Feature phones are far from dead: Are the Indian handset makers listening?

BANGALORE, INDIA: The mobile handset market made a quite healthy comeback in the 2Q, FY2016, after a disappointing start.

As per the latest CMR report, a total of 65.9 million handsets were shipped during the period, of which 56.5% where feature phones. The proportion was slightly higher than the previous quarter, where feature phones contributed 54.9% to the overall shipments.

Faisal Kawoosa, Lead Analyst for Telecoms at CMR said, “Now onwards we are going to see a clear demarcation between new customer acquisition and the refresh among existing users of the phones. Many users in the Tier I and Tier II markets had purchased their smartphones around 2013 to mid of 2014 and it’s now their turn to go for an upgraded smartphone.  At the same time, as the mobile base expands to rural and tertiary regions of the country, we expect good traction for the feature phones as well.”

“I see China brands replicating their smartphone strategy for the feature phones now. The strategies they adopted for their wider reach in the smartphone market of the country will be replicated for feature phones too.  This is why we are seeing a spur in the growth of Chinese feature phone brands, besides existing getting stronger,” added he.

Brands like iKall, Kimfly and Kekai figure in top 20 feature phone brands for the period.

Tanvi Sharma, Analyst for Mobile Handsets market at CMR said, “The proliferation of Chinese brands within feature phones can open up a stiff competition arena in this category. China brands were quick to bring innovations in the smartphone space that gave them growth beyond acceptability and the same can now happen in feature phones, if India brands don’t resort to sound counter strategy.”

The report reveals that though smartphones in less than Rs 2,000 price band saw over 200% growth in shipments in 2Q over the previous quarter, an interesting thing to witness was strong growth registered for smartphones in the price bands above Rs 15,000.

The High-end Smartphone segment, which lies above Rs 20,000 price band, has registered a 35% growth during the quarter, with Oppo, LeEco, Asus, LG and Huawei benefiting the most in this category.

The mobile handset shipments are likely to surpass 75-million mark per quarter for the first time in 3Q’CY16, forecasts the report. The growth can be attributable to several factors ranging from festive season impact, increased disposable income, new product launches and the ensuing intense competition within the telecom operators as RJio inches closer to its commercial launch,