Feature phones segment is still a big point of interest for every brand

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Smartphone market in India crossed the 30 Million unit shipments milestone for the first time ever in a quarter in CY Q3 2016 maintaining its healthy traction with 11 percent Year-on-Year growth. And though feature phone market is consolidated with few key vendors, it is also witnessing the emergence of new brands. Some new brands in the second quarter in Indian market has quadrupled its shipments while few have more than doubled over the previous quarter. And entry of the new vendors have extended the feature phone supply since past few quarters and this category is expected to grow significantly. This in turn might further slowdown the feature phone to smartphone migration.  Functional benefits are still making the quintessential feature phone an attractive buy. Almost 85% feature phone users do not intend to switch to smartphones on their next purchase, according to a recent study.

Why India still needs more feature phones?

In certain markets, such as India, where the proliferation of mobile phones grow on users’ demands, handset companies today still see the scope of launching new feature phones. As per media reports, more than 50 per cent share of feature phones  continue to dominate as they remain the preference of people in small towns and rural areas who have little need for or money to buy smartphones.  The coveted factors why India still needs feature phones are:

*India is a price sensitive market and hence consumers (especially in tier II, III cities and rural areas or maybe overall) display a very cautious spending behaviour. One of the possible reason is affordability and socio-economic behaviour of Indian consumers.

*Lack of awareness and technological literacy.

*While urban population is increasingly growing tech savvy, consumers from smaller towns and rural areas are still marginally exposed to the technological advancement that India and the world has moved towards. The pace at which this segment of population is coping up with the advancement is considerably low because of which they feel more comfortable with the conventional way of communication.

*The basic need for a phone till date is to make and take phone calls for majority of people. Therefore, the rate of migration from feature to smartphone is slow and hence feature phones continue to account for more than half of the total Indian mobile phone market.

*Reduced demand globally and in India, the shipment of smartphones have slowed down.

Feature phones are here to stay! Other research and studies like the latest CMR report have also cited that, although revenues from feature phones constitute less around 14%, in terms of volume, they hold about 57% of the market. So, overall there is a scope to play where home-grown companies are introducing their low-end handsets for users’ daily convenience.  And it’s a fact that, Indian consumers will continue to welcome feature phones solely due to the functional benefits, combined with durability, battery life, and the ease of repair, said Ms. Nidhi Markanday, Director & Business Head, Intex Technologies

Gaurav Nigam, Product Head, Lava International Ltd said “In India, majority of the population still don’t have access to smartphone due to multiple reasons ranging from affordability, battery life, durability and availability of  internet. Therefore the telecom needs are satisfied by Feature Phones. Moreover there  is another segment which has a need for high count and duration of calls. For this segment battery life is most important which they get only in Feature phones as smart phones consume higher battery due to internet and various applications”.

According to Mr. Chiranjib Sarkar, National Sales Head of Ziox Mobiles “There is not a rich ecosystem of quality local applications, in regional languages. Telecom operators, original equipment manufacturers, TRAI and industry bodies all agree that there is a lack of local content, for the local population. This gives very strong reason for many users across India to own a Feature phone”.

Also, not everyone is comfortable with English as a first language and Feature phones offering user interfaces in local languages. The battery life, durability and capabilities of feature phones still offer value to users in India, said Mr. Sarkar.

Nikhil Chopra, Executive Director, BTM Exports  said “In our view India technology infrastructure is still lacks the capacity to get fully converted into a complete 4G reliant. Hence the feature phones and entry level smart phones both have ample takers here”.

What are the key elements that makes the feature phone segment still so attractive for brands.

According to Ms. Nidhi  “In India, almost 85% feature phone users do not intend to switch to smartphones on their next purchase, according to a recent study conducted by Mobile Marketing Association (MMA) and Kantar IMRB. As mentioned above, it’s because the devices’ durability, battery life and other comfort specifications.

Ms. Nidhi Markanday Director & Business Head, Intex Technologies
Ms. Nidhi Markanday Director & Business Head, Intex Technologies

With JIO’s plan for 4G roll out in feature phones, India’s mobile phone market is creating a new category of mobile devices to attract more users to use feature phones. While many other brands have also been working on phones with 4G technology, there is clear advantage and we have taken a step accordingly. At the moment, 90% of our smartphones are 4G-enabled and we plan to introduce the new 4G feature phones to gain from recent developments”.

While there has been a huge demand for smartphones amongst the tech savvy youth, we have been witnessing a consistent rise in the demand for feature phones as well from tier II, III cities and rural areas owing to its convenience of use. Hence, we plan to introduce around 15 new devices by June 2017 in feature phone segment. However, we recently launched our two new models – Turbo Selfie+ and Ultra 4000i that come equipped with innovative practical features.

As the feature phone segment sees huge potential in rural areas, the aim is to tap first-time users as well. According to Counterpoint Research, more than 65% of billion plus mobile users in India are still using feature phones. So, tapping customers who currently use feature phones through 4G and additional features will give feature phones segment a good push, said Ms. Nidhi.

“The Indian feature phone market offers immense potential for mobile handset manufacturers, with current sales standing at approximately 12.5 million units a month. This count by all means is significant. Great quality, large base, low service cost and a large population which is looking at affordability makes this segment attractive”. said M. Nigam of Lava.

Mr. Chiranjib Sarkar said that this might be the era of eminent smartphones but India’s mobile phone industry isn’t writing off the humble feature phone. The feature phones which were all about basic messaging and calls has seen revival of sorts and has gone smarter. As mentioned above, Feature phones are still a force and Brands too are focusing on innovating in the existing segment, with newer enriched features that are relevant to the present-day users. The segment is not focused only to the lesser known brands, in fact several popular brands are aiming on establishing its stronger foothold, underlining its importance especially in rural markets.

Mr. Gaurav Nigam Product Head,Lava International Ltd.
Mr. Gaurav Nigam Product Head,Lava International Ltd.

According to Mr.Chopra “One reason which we understand is the ticket size involved in terms of investments in Feature phones and the other is the saturation in Indian Smartphones scene with the entry of Chinese smartphones manufacturers .The situation has turned nightmarish for many so called branded smartphones. The size and geography also plays an important part here.”

 

Do you feel there is still space for new players in this segment?

Yes, India has always been a key market for both international and domestic players to grow, where consumers are constantly looking for new and fresh offerings. With a population where we still have first-time mobile users, it’s for the brands who provide users’ innovative products offering the best quality devices with high-end specifications at affordable prices. Also, with the advent use of 4G technology embedded in feature phones going forward, players are going to empower users at attractive price points too.

Currently, our devices are priced at affordable rates with practical and utility based features which are easy-to-use and can potentially bring convenience to the daily lives of consumers. As a part of our strategy, we are not just focusing on offering devices at competitive pricing but on providing value added services as a part of our digital services ecosystem to retain and win more consumers. As a home-grown and consumer facing brand, we will continue to be the people’s brand and have a presence in the low-price segment, said Ms. Nidhi.

Mr. Nigam said that “the current feature phone market is 149 mn in 2016  which is 57% of overall market (as per CMR report). Hence, there is large potential to serve customers in this segment. However just selling like a trader is not going to give good returns. Whoever enters this segment must ensure good quality product, wide sales and distribution reach (touching villages) and similarly wide service network blue print.”

“This is such a segment where every player either established or newcomer is seeking the opportunity. This is the reason you can see other than existing players many new and well-known names are joining this segment” said Mr. Sarkar

Absolutely said Mr.Chopra for the pure reason that feature phone market scenario is still ok for any new brand if the brand has core values incorporated like Longevity, value for money, service supports etc. Plus its always better if the new brand in question here has something extra to offer like having its own assembly unit here like ui phones.

What will be the next big change in this segment?

According to Ms. Nidhi as mobile penetration continues to grow in the country, both feature and smartphones continue to find takers in the mobile market. According to me, the next disruptive move will be focusing on the pricing strategy of 4G VoLTE feature phone devices. In a fast paced and data-driven market, where mobile phones are meant to be equipped with heavy data, consumers tend to play games, watch live streaming videos and use all sorts of data-driven applications. Mobile brands will need to understand consumer behavior and needs to bring them the right devices at affordable rates targeting both urban cities and rural, tier-II and III markets. As for the year 2016-2017, we’ve had a total sales of 15245077 in the feature phone segment and we aim to launch our 4G enabled feature phones between the range of Rs 2,500 – Rs 3,000/-. Currently we are selling about 60 models in feature phone segment in India and have sold about 19.77 million feature phones in 2015-16 alone. We are optimistic about the growth of 4G feature phones which will further help in holding its ground in the fast growing mobile market.

The next big change in the feature phone segment will be introduction of smart feature phones with 4G connectivity.

Mr. Chiranjib Sarkar National Sales Head,Ziox Mobiles
Mr. Chiranjib Sarkar
National Sales Head,Ziox Mobiles

With 4G data tariffs going down we believe that people even at the bottom of pyramid will be able to afford 4G data and would therefore need a device to do the same. Lava realized this impending demand and was the first brand in India to launch a 4G Keypad phone –  Lava 4G M1 Connect, said Mr. Nigam.

Mr. Sarkar said “feature phones have been timely revamped to keep themselves in check with smartphone segment. In the coming days we will witness 4G connectivity, more language options and high level of VAS services”.

According to Mr. Vinod Pandit “These basic phones

Mr. Vinod Pandit Business Head, lephone Technology Pvt Ltd.
Mr. Vinod Pandit
Business Head, lephone Technology Pvt Ltd.

are getting smarter as well. Manufacturers are innovating in the segment with new feature sets that are relevant
for present day users: bigger batteries which can act as power banks, selfi e cameras, larger speakers to give a surround sound feel and the like. The feature phone market in India will continue to be significant some more years from now, driven by companies bringing innovative features, consumer-centric form factors, SOS call button and regional languages support. A feature phone user prefers to have long battery life and loud speaker in their devices. Therefore, it plans to come out with models which have larger memory to store movies and songs. Some models would come with water resistance and tough build quality”.

According to Mr. Chopra the next big change will be a 4G feature phone. India is developing and so are the wishes of masses , everyone is talking about going digital so in our view 4G in feature phone is next tech news.

Will Nokia and Jio factor play big role in this segment this year?  

At the moment, our Indian market is cluttered with undifferentiated products and consumers are constantly seeking for newer ones. Mobile handset brands will need to provide with fresh offerings. At Intex, we are constantly innovating our products and launching new devices as per consumers’ needs. Today, we have just launched our Aqua Strong 5.1+ model that allows users to enjoy superfast 4G speed and processing to experience download speeds and the fun of internet in the most seamless manner.

Intex now has moved to an entire portfolio comprising 4G-Volte smartphones and will also be entering the 10K segment smartphones from this quarter. Moreover, there has been no regrowth in the feature phone market in the country and with 4G into play, feature phones will further strengthen by moving towards smart feature phones that will further delay the switch to a smartphone driven market, said Ms. Nidhi.

“Both are strong organizations and with huge cash flow and reputation behind them but it won’t be so easy for any brand especially newcomer in Feature phone segment”, said Mr. Sarkar.

Mr. Chopra said that any such shake or move impacts the market in totality . Remember the times when that Rs 500/- worth CDMA phones got launched , they only resulted in helping the market grow and similar thing is going to happen now.

How your brand is looking into this segment

“For Intex, the feature phones segment has always been an opportunity to tap first-time users as well as rural cities with its low-end yet smart devices. As per latest IDC reports, Intex is the number 3 player in mobile market with a market share of 9.9%. With Jio planning to roll out 4G-capable feature phones and the government aggressively pushing for a less-cash era by enabling mobile banking on feature phones using USSD, we are confident about the market to accelerate wherein, we will see an increased growth of the sale numbers for our feature phones “said Ms. Nidhi from Intex.

“At Lava, we are focused on ensuring that we give great quality and experience to our consumers. We are focusing on less models but widest distribution reach. On the innovation side, Lava Connect M1 is the latest offering in this segment, which is equipped to provide the latest 4G technology, supporting high-end connectivity standards like VoLTE at an affordable price. The device can support a majority of social and messaging applications on its Mocordroid operating system enabling video streaming platforms as well as live streaming” said Mr. Nigam from Lava.

We still believe Feature phones are here to stay and still our major portion of business comes via this segment. These basic feature phones are getting smarter as well. To keep the consumer engagement high, we are innovating in the segment with new feature sets that are relevant for present day users: bigger batteries which can act as power banks, selfie cameras, large speakers to give a surround sound feel, stylish looks and several other developments all at budgeted prices. Also, most of our Feature phones are equipped with some entertainment applications & minor increments like Pre-loaded content, Games etc, said Mr. Sarkar from Ziox.

“Though we are a new entrant, still we are very much competitive in this segment as we offer high quality, good
looking handsets at a very aggressive price. Our products have already created sensation in the market with

Executive Director,BTM Exports
Executive Director,BTM Exports

innovative features like selfie feature phone and beautifully crafted sleek ID. Almost all our features phones are produced in India, hence being a part of India’s technological revolution “MAKE IN INDIA”.We are progressively working on the innovative features and attractive IDs. Our phones are already equipped with emergency call button and soon our all products will support multiple regional languages. Vinod Pandit

We at ui phones are very bullish about the feature phones segment . Primarily targeting the tier 2/tier 3 towns and and providing the audience with an array of products ranging from Rs 800-1500 price range . Also for the records we are already working on Smartphones and Tablets and soon ui phones will have all of them in its portfolio, said Mr. Chopra from Ui