India, the world’s second-largest smartphone market after China with round 750 million customers, is struggling to get new smartphone consumers, as the common particular person within the nation finds it onerous to afford a brand-new smartphone.
As an alternative of switching to a brand new smartphone, hundreds of thousands of Indian shoppers favor to proceed with their current function telephones or solely improve to a brand new function telephone. The latter has resulted in progress in function telephone shipments within the nation regardless of these telephones being fairly old school and having only a handful of options in comparison with smartphones, which assist clear up most on-the-go computing necessities for a typical purchaser.
In accordance with knowledge shared by market analyst agency Counterpoint, function telephone shipments in India noticed 10% year-on-year progress final 12 months, up from -31% in 2022. This progress comes as current function telephone consumers resist from selecting a brand new smartphone.
Of the whole function telephone market, 4G function telephone shipments in India grew to 25% in 2023 from 9% in 2022. Nonetheless, 2G function telephones nonetheless dominate the Indian market, with a 75% share, per Counterpoint.
Indian telecom large Reliance Jio leads the 4G function telephone market, with a share of 27%, adopted by Transsion Holdings-owned Itel and Indian telephone maker Lava at 24% and 18%, respectively, in accordance with Counterpoint. The telecom operator presents a variety of fashions within the phase together with devoted tariff plans and entry to providers digital providers together with the nation’s real-time fee system Unified Funds Interface and apps similar to JioCinema, JioTV and WhatsApp to draw the plenty.
Nonetheless, Tarun Pathak, analysis director for gadgets and ecosystems at Counterpoint, advised TechCrunch that the 4G function telephones from Jio have hindered smartphone adoption within the nation to a sure extent “because the shoppers at the moment are in a position to get primary apps on function telephones themselves.”
Jio eying a 5G function telephone to capitalize on the pattern
Jio, the largest telecom participant in India when it comes to its subscriber base and revenues, is quietly planning a 5G function telephone as manufacturers face challenges in attracting first-time smartphone consumers within the South Asian market, TechCrunch has solely discovered.
The telecom operator owned by the Indian conglomerate Reliance Industries has been promoting function telephones for years and steadily moved to smartphones with Google in 2021. However its first smartphone was too expensive for its mediocre specs and didn’t assist transfer the needle. Now, Jio sees function telephones because the strongest weapon it has to get telephones into as many palms in India as potential.
Jio’s 5G function telephone will run Linux-based software program KaiOS, which already powers the telco’s current function telephone vary. Contract producers Dixon Applied sciences and Neolync are presently prototyping the handset, sources stated.
The telephone can be introduced at Reliance’s forthcoming annual common assembly, which is anticipated in August, although it isn’t prone to be prepared for the mass market anytime quickly, in accordance with the sources. The telephone’s pricing can also be among the many questions that Jio is but to find out.
Sources acquainted with the matter advised TechCrunch that the Mumbai-based telco is in preliminary talks with Qualcomm for the early model of its 5G function telephone. Nonetheless, different chipmakers could also be concerned within the remaining system, because the discussions are nonetheless on on its improvement.
Qualcomm denied its participation in discussions with Jio when TechCrunch reached out this week. A Reliance Industries spokesperson declined to remark.
Alongside the brand new 5G function telephone, Jio plans to launch its 5G Android pill and a 5G smartphone this 12 months, two folks acquainted with the telco’s plans advised TechCrunch.
Dixon Applied sciences and Neolync didn’t reply to requests for remark.
Till now, Jio has a 4G line of gadgets, which incorporates the JioPhone Subsequent as its first Android smartphone. The telco, nevertheless, is seeking to improve its portfolio to 5G gadgets, because it goals to broaden its telecom revenues and dealing on monetizing 5G connectivity. Jio, together with rivals Airtel and Vi, not too long ago hiked tariffs within the nation to spice up their subscription revenues. The operator can also be anticipated to spin off from Reliance and checklist as a public firm on Indian inventory exchanges at a valuation of $112 billion as early as subsequent 12 months.
Jio’s function telephone journey to date
In August 2017, Jio unveiled its first 4G function telephone, JioPhone, based mostly on KaiOS. Shortly after its launch, the JioPhone grew to become the nation’s top-selling function telephone. The candybar telephone additionally later obtained help for well-liked apps together with Fb, WhatsApp and YouTube to broaden utilization.
In 2018, Jio launched the next-generation function telephone with a QWERTY keyboard. Nonetheless, the JioPhone 2 couldn’t repeat the success of the JioPhone resulting from its restricted availability and attraction.
Final 12 months, the telco launched the Jio Bharat as a $12 function telephone sequence to revive its presence within the function telephone market. It additionally up to date the unique JioPhone with a face-lift known as the JioPhone Prima. The launch of the brand new fashions helped develop the market of 4G function telephones in India.
Why are hundreds of thousands of Indians not shopping for new smartphones?
India’s smartphone market noticed over 11% year-on-year progress within the first quarter, the third consecutive quarter of progress in shipments, with 34 million smartphone shipped throughout the quarter, in accordance with IDC. Nonetheless, not like the price range value segments (between sub-$100 and $200), the super-premium phase (over $800) noticed the best 44% progress, seeing a rise in its share to 7%. It was dominated by the newest and last-generation iPhone fashions adopted by the Galaxy S24 and Galaxy S23 households.
Nonetheless, the share of the entry-level phase (sub-$100) within the Indian smartphone market declined by 14% year-on-year to fifteen%, down from 20% a 12 months in the past, per IDC. It was 26% of the general smartphone market in 2020 and 20% in 2021.
Market specialists consider that the first purpose for the sharp decline in entry-level smartphone shipments is the reluctance of function telephone customers to modify to reasonably priced smartphones.
Navkendar Singh, affiliate vp for gadgets analysis at IDC, advised TechCrunch that round 350 million folks in India nonetheless use a function telephone, and 50% of them have a mannequin that’s lower than $18. “As a result of they’re not in a position to purchase a smartphone, they’re changing their function telephones,” he stated.
Singh additionally famous that India’s smartphone penetration is lower than 50%, and it remained unchanged for the final couple of years, although the market noticed some progress in smartphone shipments after the COVID pandemic.
“The transition from function telephones to smartphones just isn’t straightforward for some shoppers,” stated Counterpoint’s Pathak, including that older folks and folks in low-income teams and blue-collar jobs aren’t upgrading to smartphones within the nation.
“The pricing distinction between smartphones and have telephones remains to be extensive sufficient to restrict customers to modify to smartphones simply,” he stated.
In accordance with IDC, a smartphone’s common promoting value (ASP) in India is $255. It grew over 54% from $165 in 2020. The smartphone ASP in India is merely round 31% in comparison with the $826 within the U.S.
Nonetheless, hundreds of thousands of individuals discover it onerous to purchase a smartphone in India resulting from their low disposable earnings.
“Whereas India has one of many most cost-effective smartphones on this planet, as a share of customers’ earnings, it’s much less reasonably priced than even within the U.S. and U.Okay.,” in accordance with a report titled State of India’s Digital Financial system by the Indian Council for Analysis on Worldwide Financial Relations and Prosus.
Smartphone manufacturers supply finance choices to draw consumers. Nonetheless, Singh advised TechCrunch that the transfer has to date helped solely current smartphone shoppers improve their fashions.
