Feature phone users may be slowly migrating to smartphones, but the trend among them is to opt for devices above the Rs 10,000 category, due to which sales of sub-Rs 8,000 devices will once again remain flat in calendar year 2023.
Currently, the sub-Rs 8,000 market has about 370 million users that accounts for 40% of the total handset market in the country. Among the top brands in this market, itel has the largest market share of 22%, followed by Lava at 16%, and Samsung at 12%.
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In 2022, the handsets shipments in this market segment have witnessed a significant fall, owing to factors such as high base effect of last year, weak demand due to inflationary pressure, and supply side constraints, analysts said. According to Counterpoint, the shipments in the feature phone category this year is expected to fall 30% to 61 million from 86 million in 2021.
“The entire planning of the devices, the component, the BOM (bill of materials) cost, everything got expensive (in 2022), and which actually reflects on your device cost… The most impacted segment is actually the sub-$100 (Rs 8,000) because that is where the real action lies…the cost of your display, the cost of the processor, the cost of battery, the cost of memory everything increases and it reflects on the end price of the device,” said Tarun Pathak, research director at Counterpoint. Owing to higher price of devices, people in the sub-Rs 8,000 segment do not upgrade and hold on their phones for longer duration, Pathak added.
With regard to brand preference in the segment, a recent study by Counterpoint showed that itel has emerged as a preferred brand in the sub-Rs 8,000 segment by reporting the biggest proportion of repeat users among first-time handset buyers in the segment.
The study included 1,575 respondents mostly in tier 2 and tier 3 cities and was based on factors like ease of use, trust in the brand, value for money, durability, and features. As many as 55% of the respondents who bought itel as their first phone, have purchased the device again followed by Samsung and Lava, according to Counterpoint.
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“In 2023, we will have a huge focus, given that India has still about a significant number of users on 2G. This is the segment which will actually move…in the last two years, online education has moved up like anything, increasing trends for digital payment, banking, entertainment are positive signs for the sub-Rs 8K segment,” said Arijeet Talapatra, chief executive officer of Transsion Holdings, parent company of itel.
Talapatra added that in about six years of starting the operations, the company has the least dissatisfied experience rate of 0.6% among the users, compared to 3% of Lava and 0.7% of Samsung. itel has three manufacturing units in the country at present which houses around 5,000 employees. The company largely sells through offline sales channels and plans to increase its focus on online channels of sales in 2023.
When asked about the growth prospects of brand at the time of increasing 5G penetration, Talapatra said transition to 5G will take time and still 4G has a huge opportunity and consumers today want a phone that has a good display, a good memory, and a good back battery back up.
“We have a lot of things to offer for a consumer of less than 8k currently. So, once we think that this category of consumer wants to be on 5G, we will be maybe the first brand to get a 5G,” Talapatra said. Apart from the handsets, itel will further strengthen its focus in the television, smart watches, wearables, and other electronic categories next year.
