Smartphone market will grow but usage will remain simple
In 2013, Deloitte predicts that global shipments of smartphones, defined as any device perceived by consumers as being a smartphone, is likely to exceed by one billion units for the first time and a large proportion of it will come from India.
Growth of smartphone sales has surpassed sales of feature phones in India, although they have a relatively minor share in the overall handset market.38 Several factors are driving smartphone adoption in India:
- Affordable smartphones along with the introduction of high speed internet services such as 3G and 4G are making headway.
- Application stores are continuously increasing the ‘wow’ factor as they have helped increase smartphone utility and the user experience.39
- Advanced calling features coupled with the instant messaging options make smartphones the primary devices used by enterprises for facilitating mobility amongst its employees.
- Mobile operators offering mobile phones under their own brand are pressurising handset manufacturers to sustain a strong brand image and to produce innovative products, which further increase competition in the market.
- Local smartphone vendors are now challenged by global players that have matched them in terms of affordability and number of features and are now graded higher by customers due to their brand reputation.40
As the base grows, usage is likely to stratify further.41 The absolute number of those exploiting the full breadth of a smartphone’s capability is likely to increase. In addition, the proportion and absolute number of those using only the basic functionality of a smartphone – voice, text, and photos – is also likely to rise.
One significant example of diversity in usage of smartphones relates to data. When smartphones were first launched, a key difference was the ability to handle data, as well as, voice. Yet in 2013, one in every five smartphone owners, globally, may never or rarely (less than once a week) connect to the Internet through cellular or Wi-Fi. While in case of India, the trend would compute to two in every five smartphones owners.
The reasons for using these phones in such a basic way are multiple and often overlapping:
- The limited capability of new entry-level smartphones and older hand-me-down high-end smartphones
- The lack of interest or ability among a proportion of smartphone owners to use their device’s smart capabilities
- The lack of understanding or affordability of data tariffs
- The lack of the required cellular and /or Wi-Fi infrastructure that would enable a user to exploit the full set of a phone’s smart functionality
- The low battery life while using data services42
In 2013, any full touch-screen-based device, or any device with a full QWERTY keyboard, might be described by manufacturers, presented by salespeople, or perceived by purchasers as a smartphone. In marketing and in stores there is no enforceable rule on what can or cannot be promoted as a smartphone.
Owners of entry-level or older smartphones may download and try out apps, or browse some sites soon after acquiring their devices, but if the experience is poor, they may never try it again.43 It may be that the only apps this category of owners will ever use are those that come pre-loaded onto the device. According to Deloitte’s research, almost 16% of smartphone owners have never downloaded a single app.
In a few cases, individuals may spend hundreds of dollars on a new high-end smartphone and just use it to make calls and send messages. Owners of high-end smartphones – as with owners of any high-end products – may purchase these devices because of their build quality, or because of the status that comes with ownership, rather than for their functionality.
Another reason for under-utilisation of smartphones is that the owner’s underlying cellular network may have poor mobile data quality and coverage. While the 3G coverage in cities has been improving, mobile broadband penetration in rural areas remains inconsistent, fixed broadband infrastructure is patchy and public Wi-Fi hotspots scarce.
38 Marketline FIVE FORCES ANALYSIS of mobile phone market in India
39 Gartner report on “Hype Cycle for ICT in India, 2012” published on 31st July 2012
40 Gartner’s Survey Analysis “India's Channels Believe Technology Providers Are Not Ready to Serve New IT Consumers” published on 28th March 2012
41 The smartphone share of all phones may rise to 80 percent of the total. http://www.asymco.com/2012/07/03/us-smartphone-market-not-showing-signs-of-saturation/
43 For a view on app issues on entry level smartphones, see: http://www.mobileapptesting.com/low-end-smartphones-mean-more-testing/2012/02/
44 Netscribes presentation on Enterprise Mobility Market in India September 2012
45 For detail on how e-commerce varied between different mobile OS, see: http://www.asymco.com/2012/11/26/the-android-engagement-paradox/