Falling device prices boost smartphones adoption

Sunday, 29 September 2013 10:20 administrator

Smartphone in handGrey market and increased import duties may hamper the growth.

Mumbai. The smartphone and tablet market in South Asia is witnessing rapid growth, driven by the influx of low-cost devices and the rising penetration of mobile internet services. This growth could be impacted due to the rampant grey market and steep import duties on such devices.

New analysis from Frost & Sullivan, The Smartphones and Tablet Market in South Asia, reveals all this and more. The study finds that market revenue is expected to reach US $33.33 billion in 2019 from US $4.45 billion in 2012. Smartphone sales will contribute to almost 70 per cent of the total revenue, with the rest accounted for by tablet sales. Out of the three countries studied - India, Sri Lanka and Bangladesh; India will be the largest contributor to market revenues.

“Buoyed by the availability of mobile internet services, end users are using smartphones as their primary medium for internet access,” said Frost & Sullivan’s Information & Communication Technologies Research Analyst.

Demand will continue to soar owing to falling device prices caused by the advent of user-friendly, open-source Android devices and the decreasing costs of components such as displays, chipsets and memory chips. Intense competition among the vendors in the region has also reduced price points. Despite the drop in price, the total cost of device ownership remains high, reining in adoption. Regulatory requirements such as high import duties on mobile handsets have escalated prices of the handsets. In fact, Bangladesh has a 12.5 per cent import duty on all mobile handsets and India has announced a 6 per cent duty on phones costing greater than US $40.

Another concern is the widespread proliferation of grey channel sales which in turn, affect the profitability of authorised vendors. The lack of a robust distribution system and after-sales support in the semi-urban and rural regions adds to the existing challenges. In a country like India with geographical and linguistic diversity, it is vital to have a strong, localised distribution channel that will cater to varied end-user needs.