Last updated: December 27, 2022 at 8:06 p.m. IST
Premium phones are selling more in India, but phone prices have also increased this year
The Indian smartphone market has witnessed a dramatic shift in consumer purchasing behavior and 5G has played a huge role in it without making it to the end.
We have come to that time of year where you look at the trends in the market and how they have shaped the tastes or needs of customers. The Indian smartphone market in 2022 could cap the headlines with the long overdue 5G rollout that has finally brought hundreds of 5G phones to the consumer.
It was important that 5G services were rolled out, otherwise people would buy the overpriced 5G phones just to be future-ready with no clarity as to when that future will become a reality. This brings us to the main agenda of this article, phone prices are rising in India, changing the buyer’s definition of a budget and mid-range smartphone.
The differences became clear once you read through the features of a 4G and a 5G phone. It started as a marketing blitz, but eventually they realized that upgrading the technology came at a price that the consumer would pay. The first signs of this trend appeared when several analyst reports talked about the increase in the average selling price or ASP of smartphones in India.
India has traditionally been a market where the average cost of buying a phone used to be around 12,000 rupees, but this year they are approaching 20,000 rupees, a dramatic increase, especially for a market like ours.
If you take a closer look you will find that a phone that cost Rs 12,000 a few years ago is now available for over Rs 18,000 and when people want to experience these features they invariably spend the extra 5-6 grand, to get that value. Brands have been forced to increase the price for a number of reasons, none of which are under their control.
Make effort optimized in India
Most smartphones sold in India are manufactured/assembled in the country. But even today there is no avoiding the fact that the most important components of a phone come from abroad, which means additional taxes and duties incurred by the manufacturer, which are then passed on to the consumer.
The higher value of the rupee over the past year or so has also helped and then you have the higher cost of using a 5G chipset. Combine all of this together and the final recipe appears in the form of an inflated bill.
More buyers for premium phones
But it’s not just the phone’s price that has pushed the market in a different direction, they also have a broader group of buyers for premium phones, largely due to the growing sales of iPhones in India. The festive deals meant you could pick up older iPhone models like the iPhone 12 and 13 at lower prices than the market.
And India grew in chunks, so much so that Apple doesn’t forget to see the gradual growth it’s seeing in the country as a result of those sales. And the impact of iPhones seems to have spilled over into the Android space as well.
Nipun Marya, CEO of iQOO India, recently mentioned that the Rs 50-60k smartphone market has exploded in India in the last 12-24 months. Other brands have also noticed a similar pattern, which explains the interest in launching multiple phones in a year. But what could be the possible reason for this change? One could compare this growth with the demand for compact SUV cars in the country.
While entry-level demand stagnates, SUVs are selling by the millions and it wouldn’t be unfair to say people are now willing to spend more for a better smartphone, taking them straight from a Rs 20,000 device to more than Rs 50,000 (simple financing programs come in handy) on their next smartphone.
5G will continue to spread in 2023 and we could see changing consumer behavior in the near future as well.
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