India, the world’s second-largest smartphone market, is facing challenges in acquiring new smartphone buyers due to affordability issues. With approximately 750 million users in the country, many individuals find it difficult to purchase a brand-new smartphone. As a result, a significant number of Indian consumers choose to stick with their existing feature phones or only upgrade to a new feature phone. This preference for feature phones has led to growth in feature phone shipments in India, despite these devices being outdated and offering fewer features compared to smartphones.
According to market analyst firm Counterpoint, feature phone shipments in India experienced a 10% year-on-year growth in 2023, a significant increase from the -31% in 2022. This growth is attributed to existing feature phone buyers resisting the switch to smartphones. Although 2G feature phones dominate the Indian market with a 75% share, shipments of 4G feature phones have been increasing steadily, accounting for 25% of the market in 2023, up from 9% in 2022.
Reliance Jio, an Indian telecom giant, leads the 4G feature phone market with a 27% share. Transsion Holdings-owned Itel and Indian phone maker Lava follow closely at 24% and 18% respectively. Reliance Jio offers a range of models in the segment, along with dedicated tariff plans and access to various digital services such as the country’s real-time payment system, Unified Payments Interface, and apps including JioCinema, JioTV, and WhatsApp. These offerings aim to attract a large customer base.
Tarun Pathak, research director for devices and ecosystems at Counterpoint, suggests that 4G feature phones from Jio have hindered smartphone adoption in India to some extent. This is because consumers can now access basic apps on feature phones themselves. Recognizing this trend, Jio is planning to launch a 5G feature phone to capitalize on the market demand and attract first-time smartphone buyers in India.
Sources suggest that Jio’s 5G feature phone will run on the Linux-based software KaiOS, which is already powering the telco’s existing feature phone range. The phone is currently being prototyped by contract manufacturers Dixon Technologies and Neolync. Although the phone is expected to be announced at Reliance’s forthcoming annual general meeting in August, it may not be ready for the mass market anytime soon. Pricing details for the phone are yet to be determined.
In addition to the 5G feature phone, Jio plans to launch a 5G Android tablet and a 5G smartphone this year. The company aims to upgrade its portfolio to 5G devices and monetize 5G connectivity to boost its telecom revenues. Jio, along with competitors Airtel and Vi, recently increased tariffs in the country to enhance their subscription revenues. The operator is also expected to spin off from Reliance and become a public company listed on Indian stock exchanges with a valuation of $112 billion as early as next year.
Jio’s journey in the feature phone market began in 2017 when it introduced its first 4G feature phone, JioPhone. Based on the KaiOS, the JioPhone quickly became the country’s top-selling feature phone. It later received support for popular apps including Facebook, WhatsApp, and YouTube. In 2018, Jio introduced the JioPhone 2, a next-generation feature phone with a QWERTY keyboard. However, due to limited availability and appeal, it did not achieve the same level of success as its predecessor. To revive its presence in the feature phone market, Jio launched the Jio Bharat series, a $12 feature phone series, and updated the original JioPhone with the JioPhone Prima.
The decline in entry-level smartphone shipments in India is attributed to the reluctance of feature phone users to switch to affordable smartphones. Approximately 350 million people in India still use feature phones, and only 50% of them have models priced below $18. The pricing gap between smartphones and feature phones remains significant, making it challenging for users to transition to smartphones easily. The average selling price of smartphones in India is $255, compared to $826 in the U.S. Low disposable income further limits the ability of millions of people to purchase smartphones in India.
To attract buyers, smartphone brands have started offering financing options. However, these options have primarily benefited existing smartphone users looking to upgrade their devices. Market experts suggest that factors such as low smartphone penetration, difficulty transitioning from feature phones to smartphones, and affordability challenges contribute to the slow growth in smartphone adoption in India.
In conclusion, the Indian smartphone market faces obstacles in acquiring new buyers due to affordability issues. As a result, feature phone shipments in the country have seen significant growth, indicating a preference for these devices among consumers. Reliance Jio, recognizing this trend, plans to launch a 5G feature phone to capitalize on the market demand and attract first-time smartphone buyers. However, the transition from feature phones to smartphones remains challenging for many individuals in India, mostly due to pricing differences and low disposable income. Smartphone brands continue to explore strategies to make smartphones more accessible and affordable, aiming to accelerate smartphone adoption in the country.
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