IDC report shows Indians are ditching feature phones for smartphones

The latest numbers of mobile phone sales from IDC’s APEJ Quarterly Mobile Phone Tracker, for the third quarter of 2013, show an interesting trend emerging for the Indian market.

The number of smartphone units shipped this quarter increased by nearly 337 percent, rising from 3.8 million units in 3Q2012 to 12.8 million units in 3Q2013. The Indian smartphone market grew by 229 percent year over year as a remarkable proof of how consumers are rapidly adopting smartphones. The preference also increased in the large screen models (phablets) category of smartphones that constituted 23 percent of the overall market volume.

The results for Indian vendors showed a significant slow down as compared to earlier periods, and came as a result of the lowering of prices by international vendors. As Samsung and Nokia made headway in to the smartphone market this quarter, Indian vendors like Micromax and Karbonn showed a noticeable reduction in market share.

As of the last quarter , Micromax was the second largest smartphone provider, with a market share of 22 percent, trailing to Samsung which was at 26 percent. However, the current market figures seem to have toppled Micromax from its once ascending trail. The third quarter of 2013 had Micromax reduced to 17.1 percent of market share but maintained its second rank, with Samsung having bloated to 32.9 percent in an impressive show of strength.

Another interesting trend was the fragmentation of the smartphone market amongst numerous relatively new entrants, which captured market share away from Micromax. Companies like Lava with their XOLO and IRIS range of phones showed impressive gains with a 4.7 percent market share in the third quarter eating. Moreover, even as an assortment of other smartphone providers made up 29.1 percent of the market share, Samsung walked away with most of the gains.

Indian vendors have usually relied on their offerings of low priced feature phones to attract Indian customers. In the last quarter 67 percent of smartphones shipped were under USD $200 which is a continuing trend as we see Moto G ’s USD $179 handset generate buss in the Indian market.

Research also shows that since the third quarter of last year (3Q2012), consumers have begun the eventual migration to smartphones, so local vendors need to be worried. In 3Q2012, the split between smartphone and feature-phone purchase was 7 percent to 93 percent respectively, shifting to 19 percent to 81 percent by the current quarter of 2013.

And as the distinguishing attributes between feature phones and smartphones become narrower, and international smartphone providers release a winder range of variably priced smartphones, Indian vendors will continue to face the heat and have to figure out new ways to adapt to the changing tides.

An early adaptation of this new flow is that Indian vendors are employing strategies of competitive pricing along with the rebranding of feature-phones as smartphones and positioning themselves for the global market .

In the smartphone category, Indian companies have also adopted much needed competitive strategy by attempting to broaden their brand image with the hiring of Huge Jackman as their brand ambassador to bolster the company’s image as a not-so-typical Indian brand in order to become a global brand.

Companies such as Samsung and Nokia who had suffered serious consequences from domestic feature-phone manufacturers in the past but have made a hard-earned come back which they will need to hold on to for the future if they wish to retain their growth.

As an assortment of vendors like LG, Motorola, Lava, Apple, Micromax, Nokia and Samsung among others suddenly fall in to a common product category in the eyes of consumer expectation, we can expect to see prices of smartphones to further plummet and mid-range feature phones to find newer domestic markets at even lower rates.

We can expect to see international providers continue to fight local vendors in the smartphone market as they surely wish to ensure that a market as vast and profitable as India is imprinted with global brands. The research clearly shows, Indian consumers will follow “value for money” irrespective of who the provider is – Indian or foreign.