3G SmartPhones Sales Rising in India – Hurdles Exist for large Scale Data uptake

3G SmartPhone Sales Rise Modest in IndiaAccording to data from “The MobileStore” a leading Mobile Handset retailer in India, with a presence across 100 cities through 800 stores, suggests that decline in 3G smartphone prices and data usage evolving beyond social media are helping accelerate smartphone adoption (~10% of handset volumes).

Current 3G smartphone volumes are 2-2.5m/month vs < 1m a year back and only 200-300k a couple of years back. The current economic slowdown hasn’t as yet impacted volumes, though we expect the recent sharp rupee depreciation could dampen uptake as vendors are unlikely to absorb the full currency hit. Interestingly, while the overall replacement handset cycle is ~24 months, it is ~15 months for smartphones, despite their higher Average Selling Price.

What is 3G Mobile Phone used for ?
Initial user focus is on social media but graduates to gaming/videos/music. At the higher end, many subs are also using it for business. E-commerce traffic is growing rapidly but transaction volume (at an absolute level) remains low. This evolving trend
(beyond social media) should encourage app developers/operators to focus on content generation/delivery, which should support data uptake in the medium term.

EDGE Vs 3G SmartPhones
Popularity of EDGE smartphones has declined with declining price points of 3G smartphones. Entry level 3G smartphones range between Rs5-10k (50-60% of volumes), mid-level Rs10- 20k (25-30%) and top end is beyond Rs20k (10-15%). The bulk of smartphones are on Android/Windows platform; Apple’s volumes are constrained by high prices while BlackBerry has seen declining consumer interest. MobileStore’s ~90% of its total handset sales VALUEis currently coming from smartphone sales.

Constraints for Adoption of 3G Mobile Phones
For data uptake to accelerate, the company suggests that telcos need to focus on 1) Subscriber education – With reference to data plans and pricing [Despite Reliance 3G Halving Data Traiffs, A-Vo-Id Group operators haven’t responded] and 2) Coverage – needs to improve given even larger cities have dark network spots, which impacts user experience and dampens usage rates.

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