available for Android One devices, which leads to an exciting prospect: An HTC designed, LTE-enabled handset powered by Qualcomm for $100. That has the potential to turn the budget market on its head. Whether it actually comes to fruition is something only time will tell, but it is exciting to see how Android One evolves as a platform once it starts becoming available in other territories.

With Android One, Google is offering a great choice to consumers in that they can get a similar experience from different handset vendors. The ability to control the software side of things eliminates a lot of pain points faced by users, and the availability of such features in the entry-level segment will attract a lot of users to make the switch from feature phones in countries like India. The Nexus line has been hugely successful in developed markets, and it looks like Android One will be no different in emerging countries.

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