India Surpassed the USA to Become the 2nd Largest Smartphone Market in the World | Hacker News Reader

India Surpassed the USA to Become the 2nd Largest Smartphone Market in the World

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100 pointsnotlukesky38 comments

Internet Era has just begun in India. More and more 1st-time internet users are joining the wave.

Thanks (Or maybe no thanks because they created a monopoly in telecom sector) to Jio for making the Data rate too cheap and to manufacturers like Vivo, Xiaomi, and Oppo for making Smart Phones available at a cheap rate.

(Less than 1$ for 2-3 GB.)

Too cheap? Why is it a problem?

For one, most major telecoms have folded beside airtel. Rest of them are shrinking or have merged.

Jio is a short term gain over long term problems most likely as they have started to creep up, internet speeds are once again abysmal, censorship and surveillance (why do jio apps collect so much data and need so many permissions?)

Jio is when you can cannibalize an entire industry in a few years just because you have money to give out for free until everyone switches. I think India is pretty great for this kind of plans as you can see, they are quick to switch and have no loyalty to anything. If you can kill out all the competitors before they can compete, you win.

Arguably, jio has improved many things and is a net positive so far but not for long enough. I won't claim anything on the specifics of government having connections with jio.

It’s a higher risk than you might think as new competitors can enter the market after they have lost their cash reserves and gained a bad reputation. That requires spectrum which might be an issue, but they are raising prices before their competition is bankrupt.

Not in the telecom industry where it's pretty hard without A LOT of money and political power even when jio started. They also had previous experience and size to pull it off.

They aren't going to make it easier for new competitors now.

> Jio for making the Data rate too cheap

> (Less than 1$ for 2-3 GB.)

Cheap is not the same as affordable. 1$ in India is equivalent to ~18 US$ [0].

[0] https://data.oecd.org/conversion/purchasing-power-parities-p...

I wish it was that affordable then.

Signed: A Canadian

Actually these numbers are misleading - actual rates are much lower. For example, Jio has a Rs. 149 (2.1 USD) plan for 24 days for 1 GB per day. That works out to about 10 cents for a GB.

Well, it's not a monopoly by any stretch. Market share - Jio - 32%, Vodafone Idea - 29%, Airtel - 28%, BSNL - 10% as of Nov 2019.

Yes - the incumbents (Vodafone, Airtel) have suffered a loss of market share and revenues / profits. Serves them right for keeping data rates high and not investing in modern technology when they had the money and market share to do so. I am sure customers in other markets would wish for real competition like this.

The situation is much more complex than you describe. The telecom sector has been has been hit with arbitrary regulation and tax laws that have disproportionately impacted existing players.

One of the reasons Vodafone has deferred investing is because of uncertainty around the massive tax burden in a 16-year long tax dispute because of a rule the telecoms department made up referred to as “Adjusted Gross Revenue”, which all providers appealed in the courts over years (and lost). It’s a huge tax that significantly eats into providers’ ability to invest. Faced with it, most other providers have simply exited the market.

To add to this, the regulator is hand-in-glove with Reliance Jio, which is the new kid on the block and very well connected politically. Some background: https://thewire.in/tech/reliance-jio-telecom-regulation-trai...

Unsurprisingly the only mobile service provider doing well is the one which is well connected politically. Now the government is waking up to the shit-storm its policies have created, and are considering tax deferments for the existing mobile providers.

In short, mobile services’ regulation in India has been very poor. And the outcome is that from 6+ healthy telecom companies, there is now one healthy company, one scraping by, and one ready to quit.

I don’t believe customers in other markets would want this outcome.

Its important to distinguish between internet users and internet consumers. Only India 1 (115 million) have the money to really spend, they are consumers. India 2(approx 450 mio and are those who in large parts work for india 1) have older smartphones or feature phones and only some of them have money to spent.

A lot of bad vc investments didnt make that distinction and got hurt.

None the less lots of opportunities there for thos who can find products or services india 2 can afford.

Is there a formalization of the Two Indias concept in the economic literature or market reports?

I assume “India 3” would be the other 500+ million?

I was wondering the same. As the numbers didn't add upto the population.

Yup India 3 is the rest.

Is the market also segmented by language community?

Actually it's not that bad compared to some of the other countries. While we do have too many regional languages and dialects across states, people are usually bilingual.

115million approximately speak English sufficiently (India 1) India 2 is more a mix of some speaking a little English but mostly some regional language. There are 3-4ish big ones.

India 3 (the remaining) is almost purely regional languages (+20)

Hi,

I am curious to know if this distinction exists in literature. I, for one, am not familiar with this distinction. There are different market segments to which people belong as in any other country and their proportion may vary starkly compared to well-developed countries for example. But the distinction you are making is very new to me.

Some about it here. I am looking for another repport i read a while back.

https://www.mckinsey.com/business-functions/mckinsey-digital...

https://www.mckinsey.com/~/media/mckinsey/business%20functio...

Hi,

Thank you for these pointers. I read through the article and I couldn't find the distinction that you made. Maybe I missed it. Could you please help me see where it appears ?

Hey,

I am looking for the article that speaks about it.

I first learned about it in this podcast

https://technode.com/2019/01/28/71-the-chinese-takeover-of-t...

But there is a more in depth article I am trying to find.

A few interesting things about India 1 and 2

India 1

150-180 Million

Internet Consumers

Speaks English

$1 Trillion Market

Unlimited Data

Expensive Smartphones

Wi-fi at home & office

24/7 connectivity

Earning an average of Rs 30,000 a month.

India 2

400 Million

Internet Users

Speaks local languages

Serves India 1

Send money home.

Care about education of their children.

Earning an average of Rs 7,000 a month.

Second hand smartphones/feature phones

Buy data pack

Interestingly, India1 almost exclusively speaks English, and essentially 'Anglo-Saxon' in culture. It's unsurprising that business models targeting India1 (or indeed any model, be it 'development', 'education') almost never scale for the rest of India.

It's rather sad that after 70+ years of 'independence', the country can't seem to shake off its servile colonial mindset. The 'nationalists' in power are no better in this regard - indications are that they are infact worse.

The caste system existed long before India was a colony

Servile? It's a genuine aspiration for them. India has a lot of corruption and replacement. Living in a beautiful stable place where you can have wealth and spend wealth without worry is a valuable goal.

So, being rich and educated is bad because apparently you think they're acting like slaves, but being traditionalist is also bad?

This is great news for India as more people are gaining access to the Internet. However, this is only one side of the story. The ARPU (Average Revenue Per User) in India is around 72 INR which is approximately 1 USD per month. For the US, it is approximately 50 USD per month. This figure makes a big difference as far as the revenue opportunity is concerned. This affects telecom operators a lot more than mobile phone manufacturers. India is also one of the fastest growing economies in the world. It is expected that not only more people will come online but also the per capita income will grow rapidly that will make it more lucrative in the future.

Is that $1 or $50 only the user's cost of the service (for calls and data), or does it also include spending on apps, in-app purchases, paying a debt on the phone and so on?

If it's just the service, $50 seems very high for an average. The most expensive phone service contract I can find here in Denmark is $45.

Depends what kind of service you want. Best coverage and minimum throttling is $70 to $80 per person (Verizon and ATT). Being on family plans can bring it down to $40 to $50 though. Minimum is $30+ on Sprint or T-Mobile.

I guess a lot of it is the difference in population density, but that does seem expensive. In the UK, you can get top-level coverage (O2's network) 80GB 4g with unlimited calls/texts for £20/month (~26USD). I currently pay £10/month for 6GB, which is a lot worse value per GB, but more than covers my needs.

Pretty easy to get cheaper deals too when you've been a customer for a few years.

I pay £5/m for unlimited data, 600mins, unlimited texts on Three. I know I've been super lucky with that deal in particular.

I suspect in the US, how much you pay (or who you are) determines your priority on a congested tower.

Keep in mind the USA is huge and much less densely populated than India. Think of India as 4x the population of the USA in 25% the space. You need much less physical infrastructure to serve the population in India.

This has been fueled by cheap internet rates promoted by Jio and followed by other players in the market. I really appreciate this development as this gave access to countless business and introduction/improvement of few others too. However, I am worried that this development has been led without proper framework to tackle issues like privacy, fake news, surveillance etc.,

Indian cellphone market is dominated nearly completely by Chinese brands

Which companies stand to gain most financially from this growth in a new market?

If you have an app that solves something we take for granted in the West, and the initial cost barrier is very low, you have a great business model for the Indian market.

When WhatsApp cost $1 per year it had a terrific business model for the emerging markets. Now that it’s free Facebook is complaining that they don’t make enough money.

IMO, it’s the ones that have a lean, low cost, low price, high volume model for their products or services. India is a highly cost sensitive market and there’s hardly any kind of customer stickiness that can be taken advantage of. Even mobile number portability has huge numbers reported every quarter where people switch, while retaining their phone numbers, between the four main providers (among which three are in doldrums) who have survived the brutal costs and truly ruthless competition.

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