India’s Tier 2 and 3 cities will grow to constitute a significant portion of the Indian smartphone market in the years to come, IDC predicts.
Data from the research firm's Monthly City Level Smartphone Tracker show that the leading 30 cities of India made up approximately 51% of the entire smartphone market in the fourth quarter 2015. New Delhi generates the maximum demand, closely followed by Mumbai.
However, 25 major Tier 2 and 3 cities of India currently make up around 21.3% of the Indian smartphone market.
IDC said the majority of the demand from these cities is for 3G models. But with increasing 4G smartphone model portfolio across all brands and expanding 4G network footprint by Airtel, Vodafone, and the soon to be launched Reliance Jio, the demand for 4G smartphones is expected to grow exponentially.
"There is a clear trend of migration from feature phones to low-end smartphones in smaller cities and towns, making these markets the next growth engine for the smartphone industry. With the first time mobile phone users coming on a smartphone, it will be their only connected device which meets all of their internet and entertainment needs,” said Swapnil Bhatnagar, Research Director, IDC India.
These cities are strongholds for Indian vendors with affordable smartphone models, making up more than two-thirds of the market for sub $100 smartphones in these cities.
“But Chinese vendors like Lenovo, Motorola and Xiaomi are gaining market share in these cities due to their superior positioning as quality brands, with a value for money proposition,” Swapnil said.
“Online channel is disrupting the traditional distribution channel by offering a compelling value proposition to the customers in terms of better price, convenience and product range. Flash sales and online exclusive smartphone models are a big hit with Indian consumers and these are being used as marketing tools for building excitement and hype,’ added Navkendar Singh, Senior Research Manager, IDC India.
According to IDC, India’s top 5 cities make up approximately 60% of the online smartphone sales in India. 4G devices make up around 45% of the market in these cities. Global vendors like Apple, Samsung and others hold more than 40.7% of the market in these cities.
Samsung remains at the top in leading 30 cities of India, in the fourth quarter of 2015 across cities, driven by J-series and ON series (online only), holding 29.4 percent share within top 30 cities.
Micromax is at the second position overall, capturing the significant market in sub $100 but facing stiff competition from other Indian vendors in this price segment. Lenovo + Motorola hold a strong third position, emerging as the most “value for money” brand led by “K3 Note”, “Vibe P1M” and the “Moto G 3rd gen” models.
Intex and Lava rounded out the top five in the fourth and fifth position, respectively.
Meanwhile, with the launch of iPhone 6S & 6S plus in addition to the price correction for iPhone 5S, 6 and 6 Plus, Apple regained the top position in above $300 smartphone market with 42.1% share.