Lenovo, Motorola and what it means for India

Remember the Motorola Razr? Whatever happened to it?

Remember the Motorola Razr? Whatever happened to it?   | Photo Credit: Picasa

The Motorola brand could allow Lenovo to become the only Android player in India to have a brand differentiation of the likes of Samsung.

Almost all industries, including the smartphone industry, have two viable categories or positions. The first is the differentiated high-end, and the second is the low-cost low-end.

Take a look at the table above – quite simply put, there are two types of players: high margin leaders and low-cost leaders. These two categories are well-defined especially in developed and carrier-subsidized markets such as the U.S. In developing countries such as India, these categories tend to blur as smartphone players straddle every price and feature point.

However, even in India, Apple is the undisputed high margin leader. The company’s differentiation is greatest, its price margins are the highest and it is undoubtedly (at least in the minds of consumers) the superior luxury brand.

However, due to Apple’s high price tag, and the middling purchasing power of most Indian consumers, the high-end market in India is tiny in comparison to the volumes of the low-end and middle-end market. The upper side of the medium-end market, therefore, has enough profit for players like Samsung, HTC, Sony and Lenovo to be serious players.

Now, the problem is that there is very little that distinguishes luxury-end Android smartphones from mid-end Android smartphones. Apple has its strong brand value and differentiation in the form of apps, services and software that allow consumers to distinguish it from other high-end players.

For companies like HTC, Sony and Lenovo, there’s very little differentiation in terms of software, applications or services. In fact, the only thing they can compete on is price and brand value. The box below the ‘High Margin Leader’ shows that HTC is a clear example of unsustainability in the high-end segment—it simply cannot sell enough phones to sustain its strategy.

The only other high-end player that can and has survived so far in India is Samsung—which banks on multiple price points, a great brand image, an excellent supply chain and probably the best after-sales service.

A large part of Samsung’s brand comes from it being both a high-market player and a low-cost leader. A majority of Samsung consumers move up on its value chain, starting with its lower phones like the Galaxy Duos and then graduating to the Galaxy Grand series.

Lenovo has been trying to pummel away at the Indian market for the last one year, without little to show for it. It lacks a strong supply chain and a proper after-sales service, yes. More importantly, Lenovo has no qualities that differentiates itself from other brands. Sony, Lenovo, HTC, Gionee – who cares? Certainly not the consumer.

This is where the acquisition of Motorola comes into play. Not many may remember—including much of the technology press, which claims Motorola is dead outside the U.S. and Latin America—but Motorola was within the top three brands in India in 2008 and 2009.

Granted, this was close to five years ago. But with a little luck and a carefully positioned brand strategy, Motorola could allow Lenovo to become the only Android player in India to have a brand differentiation of the likes of Samsung.

I, for one, would love to see Lenovo bring out an ad campaign that brings out the memories of the Motorola Razr. The worst-case scenario is that Lenovo doesn’t leverage the Motorola brand well and its $2 billion down the toilet.

Its fashionable to say the hardware, software, telecom, and technology industries are converging— in practice, these areas are more often that not colliding rather than converging.

Just when you thought the Apple-Samsung duopoly would be here to stay – we see the growth in iPhone sales starting to slow down and the pressure on Samsung building. The three biggest challengers to Samsung’s market share in India will now be the Nokia Lumia 520/620/720, the Lenovo-Motorola combine and Micromax.

That’s the great thing about the smartphone industry—it’s never boring.

Why you should pay for quality journalism - Click to know more

Recommended for you
This article is closed for comments.
Please Email the Editor

Printable version | Feb 27, 2020 8:13:55 PM | https://www.thehindu.com/opinion/blogs/blog-hypertext/article5634384.ece

Next Story