UNDERSTANDING
THE SMARTPHONE MARKET
The
market for Smartphones in India is one of the most talked-about in pink papers
as well as white sheets alike, with regular articles on top and budget
smartphones making headlines all too often; yet, paradoxically, it is the least
understood outside the trade, i.e. those of us who are actually in the handset
trade. For the pink sheets and white sheets, it is the Apples and the premium
phones that matter, or the budget smartphones with a range of online as well as
offline offerings being highlighted.
This
is a very simplistic look at one of the most complex markets in my experience,
which spans telecom services, data, insurance, FMCG/D - for a number of reasons, some known and
some unlisted insofar as my reading goes. The pace of technology development is
one of the well-understood reasons; as is the pricing factor. These are just of
the factors that make this market such a
fascinating yet complex study. The speed of change means products change every
few months; the attendant pricing pressure changes the market dynamics every so
often – all this is well understood. Here I attempt to look at some of the
nuances not covered in the most articles on this subject.
WHAT
IS A SMARTPHONE?
The
smartphone is not just a touchscreen, or a multimedia device; it isn’t a music
player with hi-fi; it isn’t a vivid display; and it isn’t an internet access
device; it is all that and much more;
this understanding is absolutely critical. And yet, paradoxically, in the
Indian context, it is also true that the smartphone in some segments is just
that : a touchscreen device, with an attractive interface. India is a market in
which feature phones still sell, where smartphone adoption is still on the
upswing; this creates two clear markets,
which are as alike as Refrigerators and Chwayanprash; we are talking of two
completely different markets in just about every marketing parameter you can
care to define.
A proper
understanding of the smartphone requires viewing as the sum of its parts, and
as a solution; a service, not as a product. By itself, it is almost useless.
It requires a sim card and an operator connection with Data for its power to be
unlocked. And that is why it is absolutely critical to approach this market as
a service rather than a product in order to realize its full potential both for
consumers as well as for handset manufacturers. The screen you see is a window
into a land of infinite options and opportunities, of facilities and methods
and of solutions; understanding firstly the need of consumers in various
segments, and secondly the capabilities and their combinations is the need of
the hour!
Before
we move into India-specific analyses, let us try and understand what I mean
when I say solution. The smartphone
device is a complete package, a combination of the hardware and the software.
Amoled displays or Octa-Core processing power by itself is valueless, unless it
has the software present to utilize these facilities. And that will be the
future of the market; the ultimate winners will be the ones who will place a
product solution that meets the consumer’s requirements along these parameters.
The
first point of contact for the consumer is the UI – the User Interface; the
second is the App Store. The entire layman user experience is around these two
only. This being a nascent market, currently there is a lot of fuzziness and
experimentation at both company and consumer level; this is par for the course.
But, over time, the consumer is bound to
settle into a defined choice range in what he or she likes or prefers; at that
point, solutions with a better integration and seamless performance of the
desired functions are going to be the winners in this race; which is partly
why you see companies now beginning to develop their own UIs in their
solutions.
These
functions can be a vivid display at the software levels – colourful themes
& wallpapers, or on-board office capabilities, good music output in terms
of clarity and loudness both; the internet experience; overall device
performance in terms of heating, durability; integrated apps within the UI like
office or Amazon; Guides like maps etc – these uses will increase with
increasing requirements and further inroads of the internet. Note that I don’t
highlight battery – with increasing computing power, battery is always going to
be a tremendous challenge for everyone in this market
I
highlight App integration because a well-integrated on-board app will perform
better and give a much smoother consumer experience than one that is not native
to the device or the solution – think Apple here. This is going to be the battlefield of the future – and once demand further
develops and crystallizes into clearly defined segments, this is going to be
the be-all and end-all of this market, just as any in any other computing
device. An internet resource from more developed markets highlights that
84% of users pitch for a better mobile App performance. { http://www.ymedialabs.com/hybrid-vs-native-mobile-apps-the-answer-is-clear/}
For
the Android Ecosystem, it means developing a UI, or indeed an entire OS that is
Android based, gives the look and feel of an Android, as well as its features,
but is developed internally – this leads to a much superior user experience,
which even has the capability of changing demand parameters. The longer term winners will be the
companies that can craft an integrated experience based around Apps well
integrated with the underlying hardware. But that is bound to take time in
the Indian market, which is a different ballgame altogether, being comprised of
the two segments I refer to above. In
simplified choice, it means integrated the most popular Apps on-board the
device, developing a unique selling proposition based not on hardware, but on a
solution… while not hindering consumer choice in terms of downloading Apps from
the net or the Play Store…
THE
CONSUMER IN INDIA
India
is a land of wide disparities and low income; this needs to be underscored –
for from this arises the learning that there is scope for both segments I refer
to above in the Indian Market, but more of that later. With reference to a
smartphone, the market in India is nascent, with the fascination for a vivid
colourful window into technology in the form of the screen, the experience of
internet and its power as another factor, and niche groups like music
aficionados. Another factor that needs consideration is that not all consumers
give importance to all capabilities, leading to vast unutilized features as
well as a fuzzy positioning scenario, which I shall look at a little later. The learning from this is that this is a
developing market, with generic demand as of now, which has yet to crystallize
further
These two markets,
in my terminology, are a need-cum-pricing-based segmentation, basis long
experience of watching retailers sell to consumers across various geographies
in West India. These
segments are the Computing Power segment / Power-User Segment; and the Basic
Usage Segment. I have deliberately avoided replacement market, or any other
parameters for a reason : and that reason is the product itself. The Smartphone
is essentially a solution, as observed
above, or a service; not a product unto itself. It requires another
product : Data Connection to become a usable item for the most part. Hence, we
need to segment along usage at the primary level, as shall become apparent in
my article.
While
the Power Users are beginning to become more discerning, the Economy segment is
still way behind in the learning curve due to low income as well as undeveloped
demand. I say undeveloped as the requirement for the more esoteric as well as
advanced apps has yet to gain a defining momentum due to demographic factors, a
full study of which is beyond the scope of a blog article. For the Economy
segment, the defining pleasure is still at a nascent and beginners level –
although some sub-segments within the Economy Segment are beginning to show the
demand nature of the Power segment, but are hampered by income challenges.
Within
each primary segment, you can have a series of segments as per your purposes –
replacement market, processing power, sound/audio, battery, pricing and so on
and so forth. But at the core level, the profile of the consumers in these two
segments are completely different. Sure, there will be some overlapping, as in
consumers having one handset from both segments, but even that underscores the
segmentation – power usage device for power and data intensive usage, and basic
device for basic usage, though that is frankly a rarity. But, in the Indian
context – the Economy Market is still paramount in terms of volumes as well as
potential, as more and more people upgrade… but that poses challenges on a
different scale to the companies-
something we shall look at in the second part…
Comments
Post a Comment