4G Phones to Soon Come at 2G Prices
Prices of phones run on 4G tech have fallen by more than half in the past one year
New Delhi: Prices of 4G smartphones are likely to drop to as low as .₹ 3,000 by the year end, making high speed broadband on handsets accessible to more consumers and providing the backdrop for the next battle among India’s biggest telecom operators.
The rapid reduction in handset prices is being accompanied by speedy 4G rollouts by market leader Bharti Airtel, followed by rivals Vodafone India and Idea Cellular, in anticipation of a commercial launch of similar services by Mukesh Ambani-owned Reliance Jio Infocomm. Little known Chinese handset player Phicomm this week became the first handset maker to offer a 4G smartphone for .₹ 3,999, including discounts. And that could be bettered shortly, with Micromax Informatics, India’s No. 2 smartphone brand, saying it will launch entry-level 4G phones over the next few months.
“Last year this time, the cheapest 4G phone was available for $120 (.`8,000), within a year it’s down to around $55 (.`3,650),” said Tarun Pathak, senior analyst at Counterpoint Research. “Prices can drop to $40 (.`2,700) by end of 2016.”
The sharp drop in prices is being driven by two factors. First, the prospects of intense competition among operators is prompting handset makers to drop prices to make the most of anticipated demand. Second, wider adoption of 4G technology in China and other markets offer scale for chip makers to produce components at lower costs.
Samsung is the market leader in India’s 4G smartphone segment, followed by Lenovo, Xiaomi, Micromax and Apple in that order. In an attempt to build the handset ecosystem in the lead up to Jio’s 4G launch, Reliance Retail - Jio’s sister company - has also launched 4G smartphones under the LYF brand, with one phone being sold for less than .₹ 5,000. While the initial thought was to flood the market with 4G phones at under .₹ 3,000 levels by subsidising the devices, sources say there appears no need to do that now, given the sharp price drops already being witnessed.
“In September 2015, the most economical 4G smartphone cost about .₹ 7,000 ($105); today we believe there are about 15 smartphones that are available for less than .₹ 5,000 (US$75),” brokerage Kotak said in a recent report. In 2015, 4G devices sold to end users grew about five times to 27.4 million, over 2014. “What we saw happening in 3G devices will also happen in 4G, but at a faster scale,” said Shubhajit Sen, chief marketing officer at Micromax, a company whose entry-level 3G phones starts at a price of .₹ 3,500.