EXPECT RAPID PROLIFERATION OF PHABLETS AND TABLETS
Today, people in rural and semi-urban areas who don’t even have TVs or PCs at home are using internet for the first time on a smartphone or a tablet
INDIA is at the cusp of its digital revolution journey as we embark into 2014. Last year, we became the third largest country in the world in ter ms of total internet users as well as smartphone users, now trailing behind China and USA. Looking forward, we expect 2014 as the year of growth inflection, which will propel us through as one of the fastest growing mobile inter net economies.
At the core of this change is the Indian consumer whose internet behaviour is evolving at a phenomenal pace. Companies that watch out for these trends and adapt will be poised to capture this rapid growth. The next 100 million connected users will demand mobile content and services in local languages provided through an enhanced user experience across a range of smart devices at an affordable total cost of ownership.
By end 2013, we will have close to 750 million active mobile SIMs, 140 million internet users on mobiles and in excess of 80 million smart consumer devices. Compare this to the National Telecom Policy (NTP), 2011 which envisions India having 600 million mobile internet users by 2020, possibly second only to China by then. Still a long way to go! But, we believe rapid advancements in mobile network technology, smart devices, content access and continued government focus on the digital agenda are paving the way towards meeting this ambitious NTP goal.
Obviously, given our country’s socio-economic demographics, it is inevitable that this growth will be fuelled through a continued focus on affordability by all relevant stakeholders. In the long-term, this digital revolution will have a multitude of positive ramifications on the Indian economy, society and overall governance.
As we speak, consumer behaviour in India is witnessing a seminal shift. India is already amongst the top 5 nations for Facebook, LinkedIn and Youtube users. Mobile devices are becoming the preferred choice for accessing internet for many users across multiple inter net properties, for example, online booking, e-commerce, m-banking, entertainment as well as e-governance. Driven by preferences created by advanced technology offerings, Indian youth is changing smartphones anywhere between 6-18 months and are amenable to owning multiple smart devices. It is also heartening to see that this change is not just an urban-centric phenomenon. Today, people in rural and semi-urban areas who don’t even have televisions, PCs at home are using internet for the first time on a smartphone or a tablet.
We expect growth trends for the industry to continue and
OUR 2014 ESTIMATES SUGGEST HANDSET SALES TO BE CLOSE TO 250 M UNITS, GROWING AT 45% OVER LAST YEAR WITH SMARTPHONES CONTRIBUTING 75% OF THE VALUE
possibly be enhanced with a stable economic scenario in place. Our 2014 estimates suggest handset industry sales to be close to 250 millon units and $17 billion in revenue, growing at 45% over last year with smartphones contributing 75% of the value.
Historically, technology industries in growing markets have typically outpaced all analyst expectations. Looking ahead at the next 12 months, we believe the industry will witness four major trends:
Next wave of connected Indians: 2014 would see a fresh round of spectrum auctions, wide network rollouts, ramp up of data capacity and further smartphone proliferation. With these developments, a large share of the new users will access internet for the first time on mobiles. One can only briefly imagine all that will be achieved through ingenious ways of using the internet to make their lives better. In a large country like India, many companies find it difficult to build immediate scale to address consumer demand. We believe companies like Samsung, with an extensive width and depth of distribution across India are well-positioned to tap this demand.
Local language content availability: India’s digital revolution will surge only with rapid development of the vernacular ecosystem. Our estimates say about 100-150 million Indians can interact in English, but beyond them, usage of smart devices in local languages will hold the key to future growth. We are committed to this journey early last year. Next year as well, we will continue to deliver to our consumers the joy of using internet in a language of their choice through a wide array of vernacular devices and exclusive con- tent. And clearly, this should further add impetus to the application ecosystem growth while catering to local needs.
Focus on user experience: As smart devices anchor many of these changes, consumers will demand superior user experience while consuming content anywhere, anytime. Technology innovations in new device forms, UI/UX, SoC (system-on-a-chip), hardware-OS integration will focus on making this happen. There will be a rampant proliferation of phablets and tablets as distinct categories, with the intent of providing the ‘best’ experience at the ‘right’ screen size. The tablet market is likely to become more competitive with differentiation being driven basis user experience and bundled services.
Affordable devices: Global technology improvements both at the device, chipset and OS-end always work towards making the device more accessible to end users. Similar to western markets’ subsidy model, operator partnerships will be critical to encourage smartphone adoption while considering local market constraints. We have seen markets similar to ours gain increased momentum with a strong focus on affordability by OEMs, operators and government. Lastly, partnerships with banks as well as NBFCs are important as they typically make devices available to the masses at lower upfront costs.
Each of the ecosystem players has a different stake through this digital journey. But the one who needs to benefit the most, is the consumer. To make this happen, all players in the Indian ecosystem—device manufacturers, telecom operators, equipment and infrastructure providers, content & services players—along with the government must work together. We will need to build on the momentum we gained in 2013 and invest further to realise the 2020 dream. There are surely exciting times ahead for us, as we embark into the next year.