Tier II & III cities to push next wave of growth in smartphone sales

India’s top 30 cities constituted 51 per cent of the entire smartphone market in the fourth quarter of calendar year 2015. According to International Data Corporation (IDC)’s Monthly City Level Smartphone Tracker, 25 major Tier-II and III cities currently make up for 21.3 per cent of the Indian smartphone market. Majority of the demand from these cities is for 3G models, but with increasing 4G smartphone model portfolio across all brands and expanding 4G network footprint by Airtel, Vodafone, and soon-to-be launched Reliance Jio, the demand for 4G smartphones is expected to grow exponentially.

“With increasing data penetration and enhanced reach of e-commerce, the smartphone consumers in Tier-II and III cities are becoming more aware and demanding. They want a smartphone with latest the features and specifications, affordable prices, and convenient buying options,” said Jaideep Mehta, managing director, IDC South Asia.

Among the top 30 cities of India, New Delhi generates the highest demand, closely followed by Mumbai.

“There is a clear trend of migration from feature phones to low-end smartphones in smaller cities and towns, making these markets the next growth engine for the smartphone sector. With first-time mobile phone users coming on a smartphone, it will be their only connected device which meets all of their internet and entertainment needs,” says Swapnil Bhatnagar, research director at IDC India.

Currently, these cities are the strongholds for Indian vendors with affordable smartphone models, making up two-thirds of the market for under-$100 smartphones in these cities.

“But, Chinese vendors such as Lenovo, Motorola and Xiaomi are gaining market share in these cities thanks to their superior positioning as quality brands, with a value for money proposition,” said Bhatnagar.

According to IDC, online sales are pushing smartphone sales. “Online channel is disrupting the traditional distribution channel by offering a compelling value proposition to the customers in terms of better price, convenience and product range. Flash sales and online exclusive smartphone models are a big hit with Indian consumers and these are being used as marketing tools for building excitement and hype,” said Navkendar Singh, senior research manager, IDC India.

Top five cities make up for around 60 per cent of the online smartphone sales in India, and 4G devices make up for around 45 per cent of the market in these cities. Global vendors such as Apple and Samsung hold 40.7 per cent of the market in these cities.

“However, the online/offline price disparity continues to be a major concern for channel partners of most vendors across cities,” says Singh.

Source

http://www.business-standard.com/article/technology/tier-ii-iii-cities-to-push-next-wave-of-growth-in-smartphone-sales-116030301007_1.html
 
 
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