Feature phones still hold sway, but a shift is on the horizon
India is perhaps the most dynamic smartphone market in the world right now. eMarketer expects about one in five people (20.8%) living in India will have a smartphone by the end of this year. But smartphone adoption over the next few years is projected to be quite strong, with annual growth rates well into the double digits through 2019, and falling to just below 10% in 2020.
According to recent data from Gartner, smartphone sales accounted for only 50% of overall mobile phone sales in India in Q4 2016. That was far below the share of smartphones sold in the US (96%) and China (96%), but also the developing markets of Indonesia (68%) and Brazil (92%), by Gartner’s estimate.
Part of the reason smartphone sales trail these other markets is the continued popularity of feature phones in India. These handsets are generally dramatically cheaper than even low-cost smartphones, with feature sets that often include items normally found on smartphones, like front-facing cameras and media storage capabilities.
But there are new motivations for consumers in India to make the shift to smartphones. In September 2016, Reliance Jio formally launched its entry as a new mobile service provider by offering 4G service at dramatically lower prices than established competitors. Consumers have not only been flocking to Reliance Jio, but its competitors have also been forced to drop their prices to stanch the outflow of subscribers.
That seismic shift has provided users with a compelling reason to buy not just a smartphone, but a 4G-capable one. Reliance Retail, Reliance Jio’s sister company, has even helped to foster this demand by offering low-cost 4G smartphones, reportedly selling 2.6 million such devices in Q4 2016.
According to Counterpoint Technology Market Research, 4G-enabled smartphones accounted for 70% of the smartphone shipment share in India in Q3 2016, up from 65% the previous quarter.
Smartphone manufacturers in addition to Reliance Retail are all fighting for a growing slice of India’s burgeoning smartphone market. Gartner found that market leader Samsung’s share of sales slipped to 17.3% in 2016, down from 21.2% the year before.
Gartner reported that domestic smartphone manufacturers like Micromax and Intex Technologies also had their sales share slip, largely at the hands of low-cost manufacturers based in China that have moved aggressively into India.
However, the company noted there are signs that smartphone buyers in India are no longer content to purchase simply the cheapest smartphone available to them, and are moving upmarket into devices with more features with higher price tags.