During 2022, the overall Indian smartphone market failed to meet expectations. The year started with component shortages. However, even as the situation eased on the supply side by the first half of 2022, consumer demand did not improve as expected. The weak demand was primarily felt in the entry- and mid-level price bands owing to the increase in retail prices due to the rise in component prices and an inflationary macro environment.

However, the premium market continued to grow in 2022, with the over Rs 30,000 price band reaching a new high. The continued premiumisation of the market is supposedly the main reason be­hind positive revenue growth, with the highest-ever average selling price (ASP) of close to Rs 20,000. Consumer demand started increasing from August 2022 and peaked in the last week of September 2022 during the festive sales, especially in the mid-tier and premium segments. How­ever, as the market exited the second quarter of 2022 with high inventory, there was modest demand in the entry level with the industry witnessing less-than-expected shipments during the third quarter.

A look at some of the key trends that emerged in the handset space during the year and the way forward…

5G remained high on agenda

The handset market witnessed intense activity in the 5G space during 2022 as industry stakeholders accelerated their efforts to develop a robust ecosystem. De­m­and for 5G handsets saw monumental growth. Smartphones with advanced 5G processors rapidly captured consumer mindshare, especially in the affordable and mid-range segments.

Even though indigenous smartphone shipments fell by 8 per cent year on year during the quarter ended September 2022 owing to economic headwinds that led to a decline in consumer demand and market uncertainties due to geopolitics, 5G sm­a­rt­­phone shipments continued to gain mo­­mentum as 5G roll-outs began. As per a report by Cyber Media Research (CMR) titled “India Mobile Handset Market Review Report”, 5G smartphone shipme­nts grew 30 per cent year on year during the year.

Meanwhile, 5G handset prices have gradually been falling. However, choices in the budget segment have remained limited. At present, the lowest-priced 5G handset is offered by Redmi, at Rs 12,000. Going forward, intense competition am­ong original equipment manufacturers (OEMs) and the availability of cheaper 5G chipsets are expected to bring down prices. The launch of more 5G handsets in the budget segment will further increase de­mand in the category.

Telco-handset player collaborations

Over the past few quarters, several brands, including Samsung, Oppo, Vivo, Realme, Motorola and Poco, have launched 5G sm­artphones across various price ranges. To tap this opportunity and help shape the 5G handset ecosystem, telecom operators actively inked pacts with handset brands.

For instance, Xiaomi India collaborated with Bharti Airtel to offer support for the telco’s “5G Plus” network on all Xiaomi and Redmi smartphones. The us­ers of Xiaomi 12 Pro, Mi 11 Ultra, Xiaomi 11T Pro, Xiaomi 11 Lite NE 5G, Xiaomi 11i Hypercharge, Xiaomi 11i, Mi 11X Pro, Mi 11X, Mi 10T Pro, Mi 10T and Mi 10 became eligible for benefits of Air­tel 5G. Similarly, in the affordable segment, Redmi K50i, Redmi 11 Prime 5G, Redmi Note 11 Pro+ 5G, Redmi Note 11T 5G and Redmi Note 10T 5G were allowed to stream 5G services. Current us­ers of Xiaomi and Redmi devices with 4G SIMs did not need to change their SIM cards. Customers were able to use Airtel 5G services, wherever available, on the­ir existing 4G SIM cards for smartphones supporting 5G networks. Mean­while, Oppo announ­ced that all Airtel cu­s­tomers could experience seamless 5G connectivity on its 5G devices.

Also, OnePlus partnered with Reliance Jio and Bharti Airtel to offer 5G connectivity support on its smartphones in India. 5G devices by OnePlus, including the latest OnePlus 10 series, were also tested on the Vodafone Idea Limited (Vi) 5G network in New Delhi, and smartphone users got access to the telco’s 5G service.

Further, Jio announced a collaborati­on with Google to develop an ultra-aff­ordable 5G smartphone. According to repor­ts, the phone will have a 6.5 inch HD+IPS LCD screen with a resolution of 1,600 x 720 pixels and a refresh rate of 60 Hz. The device is expected to have Qual­comm Snapdragon 480 5G CPU, 4 GB of RAM, 32 GB of user-expandable storage and an Adreno 619 GPU. The operator also collaborated with Samsung for its 5G network roll-out in India. Meanwhile, Oppo released software updates for Oppo Reno 8 Pro, Oppo Reno 8, Oppo Reno 7, Oppo F21 Pro, Oppo F19 Pro+, Oppo K10 and Oppo A53s. These devices were made ready for Jio’s standalone networks. Oppo also unveiled that majority of its 5G devices to support the standalone 5G network.

Meanwhile, Vi partnered with One­Plus to make 5G accessible to smartphone users in India. With this partnership, Vi and OnePlus aim to work together to drive the 5G ecosystem in the country. One­­Plus’s flagship devices, such as the latest OnePlus 10T, OnePlus 10 Pro and One­Plus 10R as well as the Nord 2T, Nord CE 2 Lite and Nord CE 2, were tested on the 5G spectrum bands acquired by Vi in Delhi.

Vi also partnered with Vivo to drive 5G device adoption in India. Vivo successfully tested its recently launched smartphones Vivo V25 and T1 5G on the 5G sp­ectrum bands acquired by Vi in New Delhi. Separately, Nokia announced that Vi will use its dense wavelength division multiplexing (DWDM) solution in the access layer to upgrade its network to 5G in order to meet future service capacity and reliability needs. The new compact and scalable DWDM solution allows Vi to optimise fibre resources while ensuring the future upgrade capability of its network to 200G and beyond.

Meanwhile, Realme partnered with Airtel, Jio and Vi to offer bundled 5G sm­art­phones. Further, Apple rolled out a beta update for select iPhone users in India in or­der to collect early feedback about the network’s efficiency, ahead of a broader roll-out in December 2022. During the year, 5G services were rolled out with the iOS 16.2 beta update on iPhone 14, iPhone 13, iPhone 12 and iPhone SE(3). Airtel and Jio customers using supported iPhones experienced 5G speeds before 5G became publicly available.

Moreover, during 2022, Motorola, a subsidiary of Lenovo, started rolling out over-the-air updates to its devices to en­able support for 5G non-standalone and standalone networks. According to Moto­rola, the 5G SA software update was rolled out for Jio users, while the 5G NSA software update was rolled out for Airtel and Vi users, simultaneously, thereby enabling consumers to experience seamless 5G services across operators.

Outlook

Despite the dip in 2022, India’s smartphone market remained resilient and performed better than many other regions. Go­­ing forward, the Indian smartphone mar­­ket is expected to rebound in 2023. A large ins­talled base, feature phone-to-smartphone mi­gration, local smartphone production, development of supply chain and the emergence of newer use cases will continue to grow the market in the long term.

India currently has over 600 million smartphone users; this number is expected to grow over time as more feature phone users migrate to smartphones. The dema­nd from new users and the availability of 5G networks in multiple cities will drive the market in 2023 and beyond.

According to the India Cellular and Electronics Association (ICEA), 75-80 per cent of the new smartphone launches will be 5G enabled by end 2023. Also, a report by Counterpoint Research suggests that the cumulative shipments of 5G smartphones is expected to cross the 100 million mark in the second quarter of 2023 and exceed the shipments of 4G smartphones by the end of the same year.

However, a major challenge in 2023 is expected to be the impact of consumer de­mand, increasing device costs and slow feature phone-to-smartphone migration. That said, the migration of 4G smartphone users to 5G smartphones would give a fillip to the sector, especially in the mid-premium and above segments. Besides, the inflationary ma­cro environment is expected to get better in 2023. Therefore, consumers who po­st­poned buying a new phone in 2022 will be able to buy a new one in 2023, leading to a major thrust in the demand for smartphones in the country. s

Anand Kumar Sah