In 2022, close to 200M smartphones will be sold in India. This is when only one-third of India's population actively uses a smartphone. So how are we getting outsmarted?
If you own a smartphone, there are 74% chances it is a China make. This probability would have been less than 10% in 2015. Clearly, in 6 years, we got 'outsmarted' and we continue to do so.
With their aggressive pricing and marketing strategies, Xiaomi and BBK Electronics (the owner of Oppo, Vivo, OnePlus and iQOO) clouded the Indian brands like Karbonn, Lava, Intex and Micromax to capture market share. Even today, both Oppo and Vivo are loss making brands for BBK with last reported loss of 329 crores and 2203 crores, respectively.
Micromax which was once the 10th largest smartphone brand in the world had to pivot into other segments like smart TVs with their brand Yu. In 2018, the big boy Reliance also tried to enter into this space with LYF phones packed with Jio ecosystem. But it failed!
It was a brave decision by Rahul Sharma (Founder & CEO, Micromax) to re-launch smartphones in 2020 under the brand name 'in' - positioning it as 'India ke apne phones'. But this time the scenario was different. Most Chinese brands have shifted to the 10k-20k category as the average selling price of smartphones in India has increased to 14,700. This has created a massive demand-supply gap for the sub-8k category.
JioPhone has also jumped on to this opportunity and priced the phones at 6,499 to cater to the under-penetrated market. The way Jio has structured the business is also different - direct equity investment in UTL Neolyncs (the JV between manufacturer of Karbonn and an Israeli company). What's different? Unlike LYF, the dependency on Chinese suppliers is zero.
Tejinder Singh, Head of Products at LAVA had reported that LAVA has an annual capacity of manufacturing 40M smartphones in the sub-10k category. You never know when these entry-level phones become cash cows for Indian brands and they start chipping into the market shares of large Chinese brands. The macros also suggest the trends are changing - India is now exporting $3B+ worth of smartphones in the current year.
5G enabled phones, PLI push, investment in R&D, better availability of hardware and reducing chip shortages all aid in favour of reversing the effects of the lost battle. More than anything else, if Indian brands are able to match the performance and specs of the large global brands, there will be a revolutionary wave for Indian smartphone industry.
In the US, Apple and Samsung dominate the industry with almost 75% market share together. If we support our home brands keeping political agenda aside, we could be in a similar position like US.
Outsmarted, but not for too long. With the culmination of startups, resilient entrepreneurs like Rahul Sharma and deep pocketed business houses like Reliance, Airtel and TATA, we surely can catch up.
INDIA, let's get smarter!
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