With a population of around 1.34bn, equating to around 17% of the population of the world, it is no surprise that India is a huge market for mobile phone companies. Some estimates say that over a billion people in the country have a cellular phone subscription, with just under half of these using smartphones. What’s more, the Indian smartphone market is growing rapidly, expanding by as much as 10% year on year.
So why are smartphones so popular in India, what is driving the massive growth and what might the future hold for the industry? There are a number of different factors driving the growth, from demand to demographics, including the largely rural nature of the country and even its obsession with sports. Let’s take a look at the market and some of the factors involved.
The size of the Indian smartphone market
India is the world’s second-biggest mobile phone market, after China, with over 520 million wireless telecom subscribers in rural India alone. India has more smartphone users than the entire population of the United States, and this number is expected to increase to over 440m by 2022. One of only three countries that sell over 100million smartphones per year, not only is India the second-largest mobile phone market in the world, it is also one of the fastest-growing.
The growth of the smartphone market in India is remarkable on its own, but even more so when you put it in the context of a global slowdown of the smartphone market. Worldwide smartphone sales have dropped by around 1.7% in the past year, as the technology matures and consumers keep hold of their phones for longer. People are more satisfied with the performance and features of their phones these days, and upgrades are not necessarily as attractive as they once were. India’s smartphone boom also comes at a time when the Indian economy as a whole is struggling. Respected analysts, Moody’s, have cut their growth forecasts for the country’s growth recently, saying that ‘India’s slowdown is lasting longer than expected’. Nonetheless, smartphone sales continue to defy both the global market and the Indian economy with double-digit growth.
The International Data Corporation (IDC) Quarterly Mobile Phone Tracker showed that a record number of smartphones were shipped in India in the third quarter of 2019. The 46.6million units represented a growth of 9.3% year on year and 26.5% in the previous quarter. IDC experts predict that the market will expand at a compound annual rate of over 14.5% over the next few years, with sales of smartphones exceeding 275m per year.
The vast majority of these smartphones were in the budget range, with 80% costing the equivalent of $200 or less. That said, sales of mid-range phones, priced at $200 to $500, grew by 6% in the third quarter of 2019. Furthermore, Apple iPhones showed double-digit growth in the premium sector.
Driving forces behind the rise
There are many reasons behind the rapid growth of smartphone sales, not least of which is the sheer size and geography of the country. As few as 35% of Indians have internet connectivity, with just 18million fixed-line broadband subscriptions. This means that for many Indians, mobile connectivity is the only way to access the internet. It is cheaper to roll out and install for the telecoms companies, and less costly to access for end-users. The growth in the smartphone market has been boosted by a faster than expected roll out of 4G, backed by the easy availability of affordable smartphones, as the huge sales of phones under $200 proves.
In many cases, the smartphone boom is being facilitated by online retailers. These are able to offer easier access to the latest models, without the costs of maintaining physical stores. It is estimated that around 38% of smartphones are bought online in India, with most being purchased using another smartphone.
A surprising driving force behind the Indian smartphone market is the desire to play video games. A smartphone is much more affordable than a games console and screen and so mobile phones have become the preferred platform for Indian gamers. While Sony estimates that there are around 8million Indians using the PS3 or PS4, there are estimated to be over 200million mobile gamers, and that figure is predicted to double in the next few years. For many of these, playing online on a smartphone is not only more affordable and convenient, but is quite simply the only option.
As well as playing games themselves, Indians are also famous for their fervent interest in sports, especially cricket. This is a major driver in the smartphone market, as fans download smartphone apps to watch games and check scores. While there are only around 330million Americans potentially checking to see who will win the NBA Championships, there are 1.3bn Indians who could be interested in checking the results of the IPL.
The NBA app may be popular, but it doesn’t come close to the IPL live viewing app, which has recently passed 400million downloads. Similarly, the Cricbuzz app registered more than 42 million users tuning in for updates on the day of the India-Pakistan match at the recent cricket world cup. Indians are passionate about their sport and keen to keep up to date wherever they are, making a smartphone essential for any true sports fan.
What does the future hold?
The growth of the Indian smartphone market seems unstoppable at the moment. Analysts TechArc estimate that the annual market for smartphone sales will exceed 150m units this year, with year on year growth at around 11%. What’s more, the rollout of the superior connectivity of 5G, which will help mobile services to reach even the remotest areas, will only make the potential market for smartphones even bigger. IDC predicts that 5G will add 1.5% to the worldwide smartphone market in 2020, and inevitably the impact will be even greater in India, where over 68% of the population lives in rural areas without the wired connections of the big cities.