Image Courtesy : dazeinfo.com
India’s handset market, one of the largest in the world, continues to grow strongly every year. Back in the early 2000s, mobile phones were typically only found in key urban centres and primary cities due to the low number of models in the market, high handset costs, expensive tariffs and limited network coverage. The situation has changed over the past few years with the entry of more global brands and the emergence of homegrown manufacturers in the handset market. Wider availability of more affordable handsets, including smartphones, and significantly lower call rates has catalysed growth in the market, most notably in rural areas. Competition within the crowded market is intense with more than 50 device manufacturers now selling their products. Most of these companies focus on low cost feature phones. While feature phones have dominated the market for some time, their position is being eroded by the emergence of better value smartphones, a trend which is seeing a greater number of manufacturers focus on producing more sophisticated devices.
Smartphones penetration in India’s mass market has accelerated with uptake rising from 2.5 million handsets in 2009 to about 27 million in 2012. Previously the preserve of wealthier users, smartphones have become popular on the back of greater technology usage and lower costs. Smartphone sales grew 35% in 2012 when they accounted for 10-12% of the total handset market. This share is expected to rise to half of the market’s total expected sales of 156 million units by the end of 2017.
Growth of smartphones, as the image below suggests, has rocketed in the last few years.
The increased emergence of domestic players is another instance where the growth in number of mobile phone manufacturers have caused an increase in the number of mobile phone users in the country. The reason being the wide variety of options at different levels of affordable prices for all types of users.
Source- Ipsos Business Consulting
Latest Trends in Mobile Handset Market
According to Gartner, Apple signed deals with NTT DOCOMO in Japan in September 2013, due to which sales of Apple devices increased in the last quarter. It also signed a deal with China Mobile some time in Q4 and the impact of this tie-up should be visible in the first quarter of 2014. Apple has lost marketshare and its sales have increased only marginally despite the launch of iPhone 5s and iPhone 5c in 2013. It’s marketshare is down to 15.6% after selling 150.76 million devices as opposed to a marketshare of 19.1% after selling 130.13 million devices in 2012. Android marketshare increased to 78.4% from 66.4% Year-over-Year by selling 758.72 million devices as opposed to 451.62 million devices in 2012. Sale of iOS devices meanwhile, increased marginally to 150.76 million from 130.13 million, but its marketshare reduced to 15.6 from 19.1% YoY. Windows’ marketshare increased to 3.2% from 2.5% YoY, while BlackBerry’s marketshare is down to 1.9 from 5% in 2012. And latest in the market, marking its comeback to the Indian mobile handset market, electronics giant Philips has said it is launching 3-4 new smartphones and feature phones in the next few months. The company, which sold only feature phones in India in early 2000, is also betting big on the burgeoning smartphone market in the country, aiming to be among the top six players in the category by December-end.
Possible Outcome in the Near Future for Mobile Manufacturers
Organised players, comprising both large format stores and chain retailers, will expand their presence from metro areas and primary cities into secondary and tertiary cities across the country. Regional chain stores, having consolidated and stabilised their position in local markets, will drive their business by expanding into other states. Unorganised stores will continue to play a key role in the market, which is still dominated by low-cost handsets. Online handset sales have picked up recently thanks to the expanding presence of companies such as Flipkart, Snapdeal, Amazon and many others selling these products at discounted prices. Chain stores have also developed online channels. E-top-ups are also available online through operator websites which has resulted in declining demand for such services through traditional channels, especially for high-value top-ups. Organised retailers are expected to gain greater market share in the coming years, however, the characteristics of India’s mobile market is expected to see traditional retailers and smaller stores continue to dominate the business.