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Friday, 6 September 2013

Mapping the growth of the Indian mobile market

As the demand for high-end smartphones matures and peaks in the West, attention is increasingly being focussed on Asia, which will be the next powerhouse of growth for the category. India has lagged behind China for the past few years, but is finally on a fast growth trajectory. IDC reports that smartphone shipments in the country tripled year on year in Q2 2013. In particular, Indians are attracted to 'phablets' (super-sized phones with 5 inch + screen) and 30% of the smartphone market is made up of such devices as the Galaxy Note, Micromax Canvas etc. 

Unsurprisingly, Micromax is doing well in the new scenario, and has gained 22% market share, to come within striking distance of market leader Samsung. Samsung has 26% share of the market, but the combined might of all Indian handset manufacturers including Karbonn already accounts for more than 50% of the market.

The smartphone scenario in India is playing out in a way that is uncannily similar to the way the feature phone market exploded, just 4-5 years ago. Then we had Nokia as a dominant brand making expensive and high-end handsets which were the equivalent of smartphones (remember the e-series and n-series, anyone?), as well as low-end phones. Then the Indian handset companies came onto the scene, importing cheap Chinese hardware with sophisticated features. With high-end features like camera, video-capable screens, high quality audio etc. being packed into budget handsets, the Indian players market share ate into Nokia, which in its heyday held nearly 40% of the market.

The same thing is happening to Samsung in smartphones. Samsung has innovated in budget phones and can also be credited with creating the phablet category, with the launch of the Galaxy Note 2 years ago. The Indian players have benefited from the abundant and cheap hardware (especially cheaper displays and processors) and customers have benefited by getting high-end equivalent handsets at crazily cheap prices.

If this trend matches the early one, we should soon start seeing the phasing out of feature phones, as more and more people upgrade to their first smartphone. As a smartphone demands an internet connection, we will see more mobile users online. Currently we are in the first wave of adoption - the users are mostly younger, and more educated. But this will definitely change. The mobile unlike the PC, does not have usage barriers - we use it constantly and we learn it faster. The adoption of internet will be faster. 

As telecom operators acknowledge shrinking VAS, they have started marketing more attractive data packages as a source of revenue. 3G adoption has been slowed by the high price, but 2G packages are now extremely attractive and viable. More people will adopt the slower data package (which is still fine for email, whatsapp and basic browsing). 

For marketers, the implication is that there is a need to spend more time on mobile strategy. To make sites optimised for both high and slow bandwith (apps which are smartly constructed can also bridge the gap). To focus on mobile marketing and app discovery strategy as an integral part of the digital strategy.

The appeal of a smartphone to the Indian consumer is obvious. It is a 'computer in your pocket' for as little as Rs. 5000. It is not a purchase that needs to be justified anymore - we all acknowledge that a mobile phone is a necessity. And the larger sized phablet phones are clearly catering to a PC-centric need of browsing, viewing videos - and possibly a status need to flaunt a larger handset.

One last learning from the past - once feature phone adoption picked up, it grew at a tremendous pace. We can expect the same with smartphones too. India has a large market for used mobile phones, and trade-ins are not accounted in shipments so penetration might increase rapidly. The question is - are we prepared for it?

Source : The Next Web