Reality Check: The next billion users – why India is the next big smartphone play


Editor’s Note: Welcome to our weekly Reality Check column where C-level executives and advisory firms from across the mobile industry share unique insights and experiences.

As smartphone use in emerging markets continues to explode, some emerging markets are growing faster than others. In fact, a recent report by Strategy Analytics found that India is growing significantly faster than the global average, with 163% year-over-year growth across the country during the first quarter, compared to worldwide smartphone volumes expanding just 39%. This makes India the world’s No. 3 smartphone market, surpassing Japan. To have made this large of a jump, Strategy Analytics estimates that more than 10 million smartphones were shipped in India during Q1 2013.

So how can mobile manufacturers capture a piece of the Indian smartphone market? Simply put, it won’t be by following what manufacturers have done to capture U.S. smartphone market share. While Americans have been won over by trendy, expensive smartphones, it has become clear that the same strategy won’t work in a cost-conscious environment like India. That’s why local manufacturers have begun to compete with global smartphone titans for market share, with a June 2013 IDC report noting that Indian companies like Karbonn and Micromax are now in the top-five smartphone vendors in India. Let’s explore a few ways Western manufacturers can begin to compete for their next billion users – starting with India.

Pricing strategically for emerging markets

As India’s telecom operators do not subsidize devices, price continues to be a major opportunity – and challenge – for Western smartphone manufacturers. India’s local smartphone vendors have made a point to present potential customers with attractive, low-cost options (some as low as Rs 5000, which is about $79.)

So how are global brands competing? The recent launches of cheap smartphones using Android software have proven to be exactly what the Indian market wants – helping Samsung cement its leadership position as it treats each emerging market differently and customizes its pricing strategy accordingly. In India, Samsung offers a diverse range of products across price points, and prices its phones 10% to 20% cheaper in the Indian market, specifically. It should come as no surprise then that in our latest research 38% of Indians said the Samsung brand was their clear favorite.

Samsung’s strategy in India has forced Apple to re-evaluate its pricing strategy in emerging markets. Apple has traditionally trailed behind when it comes to the emerging markets because it has not yet adapted its pricing strategy. Is the company’s recent pricing strategy in India a signal that times are changing? In addition to extensive advertising targeted at young Indian smartphone buyers, the company also offered consumers the chance to put down partial payment on an iPhone 4 or 4S, interest-free for 6 to 12 months. In addition, it has been rumored that Apple will introduce a new iPhone “lite” in September featuring a less expensive, plastic back that is aimed at capturing the emerging market dollar. It will be interesting to see whether Apple can gain the dominance it has in the West or whether it will fall at the first hurdle.

A combination of hardware and software

While smartphone sales may be on a steady rise worldwide, users in emerging markets have starkly different needs than their western counterparts when it comes to device hardware. Characteristics like “dual SIM” and strong hardware are more important than trendy add-ons and creative brand marketing.

But one of the keys to unlocking the Indian smartphone market lies not only in mobile phone hardware, but software as well. It’s the combination of both that will make a difference in emerging markets. In these markets, it’s not enough to introduce a great handset – users are also looking for all the bells and whistles of a great operating system. This is why leading manufacturers like Nokia, BlackBerry, Samsung, HTC, ZTE and Huawei are looking to partner with mobile software companies like Google and Windows in order to create an appealing package of affordable prices and innovative mobile software for these markets.

Nokia, too, still has a big fan base in emerging markets because its characteristics are based much more on need than trend. In our research, one in five smartphone users in India would buy a Nokia device, regardless of price.

70% of Indian users use their phones for social networking

Unlike smartphone users in other emerging markets who are interested in their devices for business or education use, Indian users are interested in using their phones for leisure purposes. Our research report found that 70% of users want smartphones for social networking, followed by listening to music (69%) and entertainment (63%).

This trend towards using devices for social networking is an interesting one. It immediately recalls the recent Facebook Home launch, where Facebook made a play to take over the home screen of the smartphone – placing itself squarely at the forefront of a user’s smartphone experience. Although Facebook Home has attracted mixed reviews and reactions, once more fully developed, devices that operate Facebook Home may also see great success in India. Our research showed that 41% of Indians would like a phone designed by a social network with relevant apps and content preloaded. Clearly, there’s a massive market opportunity for manufacturers who can partner with social networks to create integrated social network offerings – for example Nokia, partnered with Facebook to have the social networking app pre-loaded onto its Asha 501, as well as adding a dedicated ‘Facebook Button’ to the Asha 205.


It would be remiss not to mention that feature phones are still a major part of the global device pie. Manufacturers and content providers should continue to team up directly with the MNOs who have established market channels and billing platforms.

That being said, the race to the next billion customers for the West’s smartphone giants – including BlackBerry, Google and Apple – almost exclusively will rely on capturing emerging markets. The untapped opportunity abounds, especially in a market seeing as much growth as India. The question is: who will step up to the plate and seize it?





About Author

Kelly Hill

Editor, Big Data, Analytics, Test & Measurement
Kelly Hill currently reports on network test and measurement, as well as the use of big data and analytics. She first covered the wireless industry for RCR Wireless News in 2005, focusing on carriers and mobile virtual network operators, then took a few years’ hiatus and returned to RCR Wireless News to write about heterogeneous networks and network infrastructure. Kelly is an Ohio native with a masters degree in journalism from the University of California, Berkeley, where she focused on science writing and multimedia. She has written for the San Francisco Chronicle, The Oregonian and The Canton Repository. Follow her on Twitter: @khillrcr