India, the world’s second-largest smartphone market, is facing challenges in attracting new smartphone buyers due to affordability issues. Many consumers in the country prefer to stick with their existing feature phones or upgrade to new feature phones, resulting in growth in feature phone shipments. Counterpoint data shows that feature phone shipments in India saw a 10% YoY growth last year. While 4G feature phone shipments grew to 25%, 2G feature phones still dominate the market with a 75% share.
Reliance Jio, the leading telecom operator in India, holds a 27% share of the 4G feature phone market. The company offers a range of feature phone models along with dedicated tariff plans and access to digital services. Tarun Pathak from Counterpoint suggests that Jio’s 4G feature phones have hindered smartphone adoption in the country as basic apps are now available on feature phones.
To capitalize on the trend, Jio is planning to launch a 5G feature phone running on Linux-based software KaiOS. The company is currently in talks with Qualcomm for the early version of the device. The pricing and availability of the 5G feature phone are yet to be determined. Alongside the feature phone, Jio also plans to launch a 5G Android tablet and a 5G smartphone this year.
The reluctance of feature phone users to switch to affordable smartphones is one of the primary reasons for the decline in entry-level smartphone shipments in India. Around 350 million people in India still use a feature phone, and the pricing difference between smartphones and feature phones limits their transition. The average selling price of smartphones in India is $255, compared to $826 in the US.
Despite India having some of the cheapest smartphones globally, they are still less affordable as a percentage of users’ income compared to other countries. Finance options offered by smartphone brands have primarily helped existing smartphone consumers upgrade their models. The transition from feature phones to smartphones is particularly challenging for older people, those in low-income groups, and blue-collar jobs.
In conclusion, the affordability of smartphones remains a significant barrier to smartphone adoption in India. Feature phones continue to dominate the market, and Reliance Jio is capitalizing on this trend by planning to launch a 5G feature phone. While the market has seen growth in smartphone shipments, the entry-level segment has declined due to the reluctance of feature phone users to switch. Finance options have had limited success in attracting new buyers.
