The long forgotten cousin of the smartphone – the humble featurephone – is never going to pack its bags and go away forever.
The long forgotten cousin of the smartphone – the humble featurephone – is never going to pack its bags and go away forever. Rather it will be back with a vengeance, courtesy a makeover from Reliance Jio which has added a crucial competitive element to its make, which is 4G Volte.
So when handset makers in the country say that they won't make featurephones as the cost of the device would go up by at least 30% if a GPS system is installed, as mandated by the government from next year, the threats appear rather empty. This is true especially for Indian players who bank heavily on these basic devices to stay relevant in a market where the Chinese are increasingly dominating at their expense.
The government's diktat is to ensure that people using featurephones --which provide connectivity in the remotest of areas, on the lowest quality networks and even when there's a fraction of battery power left ---can be tracked when they are in distress, just as smartphones can be since they have GPS in-built. While handset makers -- who have successfully implemented government's other order of installing panic button -- may argue that the cost increase would have to be passed on to consumers, it's a cost that consumers may be ready to bear as personal security is top of a common man's and woman's, concern.
And let's not ignore the market math here.
India's a market of more than 1.2 billion mobile phone connections, of which realistically more than 850 million are actual users. Of this, the install base of featurephone users is a massive 400 million, as per Counterpoint Research. The number may well be more. Let's not forget, there are millions of smartphone users who still have a featurephone as a back-up for making calls.
A quick look at KPCB Mary Meeker's data on quarterly shipments of phones in India shows that while smartphone shipments in India have been on the rise since 2014, but its share has always been a third to less than half of the total shipments. Meaning, the majority of the shipments – locally made and imported (if any) units – are still featurephones.
It's a market opportunity that no one would want to miss or ignore, more so, if you're trying to gain a foothold. Take the example of Transsion Holdings, the Chinese company which is the No 1 featurephone player in Africa and is now in India with its Itel brand of featurephones and smartphones. Within three quarters of launch, Transsion was No 2 after market leader Samsung in the overall mobile phone market, thanks to its strategy to take share in featurephones.
Of the numerous brands in India selling phones, including Indian, MNC, Chinese, Taiwanese, Japanese and other brands, there are just as many of them selling featurephones as those selling smartphones. A check at Flipkart puts the tab at 49 for each after removing a seller and 'unknown'. This is after several brands like Apple, Lenovo, Motorola, Oppo, Vivo, OnePlus and more have not ventured into featurephones.
The case for featurephones becomes even stronger when one reads about government plans to take financial inclusion to the lowest level of the social pyramid, with the help of low cost devices and high end technology – and Indian handset makers and telecom companies responding to the call.
Lava has already launched its 4G Volte featurephone, albeit at a price of more than Rs 3,000, a level at which an average user can purchase an entry level smartphone. Others like Micromax, and one hears even Intex, have plans for launching 4G Volte featurephone. Micromax's Bharat 1 is supposed to come with a tool to enable financial payments, at under Rs 2,500.
But if Reliance Jio comes with its own 4G Volte featurephone at Rs 500 subsidised with services, it could change the game in the favour of featurephones completely. 4G Volte would mean free calls. If this device comes with a basic level of financial transaction capability, for instance through USSD, it may well bury the use case for smartphone… at least for those who are yet to upgrade to a smartphone.
If Reliance Jio can make its featurephone a success, it may well change the strategy of several companies that are removing featurephones from their portfolios, or are moving towards smartphones. Given the changing scenario, handset makers would have to choose their strategies, and words, carefully, because if they don't, they could find themselves in rather precarious situations.
For a clue, a look at the country's telecom sector would suffice.
Journalist with over 10 years in the field, covering world's leading smartphone makers, ecosystem players and top telecom companies in India.