Business Today

From the Editor

Chaitanya Kalbag | Print Edition: May 27, 2012

Competition is fierce and kicking in India, not least between business magazines. Which is why we love being flies on the wall as we watch the 800-pound gorillas slug it out with the upstarts in their pens. The stories are always riveting. They tell us why long-time incumbents drowse at the top of the tree; why value-conscious Indians are willing to spend big bucks on newer devices and wheels; why the user experience is so important to coming up with the best products; and above all, why the government should stay out of competition.

It is interesting that we have the widest, most exciting, constantly innovative and consumer-delight choices in the two sectors that the Indian government has allowed the greatest competition in - and permitted 100 per cent foreign investment in: mobile phones and automobiles. This fortnight, Special Correspondent Sunny Sen got his hands on both. In the cover story, he describes how South Korea's Samsung has sneaked up on leader Nokia in the world's second-largest and fastest-growing mobile market. The two phone makers are quite different of course. Nokia started as a paper maker in Finland in 1871. Samsung comes with a shorter history of manufacturing, from 1938, but is a true chaebol, a powerhouse that is most well known for its high-tech electronics. Both companies entered India in the mid-1990s, but Nokia became the brand of choice for millions of Indians suddenly experiencing the joy of calling up somebody anytime, anywhere. Mobile telephony was very different in those early years. I remember having to carry a SIM card for each city I travelled to, until GSM roaming arrived in 1998. Phone calls were expensive. Nokia grabbed commanding market share from its Western rivals, Ericsson and Motorola. Its phones were more rugged, and designed to withstand punishment in India from sweat, dust, trauma and much else. It became the Ambassador car of the chattering classes, with service centres all over the country, easily available parts, and dependability. It was even the first to lure our gardeners, vegetable vendors and migrant labourers with dual-SIM phones. But as aspirations grew, and our phones became handheld computers, and we began to use those thingummyjigs in our palms for information, music, games, and everything that a personal assistant does, Samsung sprang into the gap that Apple's iPhone had failed to fill in India, with its smartphones - and that is where it also achieved world dominance in the first quarter of 2012. Nokia and Samsung share a major weakness - both are in danger of being commoditized hardware makers dependent on software owned by somebody else: Samsung on Google's Android, and Nokia now on Microsoft's Windows Phone. Nokia is retreating from its own Symbian platform; Samsung is toying with its bada and Tizen. Google, meanwhile, has bought Motorola and that is bad news for the only major hardware-and-software player, Research In Motion and its BlackBerry.

Sen and Executive Editor Suveen Sinha also narrate the tale of another guerrilla attack - of Audi overtaking once-market leader Mercedes and tailgating BMW in India's exploding luxury car market. This is an all-German war and it is being fought on our crowded streets.

Ironically, another huge market that is in dire need of more foreign direct investment is India's armaments industry. The government dreams of producing more than two-thirds of its air, sea and land defences domestically. This can only happen if the private sector plays a much larger role. Associate Editor Kushan Mitra, in a sweeping analysis, racks up the stark numbers: the private sector's share is now a paltry $500 million, one per cent of the potential market of $50 billion.

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