Qualcomm Sees Strong Growth Opportunity in India
India: The next big Smartphone market
The Smartphone trend is shifting away from premium phones to mid- and low-tier phones. Similarly, Smartphone shipment growth is slowing in other countries but rising in India (INDA).
According to a research report by Morgan Stanley, Smartphone shipments to India are expected to grow at a CAGR (compound annual growth rate) of 23% to 192 million by 2018. India will account for 30% of this global growth and 11% of global Smartphone shipments in 2018. Qualcomm (QCOM) has seen this trend and is looking to tap into this market.
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Qualcomm eyes India as its next growth market
Qualcomm India’s president, Larry Paulson, believes that India is the second-largest mobile device market. In an interview with The Economic Times, Paulson explained that India has some unique factors that make it ideal for 4G (fourth-generation) and IoT (Internet of Things) growth:
- India has a higher proportion of young people than many countries, and there’s increasing awareness of Smartphone and related services in the population.
- Indian carriers such as Reliance Jio, Bharti Airtel, Vodafone (VOD), and Idea Cellular are accelerating their 4G network deployments.
- Local handset brands are active and popular in the mid- and low-range Smartphone space. However, local players trail behind international players in the high-end market.
- India has end-to-end hardware and software manufacturing capabilities that make it the supply base for several IoT products.
Paulson supported his statements with data. He said that India is the largest data consumption market, as 80% of Internet traffic is mobile, and this traffic is transmitted over 400 million Internet connections. He expects 3G (third-generation) and 4G mobile connections in the country to reach over 540 million, with a unique mobile subscriber base surpassing 1 billion, by 2020.
Low penetration makes India ideal for 4G
Morgan Stanley’s research report shows that only 18% of India’s population, or 225 million people, have Smartphones. Within this subscriber base, less than 1% of people have 4G Smartphones. The consultancy company expects 75% of the 170 million Smartphone shipments expected in 2018 to be 4G Smartphones. James Cathey, senior vice president of Asia Pacific & India at Qualcomm, sees significant growth potential for 4G feature phones in India.
India’s strong growth potential has attracted Apple (AAPL) and Chinese handset makers as well. According to IDC (International Data Corporation), 51.4% of Smartphone shipments in India in 1Q17 were from Chinese handset makers.
Next, let’s look at Qualcomm’s strategy to tap the Indian market.