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Smartphone market set to become bigger in 2020

Rishi Ranjan Kala
Smartphone market, VoLTE, techARC, Smart feature phones, JioPhone, 4G smartphones, 5G in premium, 5G in premium

The domestic smartphone market in the coming calendar year is expected to replicate the success of 2019 with overall sales to grow by more than 13% Y-o-Y to 213 million units. Refurbished smartphones will gain traction as entry-level buyers look for a better experience. However, the feature phone market will witness a decline, including the market for VoLTE-enabled feature phones.

As per a report by market research firm techARC, overall smartphone sales will grow 13.3% Y-o-Y in 2020, which is almost the same growth rate witnessed in 2019. Sales of new smartphones will grow at 13.8% Y-o-Y as against 11.6% annual growth expected in case of pre-owned smartphones.

"The new smartphone sales will be predominantly driven by the aspiration of existing users to upgrade to a premium experience. For first timers, due to lack of good options, pre-owned smartphones will be the favourite buy offering a better experience that is also affordable," techARC founder Faisal Kawoosa told FE. The average selling price (ASP) of smartphones is expected to rise by 8.4-8.6% and settle around Rs 15,600 in 2020, he added.

On the mobile phone market in India, techARC said overall the market will see a minor 2% Y-o-Y dip, which is primarily attributed to continuous fall in sales of feature phones and smart feature phones (4G feature phones). New smartphones will grow at 13.8% Y-o-Y fuelled by continued smartphone upgrade and replacement by consumers towards the mid and premium segments.

"Smart feature phones (JioPhone) will see an estimated 34% decline owing to limited success and acceptability as an affordable alternative for consumers at entry level to come on a digital platform. Feature phones will decline at 13% Y-o-Y in 2020. The market is primarily driven by replacement opportunity among a wide base of more than 450 million installed base," the report added.

Analysing the growth segment wise reveals that the premium segment (Rs 25,001-50,000) will lead the growth with an expected increase of 30% in 2020 over the previous year in sales volume, as consumers are now able to find abundant choices in this segment with all major brands are foraying in this space.

Although the luxe category (above Rs 50,000) is expected to grow at 26% Y-o-Y in 2020, it will continue to account for less than 1% (0.9%) of total sales. On the other hand, the mid-segment category (Rs 10,001-25,000) will grow at 23% in 2020 and is going to be the most exciting category for 4G smartphones next year as many flagship features will pop up in this segment as brands move to 5G in premium and luxe categories. However, they will not discontinue 4G portfolio in these categories.

The basic segment (Rs 5,001-10,000) will continue to be the maximum contributor to sales with 80 million units expected to be sold in 2020. The segment will grow at 7%. Entry level, or the default category for first-time smartphone users, (up to Rs 5,000), will continue to disappoint consumers with no convincing offerings to attract upgrades from feature phones. It is likely to trigger sales in the pre-owned category.