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    Home»Channel Focus»The Future Of Feature (phones)! By Mr. Ajay Sharma
    Channel Focus

    The Future Of Feature (phones)! By Mr. Ajay Sharma

    MOBILITY INDIABy MOBILITY INDIAJuly 7, 2022Updated:July 7, 2022No Comments4 Mins Read
    The Future Of Feature Phones
    The Future Of Feature Phones
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    I keep getting asked about the future of feature phones in India. So, I wanted to take some time out, and write down my thoughts on what the future beholds for the feature phones in India. Here’s my take: For starters, on the positive side, 2G does not seem to be going anywhere for some years.

    1. India has more than 300 million 2G users. Majority of them are either:

    a. Very low ARPU customers who cannot afford a smartphone and/or the minimum packages on 4G.

    b. The elderly who are more comfortable with simple keypad phones. Airtel, Vi and BSNL have to keep the 2G networks operational to serve them.

    2. Most of the POS machines still work on 2G. This is letting the people in Rajasthan still make payments through cards as the wallets are not working at the shops due to 4G shutdown.

    3. The Government of India is supporting the existence of this technology by clarifying that it has no intention to discontinue the network.

    4. As per GSMA, 12-13% users will continue to use 2G handsets till 2025 in India.

    5. When #RelianceJio entered the market with 4G services at low cost, many felt that there will be no 2G users left in India by 2019. We still have some hundreds of millions there. Even Jio Phone Next that was to make India 2G Free has not been able to make the kind of impact Jio would have liked it to.

    6. The decline in the 2G feature phone segment is expected to be in single digits for the next 3-4 years as per Statista.

    On the negative side:

    1. The overall feature phone market (2G and 4G) registered a 20% y-o-y decline in CY20, after registering a 42% y-o-y decline in CY19. Reports put the feature phone sales at 80 million in 2021 with a similar figure for 2020.

    2. As per #Counterpoint, feature phone (2G and 4G) shipments in India declined 39% YoY in Q1 2022 due to supply chain issues and low demand.

    3. #SamsungIndia is reportedly exiting the low value feature phone business. Apparently, while 20% of their volumes come from feature phones, the value contribution for this is only 1%!

    Let us now check how the feature phone landscape has changed in the last one year in terms of market shares comparing Q1 2022 to Q1 2021.

    What do we see?

    1. The graph clearly shows the decline by 5% in Samsung’s market share with a corresponding increase of 6% in the market shares of #Itel and #Lava.

    2. #Nokia lost about 2% with #Karbon at No. 5 growing marginally by 1%/

    3. The share of others remained unaffected at 29% in the two years.

    4. Unlike smartphones, the contribution of the No. 4 and 5 brands is not even in double digits with Karbon at a mere 3%.

    What can we conclude from this?

    1. While feature phone volumes may continue to decline, there is no immediate threat of it getting washed away like 3G.

    2. There is and will be space for local brands which still contribute to 29% market share unlike smartphones where it would be less than half of this.

    3. Since brand no. 5 is at just 3% share, it is obvious that the individual market share of any local brand would be less than 3% which effectively means less than 2.4 million or 2 lac phones a month in 2021.

    4. The share of local brands can only increase as Samsung exits the market by December subject to the local brands being smart in product, pricing and distribution.

    5. Assuming a 9% decline (Statista says it will be in single digit) every year the market would still be close to 73 million+ (approx. 60 lac+ phones per month) in 2022.

     

    If you have an interesting Article / Report/case study to share, please get in touch with us at editors@roymediative.com/ roy@roymediative.com, 9811346846/9625243429.

    Future Of Feature Phones
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