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

The Economic Times - - Front Page - Gul­veen.Au­lakh@ times­group.com

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.

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