Disruptive SmartPhone Maker Xiaomi started sales in India with the Flash sales model. First flash sale in 2014, 250-300k people showed up interest on FlipKart’s website. Entire sale was over in 2 seconds (10k units). The initial buyer profile was young adults, active on social media and tech savvy, wanting the best phone at affordable price but not brand conscious.
Started with Flipkart – best sale 100,000 units in 4 seconds – then started with Airtel for a partnership on 4G partnership. In 2015, rolled out the partnership Continue reading Xiaomi India – Online Sales to Manufacturing SmartPhones / Consumer Electronics
Unlike the US and China, where landline and broadband penetration is high, India’s 2013 landline-broadband penetration was 12% / 6%. With limited investments expected by telco operators in these areas, we do not expect penetration to materially improve from these levels. Even PC penetration in India was around 10% in 2013. On the other hand, 2013 mobile penetration in India was 72%. Expect smartphone penetration to continue to show strong growth driven by increasing affordability and declining smartphone prices.
The mobile opportunity in India to be bigger than landline as many first time users will access internet on mobile in our view. We hence expect the internet companies to focus on mobile first strategies and estimate that in the next 2-3 years, the Indian internet companies will have higher proportion of interactions via mobile platform when compared to US and China companies.
Indian internet companies (listed ones where financial disclosure is in public domain barring the Flipkarts, Myntras, etc) are currently growing revenues at 20%-30% YoY and we expect them to go through a high-growth phase in coming years driven by: a) affordable internet plans and devices; b) comfort in transacting and making payments online; and c) internet companies offering a better value proposition to consumers for transacting online.
It is difficult to pin-point the exact year of inflection (which will drive massive internet usage), we believe that over a period of five years all the ecosystem enablers like affordable devices / tariffs, decent credit-card penetration, well-known internet portals and delivery mechanism will be in place. In such a scenario, we do not rule out the possibility of “hyper-growth” phase playing out.
In the next five years with consumers online spend as a percentage of total spend will increase. We also expect consumers to gradually move away from “cash on delivery” to paying by credit card/debit cards. Investments and Customer Experience will hold the key as companies will focus on easy-to-use Apps (improving consumer experience) and “mobile first strategies”. This will likely provide a “differentiated value proposition” vs. traditional offline companies. There will also Likely be some disruption in traditional offline only businesses which will be forced to have a relook.
The launch of 4G service from Reliance Jio will act as a catalyst for the uptake of internet access in India as we expect: a) the company to improve affordability and provide high-speed bandwidth services, and b) competitors like Airtel / Idea to respond and thus help increase the affordability of high-speed telco services.
The >USD 500 super smartphone segment is the most important, as it is where Samsung and Apple generate most of their smartphone profits. Together, Samsung and Apple’s smartphone revenue account for about 63% of total smartphone industry revenue in 2013, and about 95% of industry operating profit [Profit share is calculated by excluding the losses that tier-2 brand smartphone makers suffer]. Approximately, about 76% of Samsung’s smartphone profits are generated from the >USD 500 Galaxy S/Note series, the >USD 500 segment of Samsung and Apple combined would account for about 84% of total smartphone industry profit.
The >USD 500 superPhone category y-y growth is expected to slow to 1% in 3Q13, from 73% in 3Q12. Most consumers with purchasing power have already bought one of these superphones, and slowing innovation may be lengthening consumers’ smartphone replacement cycle
It is widely anticipated that Samsung’s flagship Galaxy S4 Continue reading Super SmartPhone Market Saturates – Emerging Economies Want Mid End SmartPhones
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. Continue reading SmartPhone Penetration Rising in India, Entry Cost a Barrier for Mass Adoption