Feature phones still serve about half the country’s billion-plus mobile users but are typically used by low paying customers. According to Cyber Media Research (CMR), 61.8 million mobiles were shipped in the second quarter of 2017,of which 54% were Feature phones, witnessing 9% sequential growth. Although smart phones with their higher-paying users offer fatter margins for manufactures as well as better scope for telecom carriers.
The entry of Jio’s feature phone is the welcome change in the Indian market, which will shift 2G network costumers to the high speed 4G network. There are around 40% of mobile internet users in India who are still hooked up to the 2G network. Also the cheaper cost will habituate the Indian market for higher data consumption that will fuel the growth for smart phones on the long term.
Chipmakers and handset companies to app developers and telecom carriers are putting in money and efforts again in the segment, which has long been overlooked in the push towards smart phones. Recently, Vodafone India and BSNL are roping in domestic handset vendors to offer spruced up deals on feature phones as they step up to prevent their subscribers from switching to reliance Jio Infocomm. Vodafone India has tied up with phone companies Lava and Intex to offer bundled voice plans and cash back with 2G feature phones. BSNL said that it is partnering with Lava and Micromax to unveil co-branded feature phones with bundled goodies such as free calls. While JioPhone is locked to the Jio service, the other two are open phones which can be used with any service provider.
Reliance Jio is mainly targeting users in rural areas and those who typically spend less on telecom services. If the JioPhone proposition sees wide acceptance, it will pose serious competition to other players. Incumbents must respond to JioPhone as India is estimated to add half a billion new internet users in the next five years with most of them coming from rural India where internet penetration is about 15%. These users, if acquired by Reliance Jio, will undergo huge data consumption, a large pie of which will be enjoyed by Jio, including its services. Though many companies like Google are all clear that it has to be around smart phones because the experience on feature phone to do stuffs like apps and all is really poor. Nevertheless there is a lot of activity around developing apps for these phones. The biggest advantage for application drivers is that the Jio phone will bring in a huge number of users who were not earlier using any smart phones.
A large number of these users will be in rural areas, so developers will have a larger opportunity of supporting regional languages, which can open up newer avenues for revenue generation. With this new category of 4G feature phones supporting Whatsapp browsing and streaming capabilities on the rise, the feature phone market growth is then expected to continue strong. By this it doesn’t mean that smart phone growth will plateau, it might slow down in the lower segments. In a way, these 4G feature phones are nothing but cheap smart phones without a touch screen, hence the internet penetration will continue. It is also true that in a country like India that faces constant power outrage and bandwidth issue, merely introducing an Rs1500 phone is not enough. The combination of Quality of Service, the coverage that would together be necessary for running a phone.
-Kirti Singh (2017-19)