Segmenting the market based on mobile behaviour is an exciting but very complex task. A mobile phone means different things to different people; it plays myriad roles in the lives of people. To some it is business tool, to others an entertainment device to yet others a way to keep in touch with their friends and relatives. In fact, surveys have shown that some users would rather give up their PCs than their mobile phones. There are several devices the Smartphone has already replaced today like portable music players, landline phones, digital cameras, radios, gaming devices. Tomorrow it could be your wallet, your identity.

The Indian market is also very heterogeneous in terms of disposable income. Top 10% of the Indian population which would be roughly 20 million households have 34% of the total income. Out of the total 220 million households in the country, over 150 million have annual income less than Rs. 90,000. This severely restricts the revenue generation potential per household though there is strength in numbers and even at an ARPU of Rs. 50 or less it adds up to a large revenue base. On the other hand the top 50 million households have a higher elasticity of demand and have the disposable income if presented with the right products and services. This is exactly the market segment that should and will witness the highest growth due to the Smartphone revolution.

The Smartphone base in India is about 8-9 million users. This is quite low considering the overall mobile base globally but however the scenario is expected to change very rapidly.

The Smartphone base in India is about 8-9 million users. This is quite low considering the overall mobile base globally but however the scenario is expected to change very rapidly. While global phone shipments showed a decline this year, the Smartphone market actually showed double digit growth. The Smartphone wars are keenly fought by the handset vendors and watched by the overall industry and get a significantly higher proportion of attention as compared to their volume share. This is probably because in the next 3-5 years, the Smartphone penetration is expected to increase fivefold.

This is not so implausible given the fact that hardware continues to get roughly twice as better every year and you have equally capable software to go with it. And we all know which direction handset prices are headed. So in the next 3-5 years, majority of feature phone users will be able to afford what is referred to as a Smartphone today. So in some ways, studying the current Smartphone market will give an indication of what a significantly larger number of people will be using their devices for, just a few years from now. Another driving factor for Smartphone growth is the increased adoption by OEMs of operating systems that allow third party software development. With Symbian, RIM, Google, Microsoft, Linux and of course Apple fighting it out, one would see larger and larger number of handsets eventually running one of their OS. This has also opened up the market for mobile applications that vastly improve the usability and utility of the mobile device which then becomes your window to the world of products and services. Let’s look at the Smartphone usage trends we are seeing in India currently.

Mobile Internet usage has grown at a scorching pace and for several users, especially in the emerging markets; their first experience of the web is through a mobile phone and not a PC. The impact of an excellent user interface on usage is well known. A case in point is the iPhone, which generates several times more mobile internet page views than its unit share in the market. But other Smartphones too attract a disproportionately higher share of web traffic vis-à-vis feature phones. On the mobile web, search, social networking and mail emerge as the top categories. Dating, financial services, sport and adult content websites too get a fair share of usage. More time on Smartphones is spent on entertainment (music, video and gaming) than is spent on voice/ sms communication. Applications are yet another way to turn the already ‘smart’ phone into an even smarter device and users are taking full advantage of this functionality. Usage of such third-party applications is yet another trend amongst Smartphone users. Users of basic feature phones don’t enjoy this benefit.

Better quality networks would obviously augment the mobile web experience and prove to be a major catalyst for use of the Smartphone functionality to the fullest. The advent of 3G in the country will undoubtedly open up significant opportunities for data services as has been the case in other markets. The challenge now would be for service providers to segment the market, understand usage trends and user preferences, identify the right opportunities, create the right value proposition and design a seamless user experience leading to effective monetization of the opportunity.