'Connecting the unconnected' strategy to double Motorola sales
The Jakarta Post, Jakarta
If you think the most lucrative markets for cell phones are in big cities like Jakarta, Surabaya and Medan, think again!
Global communication firm Motorola considers regency towns to be where the money is and worth penetrating.
PT Motorola Indonesia country manager Robert Van Tilburg told The Jakarta Post that the firm's biggest sales volume was not in big cities but in small towns in Java and on other main islands like Sumatra, Kalimantan and Sulawesi.
He said that Motorola's strategy was to "connect the unconnected" with new low-cost but high quality cell phones.
The firm targets the small towns because only around 8.5 million of Indonesia's 220 million population (about 3.9 percent) have access to fixed-line phones, which are mostly in urban areas.
The rest of the "unconnected" population is a lucrative cell phone market for manufacturers like Motorola.
Analysts have said the introduction of the new brands and cell phones was to attract customers from the low-income bracket, as the initial market segment of cellular phones -- middle and high- income groups -- had inched toward saturation.
Therefore, Motorola aims to double its cell phone sales this year by introducing products priced below Rp 400,000, or less than its international standard of US$40, to rural areas.
"By providing low-cost cell phones, people can buy new ones instead of used ones at about the same price," Van Tilburg said.
Motorola offers low cost product lines of C115, C116 and C117, which feature only basic functions: accepting and making calls and short messaging services (SMS).
More interestingly, Motorola has promoted its cell phones in towns like Mojokerto, Jember and Probolinggo in East Java -- home to thousands of Indonesian migrant workers, be they domestic helpers, construction workers or health-service employees.
Motorola sells low-cost cell phones to migrant workers and their families to enable them keep in contact at least through SMS.
Moreover, the company has been working closely with cellular phone operators, by following their moves in establishing infrastructure in new areas where they provide services.
The growth of cellular and fixed wireless services has been quite remarkable over the course of the year, with the number of cellular subscribers increasing faster and recording 25 million by last October, up by about six million from the end of 2003.
Giants PT Telkomsel and Indosat dominated the sector with a combined market share of 83 percent, followed by PT Excelcomindo Pratama (XL) and a few new players like PT Bakrie Telecom and PT Mobile-8 Telecom.
The astounding growth was triggered by more sophisticated and innovative features on offer, combined with declining call rates prompted by a price war among operators and greater ease in procuring a cellular number.
A whopping $1 billion was invested this year by cellular operators to build new infrastructure and upgrade services, including launching new products and brands.
"Indonesia is among two or maybe three left untapped markets. Together with India and Bangladesh, Indonesia has a huge population with low penetration," Van Tilburg said.
He went on to say that this year Motorola aimed to sell over one million cell phones -- double last year's sales -- with about two-thirds of them being units priced below Rp 1.5 million.
If Motorola achieves this, it may be able to achieve its ambition of taking second place after Nokia in holding the biggest cell-phone market share in the country.
It currently claims to be in third place after Nokia and Sony Ericsson.
Although Motorola is focusing on the low-end market in the country, it does not mean it has given up on the high-end segment, Van Tilburg said.
The firm will continue to introduce state-of-the-art products with advanced technology to show what it can really deliver, he said, aside from developing products for the middle bracket economy.
After all, first-time users in rural areas will eventually want to upgrade their cell phones, as their income improves over the years, he said.
Among its high-end products are the stylish slim-phone Black RAZR V3, 3G convergence A1000 phone and smartphone A780, which cost Rp 3.99 million, Rp 6.49 million and Rp 4.99 million respectively.
Moreover, Motorola is also working with Momodesign to make a Bluetooth-enabled helmet that would make it possible for motorcyclists to scoot around town and stay connected.
It also makes Bluetooth-enabled sunglasses with Oakley.
And it does not stop there, as Motorola ties up with other "cool brands" including Apple's I-pod, Van Tilburg said.
Some of the products are already available on the local market, he added.
"Indonesia is a typical market that needs brand consciousness. The country is a status-oriented market place," he said.