Why 1 bn smartphones in 2013 is good news for Indian consumers

The International Data Corporation’s (IDC) Quarterly Mobile Phone Tracker predicts that smartphone shipments will cross one billion units for 2013. This spike is fueled by dropping prices and surging demand from emerging markets in Asia/Pacific, Latin America, Africa and the Middle East. [caption id=“attachment_1255937” align=“alignleft” width=“380”] Good news for Indian users[/caption] Predictions also indicate that growth rates will precipitously rise from 2013 to 2017 for these regions as accessibility, network penetration and drop in costs promote sales. Asia/Pacific alone accounted for over 50 percent of 2013 shipment volumes, expecting to reach nearly 59 percent global market share by 2017. The surge in rising shipments caused by the aggressive pricing of international vendors like Motorola, LG and Motorola, who are attempting low-cost innovations in mobile computing, has resulted in 39 percent growth year over year (YoY) in 2013. The Indian market has also shown a 300 percent (YoY) rise in shipments during the second quarter of 2013 (2Q13) with 9.3 million units shipped in 2Q13 as compared to 3.5 million units a year prior (2Q12). This aggressive increase in the second quarter resulted in a 50 percent hike over first quarter shipments. The general trend of mobile phone sales since 2012 in India witnessed a 21 percent YoY growth with feature phones dominating the market with 85 percent share by 2Q13. The expectation of total smartphone shipments growth is at a CAGR (compounded annual growth rate) of 18.4 percent, which translates to potentially 1.7 billion units shipped by 2017. The Indian Market: Consequences The fall in average selling prices internationally (average selling price – ASPs) is also a critical factor in demand as it has fallen 12.8 percent since 2012 (2012: $387 – Rs.24,100/-, 2013: $337 – Rs.21,000/-). Predictions from IDC indicate that this decline is expected to continue with ASPs reaching $265 by 2017. This shifting trend is promising newer, faster but cheaper smartphones to satisfy the Indian consumers demand.

Although Samsung and Nokia are still dominating the Indian market, they are facing increasing competition from domestic vendors. Indian companies such as Micromax, Intex, Lava, Karbonn and Celkon are becoming more competitive in the Indian market with their lower prices forcing international vendors to follow suit (Moto G – USD $179 – Rs.11,100/-). Other foreign vendors like LG have said that as they find greater market share in India they will work towards keeping their products inviting to consumers by considering local manufacturing to keep prices lower. This pivot by international players to compete more effectively with domestic manufactures is good news for the consumer as they can expect lower prices for better features.