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Are Feature Phones the New Smartphones?

Manufacturers keep launching new devices in India

February 9, 2017

This week, India-based mobile phone manufacturer Lava International announced it would begin selling a 4G-capable feature phone with specs that could easily rival a low-end smartphone. The device has a 1.2 GHz quadcore processor, 512 MB of RAM, 4GB of onboard storage and a display screen—pretty much everything a smartphone has, with the exception of a touch screen.

Mobile Phone Shipment Share in India, by Type, Q3 2016 (millions and % of total)

Lava’s blurring of the line between a smartphone and feature phone seems intentional. The company goes so far as to describe the device as India’s first “smart feature phone.”

So in a world that seems dominated by smartphones, why is Lava interested in catering to the feature phone market? Because consumers in India keep buying them.

While much attention has been paid to smartphone usage in India, those advanced handsets still account for a minority of mobile devices in the country. According to International Data Corporation (IDC), 39.9 million feature phones shipped in India in Q3 2016, accounting for 55.2% of mobile device shipments for the quarter.

And it seems that demand for feature phones continues to grow. Counterpoint Technology Market Research reported that feature phone shipments increased 4% year over year in India in 2016, driven by demand for very inexpensive devices.

eMarketer estimates that only 20.8% of India’s population will use a smartphone in 2017. But mobile phones of any type—feature or smartphone—will have a much higher penetration rate of 57% this year.

Feature phones offer a number of benefits over their more advanced counterparts. Most importantly, they are still drastically cheaper than smartphones, something that remains important for a large segment of consumers in India. Airtel India CEO Gopal Vittal told MediaNama that a 4G-capable smartphone with a price of between INR 2,000 and INR 2,200 ($30 and $33) would make it “a very, very affordable phone” as an upgrade from a basic feature phone among customers looking for low-cost options for voice calling.

In addition, feature phones offer battery life measured in days instead of hours, a factor that still seems to appeal to consumers in India. More advanced feature phones have also cannibalized many characteristics that were once unique to smartphones. There are now feature phones with front-facing cameras, onboard memory that can handle large files, GPS chips and mobile banking capabilities that also run stripped-down versions of popular smartphone apps like Facebook and WhatsApp.

Mobile phone users are taking full advantage of these capabilities. A recent survey of feature phone users in India conducted by Kantar IMRB and the Mobile Marketing Association (MMA) found that half of respondents listened to music on their device, while about one-third watched videos or played mobile games on them.

The study defined feature phones as a device that offered voice calling, text messaging, limited web browsing and email capabilities and music playback, but that could not download apps from an online marketplace. In comparison, eMarketer defines a smartphone as a voice handset that runs an advanced operating system like iOS or Windows and offers features similar to those found on a PC.

As the feature sets of feature phones creep ever closer to those of smartphones, consumers find themselves with a lack of compelling reasons to upgrade to an advanced handset. The Kantar IMRB/MMA study also found that 85% of feature phone users do not intend to trade up to a smartphone on their next mobile device purchase. That may be part of the reasoning behind Lava’s new “smart feature phone,” which comes with Facebook Lite pre-installed but can also route calls over older 2G networks.

Lava has made catering to the feature phone market a key element of its business plan. According to CyberMedia Research (CMR), the company shipped 12.3% of all feature phones in India in Q3 2016, behind only Samsung’s 24.5%.

But the feature phone sector in India may be set for a shake-up. The Economic Times, citing unnamed sources, reported in November 2016 that Reliance Industries, the parent company of wireless service disrupter Reliance Jio Infocomm, had plans to launch its own 4G-capable feature phone at a price that might be as low as INR 1,000 ($15) in a bid to draw even more users to its already successful mobile service plans.

Reliance Jio has already upended the wireless carrier sector by offering consumers voice and data plans at a significant price reduction over competitors. It may be about to do the same with feature phones.

Rahul Chadha

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