Why smartphones are key to India’s digital ambitions

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Smartphones in India are playing a vital role in the country’s digital transformation, but there are still hundreds of millions of people in the country who do not own the devices.

And that creates huge opportunities for manufacturers and businesses in various industries to tap into a new market – but it also means there’s still a long way to go in the country’s digital transformation, analysts say.

“India’s digital revolution has received an unprecedented boost through the wider adoption of smartphone technology,” says Harsh S Kedia, Managing Director of Auburn Digital Solutions, a digital marketing agency in India. .

“This has benefited a range of sectors with fintech, e-commerce, healthcare, education, marketing and social media maximizing the gains from growing smartphone adoption.”

For most people in India, a smartphone is the primary means of accessing the internet.

There are over 600 million smartphone users in the world’s second most populous country, according to Counterpoint Research.

Even so, that leaves a significant percentage of the population of around 1.4 billion who have yet to buy a smartphone and go online.

Yet the rapid expansion of smartphone use across the country in recent years has enabled millions of Indians to go online for the first time.

Increasing connectivity is a key part of Prime Minister Narendra Modi’s government’s push towards its vision of a “digital India”, aimed at increasing internet accessibility and digitally empowering people.

The initiative could grow the country’s digital economy to $1 trillion by 2025, up from $200 billion in 2018, according to consultancy McKinsey.

“Over the past 10 years, smartphone and mobile internet penetration has increased by 60%, bridging the urban-rural divide in India at an incredible rate,” says Vishesh Sharma, Chief Marketing Officer at Ashika Group, a Mumbai-based company. financial services group.

“Cash-dominated India’s transformation into a digital economy is the clearest evidence of the impact that higher mobile penetration, improved connectivity and faster and cheaper internet packages have created. “

India has some of the cheapest data speeds in the world and the increased use of smartphones has helped expand the customer base of e-commerce businesses. It also opened up the reach of banking in rural areas, where many people were unbanked, and created many more options for financial transactions.

“The void has been filled in access to financial services thanks to the prevalence of smartphones – whether it’s applying credit, digital money transfers, making payments without a bank account,” says Vinit Khandare, Managing Director and Founder of MyFundBazaar, an investment platform.

Improved digital capabilities and greater connectivity “will rapidly and radically change almost every sector of the Indian economy”, according to McKinsey.

“This has the potential to both create significant economic value and change the nature of work for tens of millions of Indians.”

Despite the risks of an increasing digital divide due to uneven adoption by businesses, the growth potential makes India one of the most important markets for many brands.

The growth in smartphone usage across the country means there is fierce competition among smartphone manufacturers.

According to the latest research from Counterpoint, smartphone shipments in India – the number of phones delivered by manufacturers to retailers – increased by 9% between April and June to nearly 37 million units.

Chinese Xiaomi remained the market leader in terms of smartphone shipments to India, capturing a 19% market share, followed by South Korean brand Samsung with a similar sized market share, and Chinese brand Vivo, which came in with a 14 percent slice, shows data from Counterpoint.

“The average retail price of smartphones is also seeing a growth trend,” said Shilpi Jain, research analyst at Counterpoint.

“It was up 10 cents year-over-year, driven by a growing share of the higher price segments. The more than 20,000 rupees [$251] price range share hit an all-time high in the second quarter of 2022, crossing the 22% mark.

Growth in the high-end and high-end segments has been spurred by the availability of financing programs aimed at increasing the affordability of devices, she said.

5G smartphones are also gaining popularity ahead of the network’s planned launch in India later this year.

5G smartphone shipments accounted for 29% of overall shipments in the second quarter of 2022, the highest on record, according to Counterpoint.

Reliance Industries Chairman Mukesh Ambani aims to capitalize on migrating more users to 5G.

At his conglomerate’s annual general meeting last week, he announced that his telecommunications company Jio plans to partner with Google to launch an “ultra-affordable” 5G smartphone.

Jio aims to roll out its fifth-generation network over the next two months and then expand connectivity across India to cover the country by the end of next year.

Mukesh Ambani, Chairman and Managing Director of Reliance Industries, speaks live during the company's Annual General Meeting last month in Mumbai.  Bloomberg

“Jio benefits from access to the network it sells, and can therefore afford its phones to be loss leaders to attract subscribers,” says Utkarsh Sinha, managing director of Bexley Advisors, a boutique investment bank. based in Mumbai.

“We can expect a similar strategy with their 5G phone.”

On the high-end segment of the market, Apple is also increasingly focusing on opportunities in the Indian smartphone market.

According to Bloomberg, the US tech giant plans to ramp up manufacturing in India and produce its next iPhone 14 in the country as it seeks to branch out from China.

“Massive 5G deployment and the success manufacturers have had during the 4G wave in acquiring new customers and deepening market penetration, coupled with government incentives, will give global manufacturers the comfort to invest in local manufacturing,” Mr. Sinha said.

“We could see that hardware was a big part of the 5G story in India.”

Considering the high prices of Apple products, it is unable to appeal to the Indian masses, who simply cannot afford its devices.

But the brand has huge appeal with wealthier buyers.

Apple’s sales in India rose 63% in the second quarter of the year on a relatively small base, according to Counterpoint.

Despite the rise of digitalization and mobile usage in India, the market remains unsaturated and there is room for growth.

“I feel that people [smaller cities] are less exposed to the use of digital media,” says Lalit Arora, founder of KW Academy of Excellence and digital network marketing coach.

“They have been in the learning process after the Covid-19 situation in India. But still they don’t have enough education on how to use these social media apps.

Updated: September 05, 2022, 5:30 a.m.

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