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India's phone market 'in transition'

News, 04 February 2016

NEW DELHI: India is now the second largest smartphone market in the world and going through a period of transition for both consumers and industry, according to new reports.

A study from Counterpoint Research said the number of active smartphone users in India has now passed that in the US and stands at 220m; only China has more.

During 2015, Indian smartphone shipments grew 23% year-on-year to cross the 100m mark, although the total phone market declined 3% to 243m as fewer people bought feature phones, the Economic Times reported.

A separate study from CMR made a similar point as it reported annual smartphone shipments up 18% while feature phones were down 27.1%.

Counterpoint's research also revealed a rapid shift to 4G, with more than half of smartphones shipped during the fourth quarter being LTE devices.

And many phones are now being produced in India rather than imported: more than 20 mobile phone brands are assembling their phones locally while almost half of phones sold in the fourth quarter merited the "Made in India" tag.

"We are witnessing a transition period for the industry," declared Faisal Kawoosa, lead telecoms analyst at CMR. "Transition from mass to niche, feature phones to smartphones, 2G and 3G to 4G, 'offline only' to hybrid, and 'imports only' to domestic manufacturing with imports."

That, he suggested, inevitably meant a decline in overall volumes, but "once this transition is over and vendors adopt the right mix of sourcing and marketing, and develop competencies to address the emerging/niche segments rather than the mass market, we should see the market rebound".

The top end of the market may be hampered by the falling value of the rupee, however, which is expected to push up the price of imported consumer electronics such as the premium smartphones supplied by brands like Apple and Samsung.

Data sourced from Economic Times; additional content by Warc staff