Growth in smartphone shipments in India slowed to 5% yoy in 2016 (vs 29% yoy in 2015). India saw an inflection point after 2012
when its share of smartphone shipments (as % of total phone shipments) started increasing at a fast clip. After three years of rapid increases in share, its mix of smartphones in 2016 stood at 44% (vs 41% in 2015).
Factors contributing to the slowdown in 2016 could have included: a) weak growth in 4Q due to demonetization and b) increased availability of lower-priced feature phones (as per IDC). We note that in global markets (such as North America, China, Latin America), smartphone shipments as a proportion of total phone shipments have grown slowly after hitting the 80%+ mark. India is still far away from that point.
Rising affordability (with rising per capita income and falling prices of smartphones), greater 4G network coverage (~75% vs 50% a year ago) and falling data cost should drive the mix shift towards smartphones. However, the launch of 4G-enabled feature phones could change the dynamics.
