In 4Q15, 49% of the
25mn smartphones that were shipped in India went to cities outside the top 30, essentially tier IV cities and below. The share of tier I cities (top 5) dropped by about 4ppt qoq (to 26.4%) in 1Q16, suggesting that demand is somewhat saturated there and incremental demand/shipments are gravitating towards tier II/III cities and below.
The two other key trends that are emerging are that Chinese smartphone vendors are gaining market share in non-tier I cities (possibly due to lower ASPs), and 4G handsets are proliferating in the market and trumping 3G devices.
This points to first-time Internet users are coming online due to smartphone adoption, and with the cost of smartphone ownership and data usage coming down significantly over the last three years, adoption could remain robust. Average selling price of smartphones in India has fallen by 18% in the past two years, from Rs13k to Rs10.7k; data costs have fallen by 37% over the past four years, using ARMBs of telcos as a proxy.
