Nokia opens handset unit in Indian market

Reuters.com reports on Nokia formally opening "its first Indian handset factory on Saturday in a bid to increase its stranglehold on the world's fastest growing wireless services market." According to the article, "Ultra low cost phones -- less than 2,000 rupees ($50) -- are fuelling demand in cost-sensitive India, where more than 4 million new users are entering the 85.4 million strong wireless sector each month."

Nokia "plans to invest about $150 million in the plant" and "its two suppliers, Aspocomp group and Perlos Corp., will invest $70 million and $12 million respectively to set up a printed circuit board facility and a mechanics factory."

Currently, Nokia, which owns more than half the market, competes with Samsung, LG and Motorola "in the cut-throat 107 billion rupees ($2.4 billion) handset market. iSuppli predicts the "size to more than double to $5.8 billion by 2010. The market depends almost exclusively on imports."

Sara Harris at Strategy Analytics said, "This plant will help Nokia consolidate its hold on the market."

Kobita Desai at Gartner added, "Demand for ultra low tier phones will scale up as networks expand into semi-urban and rural locations. However, handset vendors will need to focus on setting up robust and pervasive distribution channel networks. The role of the operator will increase in importance in the handset distribution map."