What you need to know about the Indian mobile market
2. The handsets
Affordable handsets sold under the ₹10,000 segment — that’s about $150 USD — account for a majority of smartphone sales. Phones that offer great value for money are also highly sought after, and in this regard Xiaomi has excelled since it made its debut with the Mi 3 last year, which continued with the Redmi 1S and Redmi Note.
Another factor that is a crucial determiner when buying handsets is dual-SIM connectivity. With carriers charging increased tariffs when switching states, people moving from one city to another usually retain the older number and get a new local number, thereby taking full advantage of two SIM cards. With cellular service also varying vastly between carriers, customers rely on two SIM cards from different providers to get the best coverage.
Over the course of Q2 2015, 56.59 million handsets were sold in India, of which 32.18 million were feature phones. Smartphones are closing the divide fast, having accounted for 43.2 percent of the sales with 24.41 million devices sold. That’s up from 36.8 percent in Q1 2015. In the most recent quarter, smartphones clocked in 27 million sales, a YoY increase of 15.7 percent and a quarterly growth of 10.7 percent.
The keyword in 2015 for brands and carriers alike is 4G connectivity, which is finally starting to take off. Even though there is only one carrier currently offering 4G connectivity in a few cities, sales of LTE handsets has increased dramatically this year, with 5.7 million handsets sold during the second quarter of 2015. That number has increased by 74 percent in the most recent quarter, which saw one out of every three devices sold featuring 4G connectivity. In terms of sales, Samsung leads the way in this segment, followed by Xiaomi and Apple.
However, even a $100 handset is out of reach for most people in rural India, where 2G networks are still the norm. We’ll see a gradual shift once 3G — or even 4G — is widely available in these areas, but that is still a ways off. Feature handsets cost between $20 and $30, and offer battery life in weeks, not days. Given that electricity is still a luxury in several locations, it makes sense to use a device that can last a week or two on a single charge. This is the segment that Google is looking to target with the Android One initiative, which provides first-time smartphone users access to affordable hardware.
As for the retail ecosystem, brick and mortar stores continue to dominate the sales, outnumbering online stores seven to one when it comes to phone sales. To their credit, e-commerce sites lessened the divide considerably over the last two years, with the likes of Flipkart and Amazon seeing huge investments. E-commerce vendors have gravitated to the exclusivity model — and flash sales in a few cases — to differentiate themselves from brick-and-mortar sales. Looking to buy a Honor handset in India? Head to Flipkart. Got an invite for the OnePlus 2? Claim it on Amazon India.
Flipkart led the way in terms of exclusivity, partnering with Motorola after its re-entry into the Indian market two years ago, and Xiaomi shortly thereafter. The flash sale model followed by Xiaomi drew ire from consumers, but it paid off dividends for the stores on account of all the free advertising.