The key commercial reasons for dumping this low-price line are two-fold, experts point out.

Money Smartphones Tuesday, February 11, 2020 - 19:09

Possibly, India must have been the only market in the world where you could pick up a smartphone at a price below ₹5,000 (roughly $70!). That situation may change now as reports indicate most phone makers have decided to up the ante a little and climb the value chain. The key commercial reasons for dumping this low-price line are two-fold, experts point out. One is that the cost of having the phones distributed to reach the deep interiors in the country is higher than the margin available in such entry level phones priced below ₹5,000. The other reason being cited is that there has been a shrinking of demand as well.

This will mean that users now having a feature phone and wanting to go in for the cheapest smartphone will either have to shell out more for it or buy a refurbished smartphone. The only other option they may find is that the carriers may be having bundled offers where the net price for the device may be lower.

The indications for the present decision to stop selling phones below the ₹5K mark had been there. The Counterpoint Research statistic, the reliable provider of data on mobile phone sales, says there was a 45% decline in the sales of phones in this price line in 2019 on top of another 25% decline in 2018 itself. This may mean the market exhausted itself of the first wave of the population migrating from feature phones. Though it is said there are still 450 million feature phones in use in the country, many of them may not want to migrate yet for any number of reasons.

Even otherwise, the IDC data shows that there has been a gradual climb in the average price of smartphones being sold /bought in India over the past 2 years+, from $159 in 2018, to $160 in 2019 and now to $170.

Xiaomi has been the only significant brand with a marked presence in the entry-level category. There is a separate dynamic working in the refurbished phones market and that may not have anything to do immediately with the buyers of entry-level smartphones.

The markets do change with consumer behaviour constantly changing every year or two years.