GenZ and AI: Shaping the future of Indian smartphone market – NIQ
India Smartphone Market Size, Share, Trends, Growth and Forecast 2030
India Smartphone Market By Cost of Smartphones (Luxury and Affordable), By Demographic (Working Professionals, Students, Senior Citizens, and Others), and By Region – Regional Industry Overview, Market Intelligence, Comprehensive Analysis, Historical Data, and Forecasts 2024 – 2032
Category: Technology & Media Report Format : PDF Pages: 220 Report Code: ZMR-8611 Published Date: Aug-2024 Status : Published
| Market Size in 2023 | Market Forecast in 2032 | CAGR (in %) | Base Year |
|---|---|---|---|
| USD 41.31 Billion | USD 77.23 Billion | 7.20% | 2023 |
India Smartphone Market
- Description
- Table of Content
- Buying Inquiry
- Methodology
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India Smartphone Industry Prospective:
The India smartphone market size was worth around USD 41.31 billion in 2023 and is predicted to grow to around USD 77.23 billion by 2032 with a compound annual growth rate (CAGR) of roughly 7.20% between 2024 and 2032.
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India Smartphone Market: Overview
The Indian smartphone industry is one of the world’s most lucrative sectors for smartphone makers across the globe. The regional market deals with the production, import-export, distribution, and consumption of smartphones. As per definition, an intelligent smartphone is defined as a mobile device that can perform functions similar to computers. Most smartphones are equipped with a touchscreen that replaces the traditional keypad. Additionally, all smartphones have access to the Internet and some may offer connection to the latest 5G systems. The operating system in the smartphone allows users to download and run several applications of their choice. The Indian smartphone industry is highly dynamic. The region has a high demand for affordable smartphones with low maintenance, but it is also one of the prominent markets for luxury smartphone sellers such as Apple and Samsung. The penetration of the regional e-commerce industry has been pivotal in driving the sales of smartphones in the last few years. The changing consumer preferences, increasing number of working professionals, and availability of a large number of smartphone options in the country are driving the regional market revenue. However, the industry is at the risk of becoming oversaturated which may impact the market growth trends during the projection period.
Key Insights:
- As per the analysis shared by our research analyst, the India smartphone market is estimated to grow annually at a CAGR of around 7.20% over the forecast period (2024-2032)
- In terms of revenue, the India smartphone market size was valued at around USD 41.31 billion in 2023 and is projected to reach USD 77.23 billion, by 2032.
- The India smartphone market is projected to grow at a significant rate due to the growing trend of consumers moving to higher-value products
- Based on the cost of smartphones, the affordable segment is growing at a high rate and will continue to dominate the regional market as per industry projection
- Based on the demographic, the working professionals segment is anticipated to command the largest market share
- Based on region, Northern and North Eastern states are projected to dominate the regional market during the forecast period
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India Smartphone Market: Growth Drivers
Growing trend of consumers moving to higher-value products will drive the market growth rate
The India smartphone market is expected to grow during the projection period due to consumers moving to products with higher value. Research indicates that average Indian buyers tend to upgrade their products when re-purchasing an item such as a smartphone. The trend can be witnessed across price tiers including affordable and high-end phones. In addition to this, as companies continue to launch new products in the market with higher performance value, consumers get interested in trying the new technology. A recent official survey indicates that more than 30 million people in Delhi city are willing to spend more on buying 5G phones.
Large consumer base of the country works in favor of the industry
India has a large consumer base. The regional population is over 1.3 billion and it is expected to grow during the projection period. Along with the growing population density, the country is also witnessing a shift in the purchasing power of buyers. The standard of living in major cities has improved with a rise in earning opportunities. Increased foreign direct investment (FDA), the surge in investment in the manufacturing sector, and the emergence of several new start-ups have helped general buyers change their lifestyles. Around 660 million people in India own smartphones. Around 61.5% of smartphone users in India tend to change their phones every 2 years thus creating growth scope for industry players.
India Smartphone Market: Restraints
Stiff competition and higher initial investments will limit the industry’s growth rate
The India smartphone market is expected to be restricted due to the stiff competition the businesses face in the regional sector. The industry for smartphones in India is filled with several brands and their extensive range of products. The vast array of available products has led to the regional sector becoming oversaturated. Since almost all smartphones offer similar features, the availability of multiple options can impact the overall buying experience of the customers. In addition to this, developing a smartphone developing and producing business in India can be cost-intensive with procuring components acting as the major expense. Moreover, setting up factory and labor costs add to the total expenditure required for a successful smartphone-developing business in the country.
India Smartphone Market: Opportunities
Surge in official initiatives to promote the domestic production of smartphones holds exceptional growth possibilities
The India smartphone industry is anticipated to deliver exceptional growth possibilities during the forecast period. The Indian government has taken several steps in recent times to promote domestic production of smartphones encouraging international companies as well as domestic firms. For instance, as per the July 2024 union budget announced by Indian officials, basic customs duty on chargers, mobile phones, and printed circuit boards (PCBs) will be reduced from 20% to 15%. Additionally, duties on critical minerals will also be exempted. The advantage will also extend to raw materials and inputs required for manufacturing smartphones. Simplified tariffs and reduced duty fees were necessary to promote domestic production of smartphones as the country aims to compete with existing manufacturing giants such as China and Vietnam.
Introduction of a 5G network in India may generate demand for 5 G-compatible phones
India is steadily transitioning in terms of network technologies. The India smartphone market can benefit from the changes in the country’s network systems. In June 2024, Nokia, a leading telecommunications company, announced its plan to expedite the monetization process for 5G in India for its regional customers Bharti Airtel and Reliance Jio. In October 2023, Vodafone India announced that it will make significant investments in the country’s 5G sector in the coming years thus generating substantial growth opportunities for smartphone companies operating in India.
India Smartphone Market: Challenges
Rising cases of phone scams in the country could challenge market expansion rate
The industry for smartphones in India faces challenges due to the rising cases of phone-related scams in the country. According to official reports, the country recorded around 80 million phishing scams in 2023. Smartphones are vulnerable to cyberattacks causing users to encounter financial fraud and compromise data privacy. These factors could impact the industry’s growth rate during the projection period.
India Smartphone Market: Segmentation
The India smartphone market is segmented based on the cost of smartphones, demographics, and region.
Based on the cost of smartphones, the India smartphone industry is divided into luxury and affordable. In 2023, the highest growth was witnessed in the affordable category. Most Indian buyers belong to low or middle-income groups. The affordable smartphone section offers smartphones starting at low prices such as INR 10,000 and above. For instance, the POCO C61 is currently priced at INR 6,649. However, luxury phones, especially iPhones have become widely popular in the country. Apple sold more than 90 lakh iPhones in 2023.
Based on the demographic, the regional market divisions are working professionals, students, senior citizens, and others. In 2023, the highest demand was observed in the working professionals segment. Employed people tend to have extensive use of smartphones. Additionally, they are more financially capable of purchasing expensive smartphones. The rise in the number of working professionals in the country along with the growing premiumization trend will fuel the segmental demand. Premiumization has been attributed as the leading reason for India achieving milestone revenue of USD 10 billion in the second quarter of 2024.
India Smartphone Market: Report Scope
| Report Attributes | Report Details |
|---|---|
| Report Name | India Smartphone Market |
| Market Size in 2023 | 41.31 Bn |
| Market Forecast in 2032 | 77.23 Bn |
| Growth Rate | CAGR of 7.20% |
| Number of Pages | 220 |
| Key Companies Covered | Motorola, Samsung, Micromax, Oppo, Vivo, Asus, Xiaomi, Poco, Realme, Tecno, iQOO, OnePlus, Lava, Apple, Infinix., and others. |
| Segments Covered | By Cost of Smartphones, By Demographic, and By Region |
| Regions Covered in India | North India, West and Central India, South India, and East India |
| Base Year | 2023 |
| Historical Year | 2018 to 2022 |
| Forecast Year | 2024 – 2032 |
| Customization Scope | Avail customized purchase options to meet your exact research needs. Request For Customization |
India Smartphone Market: Regional Analysis
Northern and North Eastern states of the country to deliver optimal results during the projection period
The India smartphone market will be led by the Northern states of the country during the projection period. States such as Gujarat, Maharashtra, Himachal Pradesh, and Punjab are some of the leading contributors to India’s smartphone sector. Rural penetration of intelligent mobile phones is exceptionally high in these regions. For instance, over 96.01% of the rural population in Gujarat is equipped with smartphones. The same statistics for Punjab currently stand at over 91%. The most popular smartphones in India are owned by Samsung followed by Oppo and Vivo. These companies produce some of the most functionally-rich smartphones at reasonable prices thus meeting the needs of the regional population. Samsung held control over 18.01% of the total market share in 2023. In March 2023, reports emerged suggesting that Korean electronics giant Samsung was planning to invest in developing a smart manufacturing functionality at its mobile phone plant currently located in the Noida region. In July 2024, Vivo announced that it would soon commence the production of smartphones at its recently built facility worth INR 3500 in Greater Noida.
India Smartphone Market: Competitive Analysis
The India smartphone market is led by players like:
The India smartphone market is segmented as follows:
By Cost of Smartphones
By Demographic
- Working Professionals
- Students
- Senior Citizens
- Others
GenZ and AI: Shaping the future of Indian smartphone market
Twenty years ago, if someone had taken out a new smartphone in a college canteen, restaurant, airport, or any public place and taken a selfie or checked email- heads would have turned, and necks would have craned. It would have been nothing short of a page 3 moment. Cut to 2023, this head-turning device is now considered as hygiene. Within 2 decades, we all have started to become a part of data sets with a digital trail which is used for generative AI and machine learning to create a significant impact in our lifestyles.
Smartphones and Gen Z
India’s smartphone revolution is a phenomenon characterized by rapid growth and widespread adoption. In just a few years, India has become the second-largest smartphone market in the world. In a country of 1.4 billion, 52% of the population is made up of millennials and Gen Z. This forms a significant dominant demographic group for smartphone brands and marketers in India. Within this, Generation Z, born between the mid-1990s and the early 2010s, is the first generation to grow up with smartphones as an integral part of their lives. The Gen Z population is estimated to be about 300 million in India and is expected to play a significant role in shaping consumer demand.
Since this is the first generation to grow up with the Internet as part of their daily lives for shopping, working, and socializing, they have a digital life where they seek representation. Unlike millennials and older age groups, Gen Z values self-expression. Today consumers turn to the internet when looking for any kind of information, including news and reviews prior to making a purchase. They toggle between sites, apps, and social media feeds, each one forming a different part of their online ecosystem. Having grown up with social media, Gen Z curates their online selves more carefully than those in prior generations have, looking for more personalized feeds, and an online presence as they consume media online.
Why Smartphones
Gen Z uses different screens: smartphones, tablets, laptops, TVs, and desktops. According to an IBM study, 75% of Gen Z selected their smartphones as their device of choice. We are a mobile phone country first with an installed base of 650 smartphones which is the highest for all the screens. The portability and form factor acts as a bonus for smartphones which makes it the preferred choice for consumers. This coupled with one of the cheapest data costs in the world makes India one of the fastest-growing smartphone markets in the world.
Source: GfK Market Intelligence, Offline POS Tracking | Jan to September 2017 v/s Jan to September 2023
Source: GfK Market Intelligence, Offline POS Tracking | Jan to September 2017 v/s Jan to September 2023
Role of Artificial Intelligence in Smartphones
AI has emerged as a game changer in the world of smartphone technology. As per GfK’s Consumer Life Report which measures consumer lifestyle trends – 62% of Indian Consumers want technology that knows them and can make recommendations. Consumers want intelligent tech and that is where AI and generative AI play a crucial role in smartphone technology. From personalized recommendations to intelligent voice assistants, AI is deeply ingrained in the Indian smartphone experience. Some of the key areas where AI plays a role in our smartphones are
- Personalisation
- Voice Assistance
- Camera Enhancements
- Language Support
- Predictive text input
- Health and Wellness
And it blends into the usage of smartphones by Gen Z. Some of the key uses of smartphones where AI now plays a very important role are in the realm of
- Content Creation: This is a generation of content creators. They leverage AI-driven photo and video editing tools to produce high-quality content for platforms.
- Learning: Ai-powered educational apps and platforms are transforming the way Gen Z students learn. These apps offer personalized lessons, assessments, and instant feedback. Post-pandemic, this has gained more significance, especially in the wake of always on the move lifestyle.
- Social Media: AI algorithms shape the content and advertisements that Gen Z sees on their social media feeds. This generation actively participates in trends, challenges, and influencer culture on platforms.
- Shopping: Consumers are increasingly using AI-driven e-commerce platforms to discover and purchase products. Features like visual search and product recommendations play a vital role in their shopping experience.
- Entertainment: Whether it is content that one watches or music one hears, what we hear and watch shapes what one further uses for entertainment. AI helps to curate personalized music through music apps on smartphones.
How is this impacting Smartphone features in India
According to GfK Consumer Life Report, “It is better to buy well-known brands because you can rely on Quality” – 45% of Indian Urban consumers surveyed who agreed with this were GenZ.
As consumers, especially Gen Z, and millennials consume more and more data and use smartphones for complex daily tasks, the feature sets used in smartphones are also evolving. This is keeping brands on their toes as they try to understand consumer usage and try to answer the big question- which are the perfect set of features in a product? From the basic form factor of smartphones: Bar, Flip, or Fold to where important buttons on a smartphone should be placed in order for the user to reach them directly with one thumb, to the optimum screen size for the full experience, every feature on a smartphone becomes very important in order to maximize usage.
Product features and design play a critical role in the buying decision of a smartphone. This has led to an increase in high-performance features of cameras, RAM, fast charging, etc. in smartphones. To give an example, an average smartphone today carries 100 times more computing power than the lunar module of Apollo 11 in 1969.
Source: GfK Market Intelligence, Offline POS Tracking | Jan to September 2017 v/s Jan to September 2023
The 5G network is poised to make a sweeping change in how consumers use smartphones and what they use them for. Gen Z will be the focus segment for 5G devices and networks since this will complement their lifestyle and usage of smartphones. As operator networks get geared up for 5G, we see brands already launching 5G-compatible devices. As per GfK Market Intelligence, Point of Sales Offline Retail Tracking for India, the contribution of 5G devices is ~40% in the offline market and is expected to peak by the end of 2024. The very fact that the switch to 5G devices in the market is faster than the switch from 3G to 4G tells us about the critical role being played by GenZ in driving the usage of smartphones and its ecosystem.
In short, the new smartphones are powerhouses which are literally a window to the world to today’s user.
With such powerful devices and intelligent tech to help today’s Gen Z, what can go wrong? Many things.
Understanding the consumer and Challenges of using AI
The reason why AI has been so effective till now is that we have large data sets of usage in the digital world and engineers have been able to feed this to AI systems for them to understand, learn, and then come up with solutions that make life easier for consumers. However, there are still challenges that brands and marketers face:
- Privacy: The use of consumer data has raised many concerns about privacy, especially with Gen Z.
- Sustainability: As we use more powerful processors, more RAM, and batteries, smartphones start producing more electronic heat which adds to Global warming. Effective recycling of smartphones is still a big concern. For Gen Z this is a touchy topic and hence sustainability becomes very important for them.
- Identifying Trends: One of the important trends identified with Gen Z is their trait of embracing their unique self and challenging norms more than any of the previous generations. This raises challenges for marketers since this means it is difficult to study their trends. What hampers marketeers is also the fact that there are not enough Gen Z marketeers.
- Cultural Sensitivity: The unique nature of India also means that cultural sensitivity becomes very important.
As we come out of the pandemic and move into the next level of growth for smartphones in India, the question that would come is what’s next for smartphones, what part will Gen Z play in this, and the role of AI.
What’s Next for Smartphones?
As mentioned before, smartphones are a consumer’s window to the world. What this means is that it also becomes one of the most important touchpoints for marketers and brands. Let’s look at some of the key parameters that would be instrumental in driving smartphone growth and usage in India in the next 5 years:
- Feature Phone shift: India still has a huge base of 250 million feature phones which will shift to smartphones. A large chunk of this shift will be influenced by GenZ as their online-first lifestyle will drive this change. This will give marketers an opportunity to tap into this segment.
- Growth Driven by Lower tiers: in the last few years we have seen growth in smartphones being driven by Tier 3 and lower tiers, including rural as tele density in Rural India grows. Today there are more internet users in Rural India than in urban due to the ratio of the population. The growth in Rural is led by changes in the aspirations of GenZ and millennials and increasing affordability in ownership of a device.
- 5G shift: As chip manufacturers and brands are ramping up production of 5G devices, the cost of 5G phones is also reducing, making it more affordable to consumers.
- Use of AI: The use of AI in smartphone apps is helping Gen Z to create more and better content and aiding them to make better decisions in their busy lives.
- Performance features: With the changing usage of smartphones, there will be an increasing use of performance features like better camera, RAM, fast charging, etc which will play a significant role in shaping up growth and usage of smartphones.
With India poised to become the world’s largest smartphone market in the near future, the role of India’s youth and AI will be very critical and will play a key role in shaping this industry. As AI becomes a part of our lives, don’t be surprised if the suggestion of your next smartphone comes from an AI.
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