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Tier 2 cities drive new smartphone growth

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India’s 30 leading 30 cities made up approximately 51% of the entire smartphone market in the fourth quarter of 2015.
According to International Data Corporation’s (IDC) Monthly City Level Smartphone Tracker, New Delhi generated the maximum demand, closely followed by Mumbai.
With increasing appeal and penetration of the smartphones in smaller cities and towns, the tier 2 and 3 cities and beyond are expected to constitute a significant portion of the Indian smartphone market in the near future.
According to Jaideep Mehta, MD of IDC South Asia: “With increasing data penetration and enhanced reach of e-commerce, the smartphone consumers in Tier 2 and 3 cities is becoming more aware and demanding. They want a smartphone with latest the features & specifications, affordable prices, and convenient buying options.
“The coming 4G revolution is promising to trigger the next wave of smartphone growth with 4G enabled devices already overtaking 3G devices as the largest smartphone category,” he adds.
The 25 major Tier 2 &=and 3 cities of India currently make up around 21,3% of Indian smartphone market. Majority of the demand from these cities is for 3G models, but with increasing 4G smartphone model portfolio across all brands and expanding 4G network footprint by Airtel, Vodafone, soon to be launched Reliance Jio, the demand for 4G smartphones is expected to grow exponentially.
“There is a clear trend of migration from feature phones to low end smartphones in smaller cities and towns, making these markets the next growth engine for the smartphone industry. With the first time mobile phone users coming on a smartphone, it will be their only connected device which meets all of their internet and entertainment needs,” says Swapnil Bhatnagar, research director for IDC India.
Currently these cities are strongholds for Indian vendors with affordable smartphone models, making up more than two-thirds of the market for sub-$100 smartphones in these cities.
“But Chinese vendors like Lenovo, Motorola & Xiaomi are gaining market share in these cities due to their superior positioning as quality brands, with a value for money proposition,” says Swapnil.