In conversation with Micromax, leading Mobile handset manufacturer in India and with distributors like Redington, we get a sense of the real mobile handset market adopted by the masses. Wireless Operators are trying to encourage smartphone adoption (which consequently helps push data services) by lowering entry price point, bundling data & offering financing options, uptake is yet to pick-up pace and is constrained by the still high smartphone entry cost and telcos reluctance to give handset subsidies.
Smartphone penetration in India currently stands at 9% of the total handset sales of ~200m pa in India but is inching up. Samsung, with its wide product portfolio of Android Mobiles and aggressive Marketing focus, is the market leader in the segment (~50% share) followed by Micromax (~25%). The Average Selling Price of entry level smartphone in India is still greater than Rs 6,500 and hence the constraint in large scale adoption.
Status of EDGE 2.5G – First Feel of being Online on Mobile – EDGE (2.5G) smartphones have been launched in the last 12 months, driven by need to increase affordability. Micromax’s EDGE smartphones start from Rs3,500 v/s overall smartphone ASP of Rs6,500. While this helps penetration, it doesn’t help 3G data. This trend was also seen in China couple of years ago but focus consequently shifted to 3G in 2012. Vendors expect the shift to be slower in India given lack of handset subsidy and will have to wait for further reduction in 3G handset prices.
India’s Reverse Handset Subsidy in the Form of Free Data Usage Due to large base of Pre-Paid users and lack of credit history of consumers, it becomes difficult for the Wireless Operators to subsidize handset. Thus they came with a different marketing strategy. Operators have resorted to providing reverse subsidies i.e. full up-front payment for the handset and on their part they will bundle FREE data / voice mins.
Apple, so far was a niche player, given the premium pricing of iPhones. However, Apple is becoming more aggressive & has now started to offer healthy discounts and deals as we have already discussed it. This is providing a fillip to volumes and Redington is hopeful it would lead to a spurt in sales.
In the medium term, expect Chinese players like ZTE, Huawei and Lenovo too selling aggressively in India under their own brands.