An Authored article by Mr. Niranjan Gidwani, Consultant Director | Member UAE Superbrands Council | Charter Member Tie Dubai | Hbr Advisory Council
In recent years, the global smartphone market has experienced a decline in numbers due to various factors like a tumultuous global environment, rising inflation, and prolonged refresh rates. However, the premium segment of the market remains robust, led by industry giants Apple and Samsung. Simultaneously, emerging players like Xiaomi, Oppo, and Vivo are making significant strides, particularly in the vast and dynamic Indian and Chinese markets.
In India, the smartphone market holds specific significance and promise for the coming years. A few years ago, India’s annual market encompassed over 300 million units of feature and smartphones. Recent data from Counterpoint Research indicates a shift, with about 60 million feature phone buyers and approximately 200 million smartphone buyers in 2022. Moreover, nearly 30-50 million of these smartphones were refurbished devices. As of now, India has an installed base of around 800 million mobile phones, with about 200 million being feature phones.
The prolonged usage of feature phones in India is influenced by their affordability compared to smartphones. Additionally, the average replacement period for mobile phones has extended to around 36 months, up from 18-24 months in previous years.
Two significant factors on the horizon for the Indian smartphone industry are the rapid pace of digital transformation in the economy and the imminent rollout of 5G technology. The implementation of 5G has propelled India’s internet speeds, positioning the country favorably in global speed rankings. Moreover, India offers one of the lowest costs for mobile data, making it an appealing market for both consumers and manufacturers.
The electronics manufacturing services (EMS) sector in India has benefited from the government’s production-linked incentives, making the country an attractive destination for manufacturing. While India still relies on imports for certain components, particularly for mobile phones, the overall opportunity in the Indian mobile phone market amounts to approximately US$36 billion.
Understanding the cost breakdown of smartphone production is crucial. Approximately 50 to 60 percent of a smartphone’s cost lies in its semiconductors, display assembly and camera modules .
In the global landscape, EMS and contract manufacturers face a strategic decision: vertical integration or scaling up current operations to stay competitive. The current global dynamics, including the US-China situation and India’s potential as a significant market, present an attractive landscape for growth and innovation.
One notable market segment in India is the refurbished phones market, comprising 30-50 million units annually. However, this sector remains largely unorganized, presenting a substantial opportunity for EMS to explore and potentially offer refurbished mobiles exclusively through platforms like ONDC. ONDC in turn could offer refurbished devices exclusively and mainly to tier 2 and 3 cities. A true win-win
Information sources: Counterpoint, The-ken, IDC
