Smartphone companies should stop selling smartphones below Rs 5,000

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The Indian market has been all about affordability and therefore it is not surprising that it was perhaps the only market in the world where you could buy a smartphone for less than Rs 5,000. However, if Counterpoint’s report about 2019 is anything to go by, the trend is changing.

Demand for Rs 5,000 categories phones in this price bracket is declining

With most smartphone makers upping the ante on the price to climb up the value chain, the sub-Rs 5,000 categories is dying. The key reason for this is that the cost of distributing devices to the interiors of the country is higher than the margin available on these entry-level sub-Rs 5,000 smartphones. Also, the demand for phones in this price bracket is declining.

This means the only way now one can get a smartphone that’s below Rs 5,000. However, is if they buy a refurbished device or pick a bundled offer from mobile carriers. To get even the cheapest smartphone now, users have to get used to the idea of paying more.

The indications for why this sub-Rs 5,000 category should die has been there since 2018. According to Counterpoint Research, there was a 45% decline in the sale of smartphones in the sub-Rs 5,000 categories in 2019. This on top of the 25% decline it witnessed in 2018.

The sub-Rs 5,000 market seems to have exhausted itself over the first wave of feature phone users moving to smartphones. Reportedly, there are 450 million feature phones in the country still. Also, but most users do not want an upgrade just yet.

IDC data shows that the average price of smartphones being bought in India had gradually on the rise

On the other hand, IDC data shows that the average price of smartphones being bought in India had gradually been on the rise. It grew from $159 (Rs 11,350 approx) in 2018 to $160 (Rs 11,421 approx) in 2019 and is touching $170 (Rs 12,135 approx) currently.

And given these prices, Xiaomi has been the only significant brand with a marked presence in the entry-level category. The market for refurbished devices is a separate one and do not overlap the market for entry-level buyers yet.

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