View from India: India, still a hot market for smartphones

-By Richa Christopher 

Global mobile handset manufacturers are strengthening their position in India, with the existing mobile community of users joined by tier city-rural consumers.

Both factors have given a unique identity to the Indian mobile telecom landscape.

Mobile adoption in India is cutting across all demographics, making the country a mobile-first market. Pocket-friendly smartphones that cost less than Rs 5,000 have urged people from tier cities or rural belts to be part of India’s digital connectivity journey. Major telecom companies such as Bharti Airtel, Vodafone Idea and Reliance Jio have come up with interesting packages to gain market share in tier cities and rural segments. Thereby, the mobile is bringing the last-mile user into the digital fold.

People who haven’t used a computer or even seen a computing device are using the mobile to fulfil many purposes, from making payments to learning online.

The mobile has helped raise their aspirational level. The smartphone offers potential for the e-commerce industry to expand to tier cities and rural markets. The e-tailers have begun to localize their products with specific price points. The e-tail experience gives rural-tier city consumers the freedom of choice to check out products. They may still be a remote audience, but they do know to browse for products, check rates and make online payments in real time. Mobile wallets are assisting consumers who lack financial inclusion and cannot access formal banks.  

Naturally, the internet economy and the overall digital ecosystem are being reinforced, as a large swathe of smartphone users are first-timers. The phone is a port of entry into the internet world. In addition to this, around half of internet users in the country use their mobile devices to connect to the web.

Competitively priced smartphones, along with the accompanying apps, are beginning to gain traction. Apps’ diverse offerings ranging from services to entertainment, social media to games, has begun to click with the tier city-rural audience.

As a consequence, smartphone manufacturers have begun to align their outlook with the Indian scenario. A case in point is Samsung, which is Aadhaar compliant. Aadhaar-approved phones allow users better access to government services, subsidies, healthcare and education. Bank accounts or mobile subscription plans can also happen in remote locations.

Aadhaar, a 12-digit unique identity number that can be obtained by residents of India, is based on their biometric and demographic data.

Another trend is that India is a promising, growing market for smartphones, whereas globally the market is witnessing a slowdown.  

Global smartphone manufacturers are focusing efforts on new India strategies, comprising R&D centres and manufacturing units. This is understandable, as the Android smartphone market is hugely untapped. Out of 650 million mobile users, approximately 300 million users have a smartphone.

This week, Google launched Pixel 3a and Pixel 3a XL, its latest portfolio of smartphones which will be reportedly priced in India starting from Rs 39,999.

Predictably, the Indian smartphone market is projected to grow. The global outlook looks bleak and for a number of reasons. In more established markets, in order for consumers to opt for faster upgrades, there’s hardly any ‘wow’ factor in a new phone. The replacement cycle hasn’t decreased either, given the lack of breakthrough features or specs in these phones. Foldable screen phones are yet to hit big. At another level, there’s a general market saturation of mobile computing devices. Rising trade tariffs is also a deterrent.

By contrast, India is becoming an important mobile investment destination for everyone, including Chinese handset manufacturers. After enjoying success in China, they plan to replicate the same in India. It’s also because the Chinese market has witnessed a recent slump.

Seen from the business perspective, Samsung and Xiaomi have a sizeable chunk of the Indian market. Incidentally, the M-series of smartphones from Samsung are positioned to be ‘India-first’. It means the phones will be manufactured in India and sold in the country somewhere in the price range of Rs 10,000 to Rs 20,000. Honor, the sub brand from Huawei, plans to invest in manufacturing and create devices with localised features. The intent is to export from India.

OnePlus has recently set up an R&D centre in Hyderabad and plans to increase its manufacturing facility. The R&D centre is poised to become a significant one globally in the next three years. In 2018, Vivo has announced its plans of investing over Rs 4,000 crore on its second ‘Make in India’ phase. A new plant is part of the agenda. Last year, Samsung inaugurated its facility in Noida, while third-party assemblers are facilitating Xiaomi’s manufacturing presence in India.

Apple has also set its sights on the Indian shore. The company plans to open branded retail stores. As part of its strategy, Apple intends to scale up its customer base in India by setting up a manufacturing facility. Up to now, the iPhone 7 has been assembled here. From April 2019, the company has begun to manufacture the iPhone 7, in addition to iPhone SE and iPhone 6s. Apple once again made news in April as it dropped the price of iPhone XR by 22 per cent.

As global brands will manufacture phones in India, smartphones are slated to be cheaper this financial year when compared to the previous year.

However, it’s not enough simply to be affordable. Smartphone manufacturers need to package interesting features that make it a value-for-money device. This is something brands like Xiaomi have realised early and have tailored budget offerings like Redmi. Realme is an online brand from the OPPO portfolio that’s retailed in India.

These forthcoming attractions are forecasted to be an economic catalyst for the telecom industry in India. The affordable mobile devices and rapid rollout of 4G will result in the socio-economic inclusion of rural-tier city consumers.

It is also expected to generate streams of revenue and open out opportunities for local talent. Component makers and supply chain vendors of these smartphones will be part of the India growth story.