Despite increasing smartphone penetration and greater access to data services, feature phones continue to account for a significant share in the Indian handset market. Around 65 percent of the country’s more than a billion mobile phone subscribers still use feature phones. The feature phone-to-smartphone migration has in fact slowed down in recent times, defying the general global trend. This is evident from the latest industry forecasts, wherein research houses have lowered their smartphone sale assessments raised the sales estimates for feature phones. This trend can be attributed to factors such as affordability, relevance and ease of use.
In addition, the recent announcements made by several handset players focusing on the feature phone segment show that basic low-end handsets are still in the game. India being an emerging market has a huge user base residing in Tier III towns and villages, which is yet to find a compelling reason to switch to high-end smartphones. Although smartphones come with rich multimedia applications that seem attractive, a consumer study shows that features like battery life, durability and affordability are still important for Indian users. Besides, owing to the downsizing of the CDMA business by operators many users are now shifting to GSM feature phones.
Strong case for feature phones
Currently, a number of factors restrain the migration of users from feature phones to smartphones. The key amongst them is the price of the device. In India, affordability has been the biggest driver for any telecom service uptake, due to the lower purchasing power of the majority of users. Since the cheapest smartphone costs around Rs 3,000, the price range has prevented users from migrating to smartphones. According to industry experts, several basic phone users are waiting for more affordable smartphones to hit the market before making a switch.
Secondly, there exists a dearth of quality applications in regional language and localised content, which in turn reduces the relevance of a smartphone for non-urban users. The existing models of feature phones can perform all critical mobile services like making and receiving calls, accessing music, replying to e-mails, web browsing, navigation and clicking pictures.
Thirdly, they have a battery life that is substantially better than any smartphone. The battery offers several days of standby time. As per analysts, smartphone manufacturers have to face certain limitations in terms of offering features like long battery life and loud volume in their devices while keeping the prices low.
Further, the majority of user additions today come from the rural market. Teledensity has crossed the 100 per cent mark in most of the urban markets in the country, while their rural counterparts still have a long way to go. Due to lower per capita income, these new rural subscribers are more likely to opt for feature phones as their primary device.
Revived focus on feature phones
The local handset manufacturers already have a feature phone segment in place particularly to serve the large rural base of the country. A strong brand recall will eventually help them attract these users when they plan to switch to smartphones.
Moreover, big and established players are also focusing on the segment lately. For instance, HMD Global, which has a brand licensing agreement with Nokia for feature phones, launched the Nokia 3310 in February 2017. The phone comes with a 2.40 inch display and a screen resolution of 240×320 pixels. It has 16 MB of internal storage that can be expanded up to 32 GB through a microSD card. The device comes with a 2 megapixel rear camera and is packed with a 1,200mAh battery. The feature phone will soon be available in India.
Meanwhile, Reliance Jio Infocomm Limited (RJIL) is also planning to launch feature phones with 4G capability. This is likely to disrupt the handset market, as it will create a new category of mobile devices in India. These phones are expected to be priced at as low as Rs 1,000 and will come bundled with unlimited voice and video calling, besides digital content. The company plans to offer the voice over long term evolution (VoLTE) facility, allowing a smooth transition for users from basic handsets to feature phones. Reportedly, RJIL is expected to launch two feature phones priced at about Rs 1,000 and Rs 1,500 by end-March 2017. The devices will function just like smartphones and will include the use of data to access the internet and make calls; the only thing missing will be the touchscreen. The VoLTE feature phones will have a keypad, front and rear cameras and will run on the Android operating system. The phones will be equipped with Jio’s content applications such as Jio Chat, Live TV and video on demand. RJIL will promote its digital wallet service, Jio Money Wallet, through these feature phones. The company is working with domestic handset manufacturer, Lava International as well as with several China-based original equipment manufacturers to roll out these feature phones.
In addition, China-based Transsion Holdings, which sells feature phones in the African market under the brand name, Itel is planning to introduce 4G enabled feature phones in India by April 2017.
Outlook for handset industry
Owing to the growing uptake of feature phones, the future of smartphones in India is anything but positive. Given the huge digital divide in the country, it becomes imperative to bring the vast rural population under the data services purview. To this end, it is important to facilitate the transition from feature phones to smartphones, particularly amongst the rural users.
India is already one of the fastest growing global markets in terms of smartphone adoption. Several industry estimates suggest that it is expected to overtake the US as the second largest smartphone market in the world, after China.
In the near to medium term, the feature phone-to-smartphone transition will continue at a slow pace, with the former playing a significant role in India’s telecom story. Over the long term, however, the mass adoption of 4G across the country and marked progress of the government’s Digital India programme will make the feature phone to smartphone transition inevitable. Besides, affordability and relevant content will facilitate this transition.
Akanksha Mahajan Marwah