The launch of cheap Android smartphones, especially in the last few years, has definitely benefited consumers in India at large. However, the state of the industry now tells a different story (though not openly).
The invasion of Chinese smartphone brands has hurt indigenous brands, which failed to gauge the impact of the foreign entry beforehand.
While the global brands like Samsung and Apple have largely managed to hold their grip over the market, it’s a different story for others. Here are 7 harsh realities of the smartphone market in India
1. Over 100 brands struggling for attention
The budget smartphone market sees the maximum competition. There are over 100 smartphone brands in India selling handsets under Rs 10,000.
Counterpoint Research analyst Tarun Pathak states that the precise number is around 130. Most brands are unheard of, but they all have a nearly identical Android smartphone to offer to consumers
2. Companies ‘boasting’ losses
When LeEco first launched its Le 1s budget smartphone they had two ‘successful’ stories to share. First, the brand had announced that it had sold over 2 lakh Le 1S units.
Second, the Le 1S costs Rs 16,042 to make (bill of materials) while it is sold for Rs 10,999. Mathematically, that’s a huge loss to boast just to grab consumer attention.
While LeEco might have deep pockets, analysts reveal that most budget Android smartphone (under Rs 10,000) offer an average margin of maximum 7% of the cost. The minimum margin could be around 2% or even nothing, depending on marketing expenses. So, where are the profits?
3. It’s no longer ‘just phones’
India’s top smartphone brand recently announced a brand overhaul. The company said it aims to become a services brand (so where are the smartphones).
Anticipating the fall in growth from smartphones alone, Micromax has diversified itself into a electronics brand selling laptops, TVs, and tablets. For smartphones, content partnerships are the only way ahead.
Most brands have already realised that selling smartphones in this highly competitive market alone cannot deliver the desired growth in revenues. Software, via partnerships, will drive growth. The hardware edge is dead.
4. Flat growth
For the first time in recent years, IDC has reported negligible in the smartphone market globally. The flat growth is attributed to hardware saturation in developed markets.
The new market dynamics have put customer loyalty behind as brands like Lenovo, Xiaomi, are now replace by Oppo and Vivo in the top 5 vendor list.
5. Race to grab mind share
When Xiaomi entered India, they had categorical said no to any sort of advertisements and relied on word of mouth advertisement. But soon they had to go the traditional way.
The race to grab consumer attention is so intense, that endorsements by smartphone brands are found everywhere — in cricket, movies, TV shows, etc. The desperation caused by intense completion is inevitable.
6. Virtual Reality is the new gimmick
Cheap Virtual Reality headsets are the new found accessory to attract consumers. Following Lenovo, domestic brand Karbonn has also joined the VR headset bandwagon.
A cheap VR headset along with an affordable smartphone definitely makes the deal sweet. But it reminds us of the time when magazines survived by attracting readers with freebies
7. Super cheap smartphone threatening quality
The likes Freedom 251 or Docoss X1 have put a question mark on the quality of cheap smartphones. With impossible prices, these brand further dilute the market leaving a bad taste for first time smartphone buyers.
Source: The Economic Times