The next wave of smartphone adoption will come from the tier II and III cities, led by 3G
Even as 4G is becoming a buzzword in big cities—telecom companies are still in the process of laying out the network—tier II and tier III ones are lapping up 3G. A new report from the International Data Corporation (IDC) predicts that the latest wave of smartphone adoption will happen in smaller cities, led by migration to the 3G network. At the moment, 25 tier II and tier III cities account for slightly over a fifth of the smartphone market. The report notes that with the 3G network expanding in the small cities, demand is set to soar exponentially—preparing the ground for even greater adoption once 4G is rolled out by telcos.
Given how price-sensitive the average Indian buyer is, that low-cost smartphone makers stand the best chance to capitalise on the smartphone boom in tier II and III cities is almost a clichéd assumption. However, it would be the brands that manage to position themselves as offering superior quality, along with a value for money proposition, that will capture the market. While Indian makers of low-cost smartphones have seen a steady rise in sales so far, such positioning has already helped Chinese brands like Xiaomi and Lenovo gain ground rapidly. One of the other factors that also could influence how smartphone brands do in the upcoming surge in adoption is the online-offline price disparity. With many foreign brands choosing an online-only retail model, Indian makers with a brick-and-mortar model for vending face a challenge in terms of pricing, especially with major e-commerce companies expanding their peri-urban and rural presence.