By Navkendar Singh
The mobile phone industry in India has come a long way in the past half-decade or so, from providing exciting devices at affordable prices to making them available even in the remotest parts of the country.
The last three years or so have been really about the so-called invasion of Chinese brands in the Indian smartphone market and all empirical evidence points to the fact that they have done well for themselves.
In the process, Indian brands have been largely marginalised while a global player like the South Korean Samsung is holding strong, so far.
Given that almost 90 per cent of the smartphone shipments are for below-$300 products, it is clear that India a very value-conscious market. However, there has been a gradual shift in the mass segment; from ultra-low-end segment of below $100 a few quarters back to the low-end of $100-$200, which now accounts for almost three-fifths of the total smartphone market.
In the past few years, almost all major China-based brands -- Xiaomi, OPPO, Vivo and Lenovo-Motorola -- have played aggressively in the $100-$350 segment and, in the process, have acquired a large base of smartphone users for themselves.
These days, consumers have a plethora of smartphone models to choose from, depending on their budget, requirement and preference of buying from retail outlets or online. All these choices and exciting offers are making many of them replace smartphones more often than a few years back.
Many consumers who bought a smartphone in the past two years or so will soon replace them with a new one. While they might not want to spend too much on a new phone, they would, at the very least, like a device which gives them a better experience than their current smartphone -- better designed, a more premium look-and-feel, and one that is able to handle most tasks, be it video playback, social networking or photography.
This opens several possibilities for almost all the major brands. This set of consumers is ripe for an upgrade and brands should be trying very hard not to let them flock to other brands like OnePlus or previous-year flagships from Samsung or Apple.
This is where the mid-premium segment play becomes crucial. Bringing an affordable flagship in the $300 to $500 range to the market -- either under the same brand or a sub-brand -- can help bridge this need gap. In fact, a few brands have started taking this route in the past couple of quarters, leading to over 100 per cent quarter-on-quarter growth of the mid-premium ($300-$500) in Q2 2018, accounting for six per cent of the total shipments now.
We have seen Xiaomi launching online its sub-brand Poco in this segment, giving a few basic but high-end features. The primary goal being to ringfence the existing Xiaomi users who are looking to upgrade now, aspiring for a flagship but not wanting to pay a high premium.
OnePlus has been very successful in this since the launch of their first smartphone OnePlus One at around $350 a few years back. Now, with every subsequent launch of a new model, it has scaled up to the $500-$700 segment.
With focus on online channels combined with physical experience stores for enabling touch and feel for a premium device, OnePlus has positioned itself as a very strong alternative to anyone wanting to go for a premium Android smartphone.
Major online marketplaces have made efforts to drive affordability like easy financing, EMI on debit cards and exchange schemes, etc.
The efforts around the exchange and buy-back schemes have really made the purchase of a new smartphone from online more attractive by giving convenience of getting instance valuation for your smartphone and choosing to replace it with a new one instantaneously -- all from the comfort of your home.
Also, these marketplace players have been key to the success of many of these brands in India in the past few years. They have all the customer data like who has bought which device at what price and when. They can really drive this upgrade cycle by leveraging all the customer intelligence and working closely with the brands.
In conclusion, considering the skewed value orientation of the smartphone market in India, the mid-premium segment might not see overall growth as much as the low-end segment.
However, the brands who choose to play and can win in this segment will be the ones who can bring flagship-like features at non-flagship price points, instead of step-down versions of flagships in their portfolio.
An online channel can be a good starting point for these players, coupled with pop-up stores and display kiosks, for letting consumers experience, touch and feel the device.
(Navkendar Singh is Associate Research Director, Client Devices and IPDS, IDC India. He can be contacted at firstname.lastname@example.org)
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