India is a country that offers a huge variety of customers and consumers for the different kinds of markets. The country gives an opportunity to any market type to grow and succeed. Today, we are talking about the mobile phone market here and its slow transition from basic feature phones to today’s smartphones.
Remember the days when you have your b&w Nokia phone on which you used to play Snake. Since then, things have evolved in a varied manner and Indian mobile phone industry has gone through a major transformation. Consumers are migrating from their basic feature phones to today’s smartphones and the main reason behind is the availability of smartphones under $100 mark.
According to a report of GSMA intelligence Research, by 2020 around two-thirds of all connections globally will be smartphones showing the rapid shift from basic phones. Till 2014, feature phones encompassed more than half of the global connections.
Earlier, phones were used for calling and receiving calls and sending text messages. However, over the period of time, when everything was going online, smartphones grab the people’s attention. They started looking for advanced features like camera, easy access to the Internet, colorful interfaces, Android features and a lot more. Initially, there was some reluctance in buying the high-priced smartphones but the availability of smartphones at the same price as basic and feature phones shows that the latter device category is rapidly becoming obsolete. The result was, the percentage of smartphone users started increasing in multiples.
Soon, the adoption of smartphones was indicated as a developed culture. In the developed market, smartphone adoption was around 70-80% whereas the feature phones show only around a quarter of all connections in 2014. It was expected that only a residual share of the market would run on this device by 2020.
According to a study of Best Buy’s Portfolio of unlocked handsets in the US, the majority of mobile phones offered in the country are smartphones and they are priced at the same level as that of feature phones. Although, the portfolio of basic feature phones still had a pricing advantage, but that may not be the case for long.
Smartphones: Developed Vs Developing countries
By 2010, there was an equal distribution of smartphone in developed and developing countries. However, by 2014, seven of ten smartphones were available in developing countries. This did not stop here. The rate of adoption is continuously increasing and it is expected that by 2020, four of five smartphones will be in the developing country. By 2020, it is expected that only 30% of connections will be running on basic or feature phones.
As of now, India is the second largest smartphone marketing the world and going through a period of transition. This transition is both for consumers and industries.
According to a study from Counterpoint Research, the number of active smartphone users in India has outnumbered that in the US and stands at 220m. We stand second only to China. A separate study from CMR made a similar point as it reported annual smartphone shipments up by 18% while feature phones were down by 27.1%.
With all these data and facts, it is clear that we are in a transition phase and this transition is not just from feature phones to smartphones but from 2G and 3G to 4G, from offline only to hybrid, from imports only to domestic manufacturing with imports. Many phones are being manufactured in India and more than 20 mobile brands assemble their phones locally.
As we are talking about the transition of the mobile market, but the transition in developing countries as compared to the developed ones is not that prominent or not on expected pace. It is true that smartphone adoption started at a high rate but that was because of the availability of smartphones at low prices. When we talk about developing countries like India, the price of smartphones is still not low enough to attract the rural buyers. Though the smartphone market is growing at a phenomenal rate in India in Tier II and Tier III towns, feature phones still outsell smartphones.
The feature phones for them are not only affordable but offer multiple features that allow the users to stay connected at all times. In fact, in the year 2016-2017, migration from feature phones to smartphones slowed down due to increase in demand for feature phones.
Now, as the country is moving towards the digital lifestyle and superfast connectivity with the adoption of 4G enabled devices, feature phone manufacturing has become smarter in the country. There are 4G enabled feature phones at really affordable prices. There is mobile banking facility to conduct normal banking transactions. Feature phone manufacturers are also working on aspects such as long battery life and good speakers. All these innovations in features ones are also curbing the pace of transition.
So, all in all, we can say that smartphone revolution is happening but it is not there yet.
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