Indian smartphone market set for growth

24 April 2013
NEW DELHI: The market for smartphones in India is approaching a "tipping point", with penetration hitting 10% due to falling prices for entry-level handsets.

"The market is expanding fast, but a tipping point is still about a year away," Sashi Shankar, chief marketing officer at Idea Cellular, a mobile services operator, told The Economic Times. His added that handset prices would have to fall further, to around Rs 3,000, before rapid growth could occur.

Separate analysis from PricewaterhouseCoopers pushed the watershed moment back further, to 18-14 months. "It will come when users see value in it beyond a fashion accessory — like using it for mcommerce, m-banking and even entertainment," said Mohammad Chowdhury.

But others felt the turning point had already arrived, with Anshul Gupta, principal research analyst at Gartner India, suggesting that there had been a fundamental shift in the market in the last quarter of 2012.

Certainly, manufacturers have noted changes. "About 20% of the phones that Samsung sells are smartphones, and this has doubled in the past one year," said Asim Warsi, vice president Samsung Mobile. Nokia, meanwhile, expected smartphone penetration to treble to 29% by 2015.

Jerold Pereira, head of the handset division at Videocon, a mobile services firm, highlighted the progress the Indian smartphone market has made over recent months. "In 2011, 10m smartphones were sold and all were at least Rs 10,000 or higher," he said.

"In 2012, the market doubled to 20m, at Rs 8,000- Rs 10,000. This year, 45-50m devices will be sold and prices have dropped below Rs 6,000."

Entry-level devices currently account for 30% to 35% of the market, with the ability to browse the web, chat on Facebook or send emails being seen as enough by new users. More sophisticated features such as location-based services or high-definition gaming apps would require an upgrade.

But even then, the infrastructure may not be sufficiently developed. "One-third of the smartphones sold are not 3G, but 2.75G," said Pereira. "And in remote areas, 3G is still not there. So, users won't get value out of their top-end smart device."

Data sourced from The Economic Times; additional content by Warc staff
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