India's smartphones have grown significantly, with a compound annual growth rate of 24%
The wireless user base is expanding day by day, driving the rapid growth of the Indian mobile phone industry. The number of users is expected to increase from 234 million in 2007 to 716 million by 2012, with a compound annual growth rate of 25%. Based on this, iSuppli estimates that the compound annual growth rate of the Indian mobile phone market will reach 20% from 2007 to 2012, and shipments will rise from 94 million to 237.2 million.
Considering the increased understanding of technology, the demand for smartphones in this market is on the rise. These phones can provide functions similar to PCs, such as cameras, music and e-mail. Mobile e-mail (push e-mail) is driving the popularity of smart phones in India. At present, India is the third largest smartphone market in the Asia-Pacific region, behind Japan and China.
According to estimates in October 2007, the Indian smartphone user base was 9 million in 2007, with an annual demand of 3.7 million. Among them, the demand for converged products is estimated to be 250,000 units, driven by the enterprise application of data centers. The compound annual growth rate of the smartphone market is expected to reach 24%, reaching 10.8 million by 2012. About 50% of the smartphones sold in 2012 will support the GPS function.
The following factors are expected to drive the rapid growth of this market:
* PDA phones are increasingly popular with corporate executives, and features such as mobile email are very useful for executives who travel frequently
* The disposable income of the urban population continues to increase, and the lifestyle improves accordingly
* Through the secondary market, the rural population ’s demand for smartphones has increased
* Prices have fallen sharply in the past two years; smartphones that cost US $ 580 two years ago were now only US $ 230
* Expansion of GPS navigation market in India
Major manufacturers
The major players in the Indian smartphone market are Nokia, HTC, HP, Palm and BlackBerry. Nokia is far ahead in this market. However, in the PDA field, BlackBerry phones dominate. The Indian government recently threatened to ban the BlackBerry service due to email security issues, which has caused some troubles with this service recently. Considering that RIM (the owner of BlackBerry) has experience dealing with similar issues in other countries such as Russia, China and France, it may overcome these challenges and continue to provide its services in India.
Most of these manufacturers plan to expand their market share by launching low-cost smartphones (less than $ 235) or aligning with telecommunications service providers. For example, HP India plans to launch a $ 188 smartphone. BlackBerry has established cooperation with Airtel, Vodafone, Reliance CommunicaTIons and BPL.
At present, the demand of enterprise users for smart phones is higher than that of mass consumers. This may be due to the low share of smartphones in the rural population, which accounts for 70% of India ’s total population. However, as various manufacturers strive to expand the rural smartphone market, the above situation will change. For example, in July 2008, Nokia announced plans to launch a project with a small financial institution to reduce the cost of entry for a rural user to own a smartphone. It is also discussing the launch of a service with telecommunications service providers that will be able to provide rural people with information on agricultural product prices and weather conditions.
In light of these developments, iSuppli estimates that smartphones sold to mass consumers will account for 63% in 2012. The rural mobile phone market continues to expand, depicting a bright future for the Indian smartphone market. There are also challenges, such as India ’s economic slowdown, rising interest rates and rising prices. However, based on the strategies adopted by companies such as Nokia to overcome current challenges, iSuppli expects the Indian smartphone market to achieve decent growth.
Author: Abhimanyu Raina
Abhimanyu Raina is an associate analyst at iSuppli
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