In smartphones, what’s a luxury today will be mid-range tomorrow
Remember the phones with green-backlit keypads that we used to have long ago? The only game that we could play in them was “Snakes”. After some point, another game “Cricket” was introduced and it instantly made your phone more functional. This was still nothing as compared to what we were about to see in the near future.
When smartphones started entering the market, they were so expensive that a majority of us kept them at an arm’s distance. But there were compelling products too—such as dedicated gaming phones like the Nokia N-Gage.
Resistive touchscreen, clamshell design, stylus pen, colour display, superior storage space (used for contacts and text messages), and what not, these phones were meant to become both a fashion statement and a status symbol.
But despite all the temptation, the real disruption happened as white-backlights replaced the green backlight and colour displays were introduced on our typical mobile phone.
Eventually, a new breed of mobile phones started proliferating in the market, and were popularly known as the ‘Chinese phones’. These mid-range phones acquainted the mainstream with colours, touchscreens, unconventional designs, and everything else that they had been seeing in the high-end category, and at a price point slightly higher than the feature phones they owned.
Not many people knew that this would eventually become the turning point of the Indian mobile phone industry – especially as the ‘Chinese phones’ didn’t come with any service guarantee/warranty and ceased to function in relatively short period of time.
The impact that Chinese phones had on the Indian market was that they made the ownership of advanced phones easier and cost-effective for everyone. It acquainted a majority of Indian consumers with multimedia formats, voice recorders, cameras, interactive games, and so on. Customers eventually wanted their next phone to be better than the one they previously had, which is how demand increased for these new-age smartphones.
Mobile phone companies were quick to gauge this demand. They launched a range of smartphones to tap this demand, especially in the mid-ranged category. These smartphones were based on Symbian and Android operating system (OS), with iOS (and Windows Mobile to some extent) strictly for high-end customers.
This was also the point when more cost-effective and functional offerings started entering the market, with the rise of disruptive smartphone brands. The number of smartphone users in India began growing exponentially. The market also got a sizeable thrust from support by the government and its digital initiatives. Smartphone share of overall mobile phone market increased from 21.2% in 2014 to 29.8% in 2016. 4G networks and gradually decreasing data costs also facilitated smartphone adoption.
However, the 4G network also had negative impact on the smartphone industry — with the launch of 4G feature phones — which experienced widespread adoption among rural geographies. By 2017, the share of smartphones went back to 23.2%.
But the allure of 4G feature phones is limited to economic conditions and calling packs. Smartphone adoption is still increasing and is expected to reach 29% by the end of this year and 36.2% by 2022.
Obviously, this market development will be largely driven through mid-range phones, especially as cutting-edge features like AI cameras, bezel-less screens, higher processing power, etc. are introduced. This will also pave the way for greater traction in the luxury phone category. While current ‘mid-range customers’ will adopt luxury phones in the near future, the ‘first-time smartphone user’ category will graduate to mid-range smartphones.
Now, do you really remember the green back-lit phones, and how they helped us transition from landlines to an ever-connected world of mobile network? It was a different market back then and even the high-end smartphones of that time will easily be put to shame by low-end devices of today.
Essentially, what was high end once is entry level today, and what’s luxury today will be the mid-range in future. It all comes full circle.
Madhav Sheth is the CEO of Realme India.