LG eyes 10 per cent share of the GSM market by 2008
31 Aug 2007
New Delhi: Aimed at cornering a 10-per cent share of the GSM market by 2008, LG Electronics India, the Indian arm of the South Korean electronics giant LG, has unveiled future plans for its mobile business in India, saying that it would target GSM rather than CDMA, as the latter had seen an erosion of its market share due a market inundated with Chinese products.
Additionally, the company plans to use India as an export hub for Middle East and Africa in GSM category.
According to managing director and president, South West Asia, Moon B Shin, the company does not think that CDMA is a profitable option in India. In recent months, the company has witnessed shrinking profitability due to low-cost Chinese models.
The company sees GSM as the future growth engine for India, and is looking at being one of the top three players in domestic market. It has put in place a strategy to take on number one Nokia.
LG wants to increase its GSM market share from the current 1.4 per cent to 8-10 per cent by 2008, driven by product leadership, an enhanced distribution network and after-sales support, and a range of new models in the premium segment. On Thursday, LG launched two new premium GSM handsets, which are part of its ''black label'' series. The models are called LG Shine, a sliding handset priced at Rs15,999, and the LG Shine bar phone priced at Rs8,999.
Expansion of its Pune-based production unit is also on the anvil, with plans to make it serve India as well as Middle East and African markets by producing locally. Till now, the company has invested $60 million in the Pune factory, with more coming in future years to add a minimum of two production lines every year. The company envisions it to be a strategic facility three or four years down the line, with a 1-million handset capacity per annum.
Elaborating
on the decreasing profitability of its CDMA offerings, Moon said LG India''s turnover
for CDMA phones in 2005 was at $300 million, which declined to $250 million last
year. This year, it is expected slide further to about $150 million. In volume
terms, LG sold 9 million CDMA handsets and 1.2 million GSM handsets in India last
year. CDMA sales are foreseen to decline further to 6-7 million, while GSM handsets
would grow to over two million handsets this year.