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Smartphones Move Upmarket in Indonesia

But most consumers still spending less than $200 on devices

September 12, 2017

Apple fans will be focused on the company’s release of its new iPhone 8 today, but it’s unlikely that many of them will be in Indonesia.

That’s because, at carefully controlled retail prices that started at $650 for the iPhone 7, the device appears to be just too expensive for the majority of people in the archipelago nation.

According to new data from International Data Corporation (IDC), only 1% of the 7.9 million smartphones shipped in Indonesia in Q2 2017 fell into the “ultra high-end” category of devices—costing $600 or more. And 69% of devices shipped during the quarter cost less than $200.

Smartphone Shipment Share in Indonesia, by Price Tier, Q2 2015-Q2 2017 (% of total)

However, the smartphone market in Indonesia is heading decidedly upmarket. IDC found that the “low-end” category—devices costing between $100 and $200—made up 43% of smartphones shipped for the quarter. That was up from 33% in Q2 2015.

At the same time, the share of “ultra low-end” devices, priced at $100 or less, declined from 56% of smartphones shipped in Q2 2015 to 26% in the second quarter of this year.

IDC reported that the top five brands of smartphones in Q2 2017 in Indonesia were Samsung, Oppo, Advan, Asus and Xiaomi, in that order. China-based manufacturers figure prominently in this list, accounting for three of the top five brands.

The evolution of the smartphone market in Indonesia appears to be following a path in which manufacturers initially gain market share by offering very low-cost devices to appeal to low-income, first-time smartphone buyers. But manufacturers are also savvy enough to keep consumers in their sights as they move upmarket to more expensive devices with expanded feature sets.

“The top smartphone players have taken the game to another level by offering products with better features such as higher camera resolution, fingerprint readers, higher storage and memory capacity at affordable prices,” said Risky Febrian, associate market analyst for IDC Indonesia.

IDC noted that the adoption of more expensive devices is also being facilitated by the rise of microfinancing companies, which allow consumers lacking credit cards to purchase smartphones on installment payment plans.

Competition among smartphone manufacturers selling their wares in Indonesia is likely to get even more fierce in the coming years as rivals fight for a piece of the action. eMarketer expects the number of smartphone users in the country will grow from 67.1 million in 2017 to 99.9 million by 2021.

Rahul Chadha


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