There will be an estimated 250 million handsets sold in the India market in 2014, 35% of which will be smartphones, an increase from the 23% in 2013. However, with a population of 1.2 billion and an underdeveloped infrastructure in India has resulted in a complicated system for marketing handsets and offering after-sale service. To collect direct information on the India market, Digitimes interviewed four India-based handset-marketing companies in Chennai and New Delhi and invited India-based enterprises and Taiwan-based MediaTek and Delta Electronics to attend two India-Taiwan business symposiums.Maintenance service provider TVS-ELocated in Chennai with 1,250 employees around India, TVS-E sells POS devices and printers and provides repair and maintenance services for handsets. According to TVS-E president K E Ranganathan, the largest difficulties for foreign enterprises to tap the India handset market are complicated and regionally varied market characteristics, consumers' high sensitiveness to price and the common use of SIM cards.Due to insufficient manpower, Taiwan-based companies are expected to be unable to independently operate business in India and it would be preferable if they could cooperate with local partners. It is difficult for Taiwanese to understand the logic of consumers of India and therefore base decisions on the common understanding of price. For example, TVS-E still sells dot matrix printers which are ponderous and low in printing speed but with are low priced to meet demand for printing large volumes of government documents at low cost.Taiwan-based IC distributor WPG HoldingsWPG has 11 marketing bases and 110 employees in India. President Rajeev Bajpai for WPG India agrees with TVS-E's opinion that the average sales price for a handset is lower than US$70 in the India market because consumers are very sensitive to price.Without customs duties, imported handsets are more competitive than locally made models in the India market. India-based vendors import more than 12 million handsets a year, including three million units by Micromax and two million units by Karboon.In Bajpai's point of view, Micromax, Karboon and other vendors with economic operational scale should find innovative solutions or expand product lines to create differentiation for India-based handset vendors, The current market situation is now an optimal time for operational transformation. Many India-based handset vendors have attempted to tap overseas markets but have not substantially succeeded and this is mainly because they do not have roadmaps for future products to create differentiation.HCL transforming operation from PC sale to after-sales serviceHCL Group, an early established PC company in India, has two subsidiaries, HCL Hightech and HCL Infosystem. HCL Hightech is an outsourced developer of software, like Infosys and Tata, with annual revenues of US$6.5 billion, while HCL Infosystem is responsible for marketing and after-sales maintenance and recorded 2013 revenues of US$1.6 billion consisting of 59% from distribution of products, 34% from retail sale of hardware, 6% from system services and 1% from training services.HCL was renamed from HCL-HP which was a joint venture with Hewlett-Packard (HP). In view of an unsatisfactory sales performance, HCL phased out its PC vendor agent business in 2013 and transformed its operations to providing after-sale services with partners including China-based Lenovo.HCL initially focused on after-sale services for Nokia when Nokia entered the India market. According to HCL's handset sale senior vice president Sutikahan Naithanl, Nokia initially profited well and reached a market share of nearly 90% but later its market share declined due to an inability to meet market demand. HCL then began cooperating with other international handset vendors (except for Apple), with Samsung Electronics being its key partner.With a handset market share of over 35% in India, Samsung has obtained a preferential customs tariff for importing SKD (semi-knock-down) handsets from Vietnam for assembly in India, with a monthly assembly of 4-5 million handsets currently, HCL noted. Taiwan-based vendors can also tap the India market through seeking cooperation with India-based makers.Consumer electronics retail channel RedingtonIt is still difficult to develop online trading in India especially because regulations vary among states, according to Redington president E H Kasturi Rangan. Therefore, Redingon with 56 offices around India to access consumers has a lot of room to grow, Rangan said.Redington has close business relation with Taiwan-based retail channel distributor Synnex Technology International, which holds a 22% stake in the company. Redington was listed on the India stock market in 2007 and generated revenues of US$4.2 billion for fiscal year 2013-2014, with slightly over 50% of the revenues coming from the India market - the remaining came from Africa, Turkey and other markets. Thus, cooperation with Redington is helpful for tapping markets in the Middle East and South Asia.President Kuo Gan-tsong for MediaTek IndiaIndia is absolutely a market worth tapping but business operation there should be on a long-term basis. When MediaTek came to the India market it was difficult to establish business relations with local enterprises. Therefore, MediaTek began by offering technical support and even assigned engineers to support local enterprises' R&D. The fast growth in the India handset market in recent two years has afforded MediaTek large room for business development there.In the future, Taiwan-based components makers can consider establishing cooperative technical support centers in India to win recognition from local industries. While interaction between Taiwan's and India's industries is increasing, it is better for Taiwan and India to reach an agreement to protect investment and set up an insurance mechanism to secure component trade.Peripheral maker ZebronicsZebronics produces audio devices and mice in India and is planning to broaden its product mix. The company has 750 employees in total and over 100 business operation bases and posts gross margins of 15%.In the India market, consumers like to ask for price cuts and are sensitive to prices. In addition, highest interest rates of over 12% render it difficult to operate businesses in India.HP India is highly interested in the 100 New Smart Cities project but is worried about insufficient support from the local supply chain, the company indicated. Therefore, HP India hopes to cooperate with Taiwan-based makers to compete for orders related to smart cities.Conclusion: India government and industries tout investment from TaiwanThe India market is not only India's 1.21 billion population but also includes neighboring Pakistan, Bangladesh, Sri Lanka and even Indian descendants living in eastern Africa, southern Africa and Caribbean islands.Except for Samsung Electronics and Apple, other top 10 smartphone vendors in the China market in the second quarter of 2014 were China-based ones. As the China smartphone market is approaching saturation, leading China-based vendors are also expected to tap the India market.In the India market, will more than 20 India-based handset vendors compete or cooperate with China-based smartphone vendors? The India government and industries have touted Taiwan-based makers' investment in India to boost development of India's handset industry. How do Taiwan-based makers view the potential market that they have not paid attention to previously? As China-based smartphone vendors have been making foray into the India market, there will be optimal time of only 1-2 years left for Taiwan-based makers to tap the market.

Desktop shipments are expected to enjoy growth in 2014 with Microsoft ending its support for Windows XP, but the all-in-one PC market, which focuses mainly on the consumer market and did not start enjoying demand until recent years, may not be able to benefit from the growth.Digitimes Research expects all-in-one PC shipments to drop 2.4% on year in 2014 because enterprise and consumer buyers have both used their budgets to purchase conventional desktops. Sony quitting from the PC market is another driver that is causing all-in-one PC shipments to drop in 2014.Apple and Lenovo are the top-2 vendors in the all-in-one PC market and the two's combined market share has been rising each year and is expected to surpass 60% in 2014.Most other vendors have seen their market shares decline. Despite Hewlett-Packard (HP) and Dell still having a large desktop client base, they are unlikely to reverse the situation.However, ODM/OEMs are seeing different results. TPV-Inventa Technology, Compal Electronics and Foxconn Electronics (Hon Hai Precision Industry) are expected to achieve on-year shipment growth in 2014 mainly thanks to increasing orders from Lenovo and HP. For 2014, TPV-Inventa's shipments will return to above two million units and Compal will have a chance to achieve over one million unit shipments for the first time.

US-based GT Advanced Technologies (GTAT), the exclusive sapphire supplier for Apple, is estimated to supply enough sapphire to make covers for up to 1.35-2.25 million 5.5-inch iPhones by the end of 2014 based on the progress of GTAT's sapphire production ramp, according to Digitimes Research.GTAT started sapphire production in August 2014 and expects revenue contributions from sapphire to begin in the fourth quarter, and Apple's fourth down payment is due in October 2014, these conditions signal that GTAT's sapphire production will not reach a large scale by the end of 2014, Digitimes Research indicated. However, GTAT is likely to ship sapphire at a large volume beginning the first quarter of 2015.In addition to production volume, cost for a 5.5-inch screen cover made from sapphire is estimated at US$100, much higher than US$5-10 for that made from reinforced glass, Digitimes Research noted.

Amazon released its mid-range to high-end Fire Phone in late-July 2014, looking to attract consumers to shop through Amazon's e-commerce platform with the phone's built-in Firefly technology, according to Digitimes Research.Since the main battlefield for online and e-commerce businesses in emerging markets is likely to shift to smartphones in the next few years, Amazon can capitalize with the launch of entry-level Fire Phones or release of a Firefly application for other handsets to expand its online shopping business in emerging markets, according to Digitimes Research.Amazon had been in talks with Taiwan-based handset ODMs for the production of entry-level Fire Phones prior to the release of the current Fire Phone.

Taiwan LCD monitor makers' shipments reached 22.14 million in the second quarter of 2014, up 10% on quarter and 0.9% on year, according to Digitimes Research.Makers such as Foxconn Electronics and Wistron saw orders increase as vendors prepare to release new units, which helped push Taiwan makers global shipment proportion to 64.2%.Going into the third quarter of 2014 Taiwan makers can expect to see a 6-7% increase due to demand during the peak season as well as to an increase in orders for new units as a result of Windows XP support coming to an end.Meanwhile, the ASP of LCD monitor panels is mostly increasing due to limited supply as panel makers are shifting their focus to production of small- to medium-size applications, added Digitimes Research.

Revenues for the six main LCD driver IC companies in Taiwan reached NT$28.18 billion (US$940.04 million) in the second quarter of 2014, up 13.1% on quarter and 4.1% on year, according to Digitimes Research.Shipments of LCD driver ICs alone by the top-six makers totaled NT$23.55 billion in the second quarter, increasing 10.4% from the previous quarter.In terms of applications, sales of small-size LCD driver ICs were up 13.6% sequentially in the second quarter compared to a 6.9% growth enjoyed by medium- and large-size LCD driver parts. Shipment growth rate and values of small-size driver ICs will continue to be higher than that of the medium- to large-size driver ICs in the third quarter.However, shipments of medium- and large-size LCD driver ICs for Ultra HD TV applications are expected to soar 105% sequentially in the third quarter although the ratio of Ultra HD TVs to total LCD TVs still remains low.Since the third quarter of each year is a peak season for the IT industry, ability for LCD driver IC vendors to secure sufficient wafer capacity at foundry houses will be essential for the makers to stabilize their shipments as well as to ramp sales growth.Meanwhile, due to a rebound in demand for low-cost smartphones in China in the third quarter, ILi Technology (Ilitek) will take the opportunity to ramp up its shipments of WVGA driver IC parts. Himax Technologies is also expected to see its shipments of LCD driver ICs for smartphone applications pick up stream in the third quarter thanks to a rebound in orders from clients in Korea.

Combined revenues of the top-three Taiwan-based foundry houses are expected to top US$8.47 billion in the third quarter of 2014, increasing 13.4% from the previous quarter, according to Digitimes Research.Optimizing a rebound in orders from chip suppliers for telecom, computer and consumer electronics devices, the top-three foundry houses managed to buck the seasonal trends in the second quarter and ramped up their combined sales by 22% sequentially to US$7.47 billion in the second quarter.In addition to replenishing their inventories, chip vendors including Qualcomm, Broadcom and MediaTek have also started taking pull-in orders for 4G LTE chips in preparation for an anticipated sales boom for 4G smartphones in the second half of 2014, driving up demand for 28nm production capacity at Taiwan Semiconductor Manufacturing Company (TSMC) and United Microelectronics Corporation (UMC).Due to strong demand from the mobile device sector, TSMC has not only continued to expand its 28nm capacity but has also ushered its 20nm process into volume production in the second quarter of 2014. Meanwhile, UMC has also begun its 28nm PolySiON process in the second quarter, contributing 1% to its total revenues in the quarter.Digitimes Research believes that the ratio of revenues generated by the advanced 28nm and below processes to total revenues of the top-three foundry houses will leap significantly in the third quarter of 2014 as compared to the previous quarter. ASPs will also pick up in the third quarter due to improvements in product mixes.

While major Japan-based household appliance suppliers, including Toshiba, Sharp, Panasonic and Mitsubishi Denki, have already made the controls and operations of their smart household appliance systems through smartphones as standards, sales of smart household appliances compatible with home energy management system (HEMS) are expected to increase significantly amid rising awareness of energy saving and to become an emerging trend of Japan's smart household appliance industry, according to Digitimes Research.Toshiba began to sell its HEMS-centric smart household appliances in October 2013, which can perform a number of advanced concierge services such as remote-control, remote-confirmation, malfunction diagnosis, usage recommendation, energy-saving proposals and notification of operation. The launch of the Internet-connected, cloud-service accessible Feminity series of home appliances further enhance Toshiba's smart home appliance services, which can be controlled using PC systems, TVs, and tablets in addition to smartphones. Sharp has regarded the development of sweeping robots as the first step to realizing next-generation smart home appliance solutions. Its Cocorobo-series RX-V200 robot, launched in November 2013, can serve as a home appliance hub that can control and operate a number of household appliances through infrared. The RX-V200 can also apply to cloud services, to enhance the degree of communications with human beings. Sharp has been emphasizing the connection and communications of its smart household appliances and will incorporate such smart functions to all of its home appliances.Panasonic has been focusing connection between smartphones and smart household appliances and has launched more than 10 related products, offering a number of value-added services through FeliCa and NFC technologies. However, along with the rising concern of energy saving, Panasonic has also begun to step into HEMS compatible products.

July average retail price for 7W LED light bulbs (equivalent to 40W incandescent ones) in the China market increased by 5.2% sequentially to CNY36.3 (US$5.9), while the 9W segment (equivalent to 60W incandescent) also saw a 8.3% increase to CNY50.9, according to Digitimes Research.Average retail prices for 40W- and 60W-equivalent LED light bulbs in the Japan market in July stood at JPY1,701 (US$17) and JPY2,807 respectively, with the former growing 2.3% sequentially and the latter 4.2%, Digitimes Research indicated.July average retail prices for 40W- and 60W-equivalent LED light bulbs in other markets were: KRW12,462 (US$12.5, down 0.5% on month) and KRW14,645 (down 2.2%) in South Korea; US$20 (up 4.2%) and US$20 (down 7.0%) in the US; EUR12.9 (US$17.4, down 3.7%) and EUR11.8 (down 13.9%) in Europe.Osram 40W- and 60W-equivalent LED light bulbs available in the South Korea market had the highest average lumen-price ratios of 67.8lm/US$ and 92.9lm/US$ respectively in July. In terms of luminous efficiency, Toshiba 40W- and 60W-equivalent models for sale in the Japan market had the highest average levels of 74.6lm/W and 100.5lm/W respectively.

After facing a second quarter where overall shipment results came in below expectations, tablet vendors are expected to see a rebound in the third quarter, with global shipments increasing 23.8% on quarter, according to data from the latest Digitimes Research Tracker service. Worldwide tablet shipments will reach 68.5 million units in the third quarter, up 9% from the same period last year, but Digitimes Research noted that with the global tablet market maturing, annual growth will fall to single digits in both the third and fourth quarters of 2014.The recently published Global Tablet Market Tracker report forecasts that the third quarter will represent the first period of 2014 to show sequential growth, as vendors face less adverse market conditions.The most significant market factor constraining shipments in the second quarter was Samsung failing to meet expectations. The vendor was unable to continue the growth momentum it had previously seen in all its tablet lines, mainly because the market saw no significant difference between Samsung's new mid-to-high-end Android products and the Apple iPad or even Samsung's previous generation products.Samsung also originally expected to increase its 8.x-inch market share but failed to take even 20% of that market, while sales of its low-priced phablets suffered in emerging markets, as they still maintained a price premium compared with competitors.Tablet vendors will continue facing market obstacles as they head into the second half of the year. The global tablet market is maturing and notebook vendors are looking to reclaim market share by offering notebooks priced similarly, or even cheaper, than tablets. Digitimes Research forecast that annual growth in the fourth quarter of 2014 will fall to 0.5%.