As India’s second-largest smartphone market after China, the country is facing a challenge in attracting new customers, with many individuals finding it difficult to purchase a brand-new smartphone due to affordability concerns.
In place of upgrading to a brand-new smartphone, millions of Indian consumers prefer to stick with their existing feature phones or opt for a mid-range upgrade. Despite the age and limited capabilities of feature phones, they have driven progress in domestic telephone shipments, offering basic functionality that meets everyday computing needs for the average consumer.
According to a recent report by market analysis firm Counterpoint, Indian smartphone shipments showed a notable 10% year-over-year growth last year, marking a significant recovery from the 31% decline seen in 2022. As consumers increasingly hesitate to upgrade their existing smartphones.
In India, the share of 4G feature phone shipments surged to 25% in 2023, up from 9% in 2022, making it a quarter of the overall characteristic telephone market. Notwithstanding their outdated technology, 2G feature phones still hold a dominant 75% market share in India, according to Counterpoint’s statistics.
Reliance Jio, India’s leading telecom operator, dominates the 4G feature phone market with a 27% share, followed closely by Transsion Holdings’ Itel brand and Indian manufacturer Lava, which hold 24% and 18%, respectively, according to Counterpoint research. The telecommunications provider offers a diverse range of options within its sector, including customised tariff plans and access to digital services such as the country’s real-time payment system, Unified Payments Interface, and popular apps like JioCinema, JioTV, and WhatsApp, designed to attract a large audience.
According to Tarun Pathak, analysis director for units and ecosystems at Counterpoint, Jio’s 4G feature phones have somewhat impeded Indian smartphone adoption, as customers can now access basic apps on these devices.
JIO targeting a 5G-enabled phone to capitalise on the growth?
Jio, poised to capitalize on its dominance in subscriber numbers and revenue, is discreetly developing a 5G-capable phone as manufacturers grapple with the challenge of enticing first-time smartphone buyers in the South Asian market, it has been learned exclusively by TechCrunch?
The Indian telecommunications giant, a subsidiary of Reliance Industries, has been championing innovative feature phones since the early days and continues to do so, taking a significant leap forward in 2021. The company’s initial foray into smartphones was hampered by a price tag that outweighed its modest technical specifications, ultimately failing to generate significant interest or traction. Now, Reliance Jio views affordable feature phones as its most potent tool for widespread mobile penetration in India.
Jio’s upcoming 5G feature phone is set to run on Linux-based operating system KaiOS, the same software that currently powers Jio’s existing feature phone lineup. Contract producers Dixon Technologies and Nuralink are currently prototyping the handset, according to sources.
Reliance’s upcoming annual general meeting, slated for August, may witness the introduction of a new telephone feature, insiders suggest, but its widespread availability remains uncertain, pending further development. The pricing of Jio’s telephone remains a mystery to unravel.
Sources familiar with the matter have revealed to TechCrunch that India’s Jio Platforms, a subsidiary of Reliance Industries, is engaged in initial discussions with Qualcomm regarding the development of its first 5G-enabled smartphone. While the discussion around improving the system is ongoing, various chipmakers may still be involved in the overall project.
Qualcomm has refuted any involvement in talks with Jio, dismissing the notion upon inquiry by TechCrunch this week. A Reliance Industries representative chose not to provide a statement.
Jio is poised to unveil its latest additions: a 5G Android tablet and smartphone, slated for release this year, according to two sources familiar with the company’s plans.
Neither Dixon Applied Sciences nor Neolync responded to inquiries for comment.
Until now, Reliance Jio has offered a range of 4G-enabled devices, including its first Android-based smartphone. Despite this, the telco aims to expand its 5G device offerings with a goal of increasing telecom revenue streams and exploring opportunities for 5G connectivity monetization. Indian telecom operators Jio, alongside competitors Airtel and Vi, are intensifying efforts to boost subscription revenues domestically. The company can potentially list itself as a public entity on India’s major stock exchanges within the next year, with an estimated valuation of $112 billion.
Jio’s transformative telecom odyssey has been marked by milestones of innovation and disruption. Since its inception in 2016, Jio has revolutionized the Indian telecommunications landscape with its game-changing strategy of offering affordable, high-speed data services to the masses.
In August 2017, Reliance Jio introduced its initial 4G feature phone, built primarily on the KaiOS platform. Following its inception, the JioPhone quickly gained traction. The Candy Bar telephone subsequently received support for a wide range of popular apps, including Facebook, WhatsApp, and YouTube, thereby enhancing its usability.
In 2018, Reliance Jio introduced its cutting-edge feature phone, boasting a pioneering QWERTY keyboard design. Despite the JioPhone’s initial success being attributed to its limited availability and unique appeal, the subsequent release couldn’t replicate this outcome.
In the final year, the telecommunications company introduced a new $12 feature phone lineup in an effort to re-establish its foothold in the feature phone market. The revised text is:
JioPhone has been updated with a revamped version, dubbed. The introduction of cutting-edge fashion trends significantly contributed to the growth of the Indian market for 4G-enabled smartphones.
Despite smartphone penetration rates in India exceeding 50%, a staggering proportion of the population remains hesitant to upgrade their devices.
In a significant milestone, India’s smartphone market witnessed its third successive quarter of growth in shipments, with a total of 34 million smartphones shipped during the period, according to data from IDC. Notwithstanding, the super-premium segment (above $800) saw the most significant 44% increase, with its market share rising to 7%, outpacing other segments. The Samsung Galaxy S24 and S23 series were heavily influenced by the latest and greatest iPhone trends of their time.
According to IDC, the proportion of entry-level smartphones priced below $100, commonly referred to as the sub-$100 segment, experienced a notable decline of 14% year-over-year, dropping to 15% of the Indian market share from 20% in the previous year. By 2020, Huawei had captured a significant 26% share of the global smartphone market, while by 2021, its market presence had slightly decreased to 20%.
Industry analysts posit that a primary factor driving the precipitous drop in entry-level smartphone shipments stems from the hesitation of traditional feature phone users to migrate to affordable smartphones.
According to Navkendar Singh, affiliate VP for units analysis at IDC, roughly 350 million people in India still rely on feature phones, with half of those devices being priced under $18. “Due to financial constraints, many people are opting for more basic phones as an alternative to smartphones.”
According to Singh, India’s smartphone penetration has plateaued below 50% over the past few years, despite a modest uptick in shipments following the COVID-19 pandemic.
“The shift from traditional landlines to smartphones poses a significant hurdle for certain consumers,” noted Counterpoint’s Pathak, citing older adults, low-income households, and blue-collar workers as demographics that are struggling to adapt to this change in India.
“The disparity in pricing between smartphones and feature phones remains significant enough to deter customers from switching to smartphones.”
According to market research, the average selling price of smartphones in India is approximately $255, as reported by IDC. The company saw a remarkable growth of more than 54%, increasing its revenue to $257 from just $165 in 2020. The average selling price (ASP) of a smartphone in India stands at approximately 31% lower than the $826 seen in the US market.
Despite this, tens of millions of people still struggle to buy a smartphone in India due to their limited financial resources.
While India boasts some of the most affordable smartphones globally, when measured against consumers’ purchasing power, the price tag is surprisingly high, rivaling that of even the United States.
According to a report by the Indian Council for Research on International Economic Relations and Prosus, “U.OKAY.”
Mobile device producers offer financing options to attract customers. Despite this, Singh told TechCrunch that the transfer has primarily benefited existing smartphone users by allowing them to upgrade their models.
