Of the installed base, new smartphone users coming from feature phones was 6.1% in 2019, which fell to 5.7% in 2020, 5.6% in 2021, and 5.4% in 2022, according to Counterpoint Research. The reason is mainly affordability and a lack of relevant use cases. The featurephone-to-smartphone conversion though is expected to bounce back next year with research director Tarun Pathak predicting it to grow to 5.9%.
“First the pandemic, the component issues, and then inflation-in that order, has been impacting the feature phone market and people have been holding on to the feature phones for longer. Next year we expect some upgrades,” Pathak told ET.
He added that the average replacement cycles have gone up to 20-23 months in 2022 in the historically high-volume sub-₹8,000 segment, from 18 months in 2019, which has led to a lot of brands either exiting the segment or slowing down their launch cycles.
“The segment under ₹8,000 is not growing the way it should be growing. But it is still a very big segment with almost 370 million consumers, which is a huge base. Within that, almost 220 million consumers are still using 2G networks,” said Arijeet Talapatra, CEO, Transsion Holdings, which operates brands like Itel, Infinix and Tecno in India.
Itel is among the top three in this segment along with Lava and Samsung, and has been the leader in the feature phone segment for three years in a row, with 28% share in Q3 2022, according to Counterpoint.
He added that for an average feature phone user, there is almost a gap of ₹3,500 for a new smartphone. “So, we still don’t have an answer to that-actually nobody has. We have had a lot of meetings with (Reliance) Jio and Airtel on that, on how to bridge the ₹3,500 gap because while consumers have been upgrading from a ₹800 feature phone to a ₹2,000 smart 4G feature phone, they are finding it difficult to upgrade to a ₹4,000 smartphone after that.”
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