Despite the already strong presence of Samsung, Nokia, and Apple smartphones, two local competitors, Karbonn and Micromax, are quickly gaining ground in the Indian smartphone market. As it currently stands, Samsung is still the market leader, accounting for 43.1% of smartphones sold in 2012. Nokia was a distant second at 13.3%, yet still maintained top position in the overall handset market thanks to its lead in feature phone sales. If current trends continue, however, Samsung’s dominant position is likely to slip. 

While in the U.S., prices for Apple and Samsung smartphones are heavily subsidized by mobile operators who offer customers discounts in exchange for signing multi-year service agreements, in India, where the overwhelming majority of mobile users operate under prepaid service plans, the price for an Apple or Samsung smartphone can be quite prohibitive. The Samsung Galaxy S3 currently retails in India at about $500, while a new iPhone 5 can cost upwards of $750. New Android-powered smartphones from Karbonn and Micromax, however, start at $66 and $73 respectively. By offering highly-functionable handsets at such a low price, the two Indian-based companies are able to capture many first time smartphone buyers. In Q4 2012, Micromax and Karbonn were second and fifth respectively in terms of smartphone shipments in India. 

Thanks in large part to an influx of affordably-priced handsets, the Indian smartphone market is poised to become the third largest in the world by 2017, behind only China and the U.S. Besides cheaper phones, key trends driving this growth include decreasing costs for mobile data and a booming emerging middle class. As average income continues to rise in India, smartphone manufacturers look to the market as a key source for future growth. For example, while BlackBerry sales continue to plummet in most developed nations, sales in India are expected to increase 50 percent every year for the next three years, reaching upwards of $7 billion by 2016. In fact, the company plans to release its new Blackberry Z10 handset in one of its smaller markets before its release in the U.S.

As Apple and Samsung look to lower prices to stay competitive, local players like Micromax and Karbonn seek to gain ground in the Indian smartphone market. With hundreds of millions of first time smartphone buyers entering the market over the coming years, the key to gaining market share will be capturing these consumers. Given their current price points, Micromax and Karbonn stand to gain the most from this trend.

 

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Published April 12, 2013