The Indian feature phone market, which had witnessed a setback with the penetration of smartphones, seems to have reinvented itself in recent years with the launch of 4G-enabled smart feature phones. This has effectively bridged the gap between low-cost 2G feature phones and low-end smartphones.

Budget and price-conscious Indian consumers are turning to feature phones as they are much cheaper than smartphones, but offer a host of services. Buyers need to spend at least Rs 3,000 to buy even a budget smartphone, whereas an advanced feature phone such as JioPhone costs Rs 1,500 only. While the affordability of feature phones is definitely a big factor in their growing uptake, the changing demographics of people residing in the hinterland as well as in Tier 2 and Tier 3 cities is also fu­ell­ing the demand for feature phones. More­­over, a large population from these areas is migrating to the big cities, leading to changing aspirations and greater purchasing power. The new-generation feature phones fulfil the needs of this section well.

Today, people in rural areas are turning to smart farming and leveraging technology to increase their output and efficiency. Tele-education and e-healthcare verticals have also assumed great importance among them. Various women self-help groups are focusing on making rural women tech-savvy, better educated and well informed about their rights. In light of this, there has been an increasing demand  for an all-in­clu­­­­sive device that can function as a me­dium for not just communication but also for entertainment, learning, networking, ac­­c­e­ssing government provided e-services, etc. Interestingly, the consumption of en­ter­­­tainment in terms of mobile videos has sur­ged substantially in Tier 2 and Tier 3 cities.

The government’s Digital India initiative, which seeks to redefine the connectivity landscape of India, has also given an impetus to the feature phone market. Un­der this initiative, the government aims to deliver a host of e-services that can be ac­cessed through phones, connect household and panchayats, enable people to carry out digital transactions and book railway tickets online, and create employment opportunities for the youth in smaller towns. A key thrust of the Digital India initiative is to digitally empower people in rural areas.

Given the variety of services and benefits offered by the new-generation feature phone, it is not surprising that it has found takers in the older age groups. The functioning of smartphones is not easy to comprehend for old people and they find feature phones much easier and suitable.

Market composition

In terms of market composition, the Indian feature phone market has seen some major changes after Reliance Jio introduced its 4G-enabled JioPhone in 2017. Much re­cen­tly, Jio launched the JioPhone 2. The entry of Reliance Jio in the feature phone segment pushed all major handset players such as Nokia, Micromax, Idea, Lava and Intex to upgrade their offerings. As a result, Micromax launched the Bharat 1 and Bharat 2 4G VoLTE-enabled feature phon­es in October 2017. To support the government’s efforts to promote digital transactions under the Digital India initiative, Mi­cro­­max has added the mVisa and Transerve wallets in the Bharat 1 and Bharat 2 feature phones. Intex has also launched the Intex Turbo Plus 4G feature phone.

As far as the market share is concern­ed, according to Counterpoint Research, Reliance Jio held a 47 per cent share in the feature phone market during the period April–July 2018, within a few months of its launch. A key factor that contributed to the sales of JioPhone was the “effectively free” cost of purchasing the phone. Given its innovative pricing strategy, Jio claims to have sold over 25 million devices since its launch and aims to take this number to 100 million by 2019.

Jio was followed by Samsung and Nokia with 9 per cent and 8 per cent market share respectively during the period under consideration. Nokia’s share increased from 3 per cent in April-July 2017 to 8 per cent during the same period in 2018. This can be attributed to the launch of the Nokia 8110 4G Banana phone in February 2018. In order to better compete with Jio’s offerings, HMD Global owned Nokia decided to include WhatsApp on its KaiOS. Reliance Jio is not far behind as it has also recently launched the WhatsApp feature on its Jio phones. As far as other market players are concerned, Transsion Holdings owned iTel witnessed a fall in market share from 16 per cent in April-July 2017 to 6 per cent in April-July 2018. Lava also witnessed a year-on-year decline of 3 per cent during April-July 2018.

The way forward

Feature phones might be a thing of the past in a lot of countries, but India is an exception. “While smartphones are considered the forerunners of digitalisation, we miss the point that more than two-third of India’s population is rural. Feature phones or smart feature phones are here to stay and bringing a technological advancement to them would have a multiplier effect on the digitalisation of India,” says Pradipto Ganguly, chief executive officer and co-founder, Britzo. Feature phones have evolved over the years to better cater to the new and emerging needs of its users and will be instrumental in driving the government’s Digital India initiative.

Going forward, feature phone manufacturers must understand the needs of their potential customers and develop offerings accordingly. “Rural geographies are very different from urban cities. So, they understandably require a different approach to help them evolve to modern standards. At present, the needs of rural customers are by and large limited to a few applications, which help them avail of e-services and coordinate with their peers. They also need multimedia support so that they can benefit from cutting-edge app­roa­ches (in the fields of farming, animal husbandry, etc.), which are being adopted globally,” adds Ganguly. Thus, handset manufacturers should develop their business and revenue models in sync with the different factors that influence the market.