The centre of gravity in mobile is shifting—potentially—to the subcontinent. India is currently the second largest market for smartphones in the world, second only to China, according to Neil Shah, research director for devices and ecosystems at Counterpoint Technology Market Research.
But more importantly, it’s the fastest growing market, and regional manufacturers are carving out expertise in delivering hardware and software to new and entry-level customers that could have global repercussions.
“The next two leaders are either from India and Africa,” adds SN Rai, co-founder of smartphone manufacturer Lava International, which serves India, Bangladesh, Thailand and other countries and is currently expanding factory capacity to produce an additional 80 to 90 million phones.
If Rai is right, the next decade will present an unprecedented opportunity for India’s hardware community. Although companies like Infosys and Wipro have become globally recognised brand names, India has historically not played a significant global role in branded consumer devices.
The next four billion
We’re now, however, entering a new generation of technology. Approximately 4 billion people have yet to connect to the internet. One billion live without electric light. Emerging markets already account for 76 percent of all smartphone shipments in 2014 and the figure rise to 82 percent by 2020, according to SpecTRAX and PriceTRAX databases from Strategy Analytics.
These customers won’t settle for second rate technologies. They will want quality experiences at a price they can afford. By taking the lead in mobile, Indian companies can lay the groundwork for moving into adjacent markets, like the Internet of Things, as well as into other regional and national markets. Ringing Bells recently made international headlines with an Android phone for under $4.
Call it technology for everyone.
And, of course, there’s no reason a company couldn’t leverage experience in entry markets to go into more luxurious ones. Chinese vendors such as Huawei, ZTE and Xiaomi serve international audiences. Micromax is already the number ten smartphone manufacturer by shipments worldwide.
Where it all starts
Like in most technology markets, the foundation for optimism revolves around taking advantage of a very real and ongoing trend: Namely, the local smartphone market. Smartphone shipments have climbed 5x in three years, from 22 million in 2012 to 1,134 million in 2015. Unique phone users will hit 563 million this year, still less than half the population.
The demographics of the market, however, are quite different than what you see in other parts of the world. Fifty-nine percent of the market consists of sub-$100 phones while only 22 percent are in the $150-$300 band, according to Shah. Indian manufacturers account for 44 percent of shipments and are heavily concentrated in the $75 and below segment. Chinese manufacturers lead in the $75-$100 segment and multinational manufacturers lead in the $150 and below.
“The $100 to $150 segment is the battleground,” Shah said.
Will multinationals use their large, established economies of scale to penetrate to lower price points? Or will Indian manufacturers be successful in keeping them out and moving up the ladder with innovative content deals or designs? Can Chinese manufacturers leverage their established manufacturing footprint and lessons learnt in branding to continue to make inroads? Stay tuned.
Expect to also see plenty of innovation among carriers. There are more than 10 carriers in the country, said Shah, making India ripe for disruption. Vodafone and Airtel have shown a track record for being hyper efficient when it comes to rolling out new customer services, he said.
From this vantage point, the only thing that can truly be predicted is that this opportunity is not a fleeting one. Companies may rise and fall but the demand is not going to disappear.
- By Balaji Sivakumar, director, Mobile & Tablet Marketing, SanDisk. The views expressed are his own.
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As one who recently returned from India after a four month stay there, I fully endorse the views expressed in this article. I have seen the penetration of mobile phones in different strata of the society. In a country where carrying two or more cell phones whether needed or not but considered as status symbol, coupled with low call charges (lowest in the world ?) demand is bound to grow exponentially in the years to come. Who knows, cell phones may exceed the population!! ion Apr 16, 2016