Smartphones rising

Earlier this month Ovum Analyst Adam Leach wrote that, “the global economic downturn has stimulated a renewed focus on smartphones. The collapse of the market for mid-tier handsets in 2009 is polarizing the handset market, with vendors and mobile operators focusing on two types of handset: those targeting the low-end and high-end segments. The end result is a quickening of the replacement of 2G in favor of high-end 3G handsets, and greater volumes of smartphones.”

Leach had also predicted that smartphone shipments would grow by 18.7% between 2008 and 2009 despite the overall mobile phone market taking a hit in the same period. Smartphones would continue to grow at a CAGR of 19.5% through to 2014, at which point they would account for 29% of the total global handset market. In the Asia-Pacific region, smartphone shipments are forecasted at 52 million in 2009 (30% of the global total), growing to 142 million in 2014.

In comparison, IDC figures for smartphone shipments in India appear small at about 4-5% of the market which works out to about 4 million in 2008. The question remains, will India follow the rest of APAC and in fact the rest of the world in ditching feature phones for smartphones?

As of now the pricing of smartphones has been a sticking point with a fully loaded device costing Rs 25,000-35,000 (although there are entry-level smartphones that retail for Rs 12,000-15,000).

Then there’s the fact that telco data plans have been priced on the higher side. Vodafone has a 500 MB data plan for Rs 499/month and that’s typical of the private operators; BSNL does have an unlimited GPRS option for Rs 199/month but it is the exception; 3G pricing has also been on the higher side so far with a 1 GB data plan from BSNL costing Rs 400/month. 1 GB may seem like a lot but at the faster speed of 3G that should be about a fortnight’s use even if you go light on the YouTube videos and streaming music and what have you.

Despite all of this, starting 2010 I expect smartphone sales to start taking off in India for the following reasons.

The mobile market is maturing. Pretty much everybody has a basic handset and people who have feature phones will start realizing the limitations of the same and start eyeing entry-level smartphones that let them install applications and surf the Web and check their e-mail on the move.

3G on the handset is available only from the state-run telcos at this point. While Reliance and Tata Indicom both offer EVDO data cards, neither offers 3G on the phone yet. For private operators to do that, spectrum has to be allocated.

In any case, the value proposition is higher in 3G’s case. You couldn’t do a lot with GPRS but 3G opens up things a bit from the multimedia perspective and looking at the success of ringtones, ringback tones etc. it should get its share of adherents.

Smartphones are getting better all the time and the major device vendors all have plans to build application stores to copy Apple’s success in the US. Whether they will succeed in their endeavors remains a question mark but with telcos also eager to sell applications/games/ringtones etc it’s quite likely that at least one/two of these efforts will succeed.

On the whole I am bullish about smartphone usage picking up in India and it’s going to mean that we are going to be a more connected nation.

For the past couple of weeks there has been a fair bit of buzz building around Microsoft’s upcoming freebie anti-virus named Morro. Here’s my take on this:

• Microsoft already offers anti-malware for free through Windows Defender (comes with Vista, free download for XP). This is just an extension of the same.
• There are lots of established free for personal use anti-virus, anti-malware applications that are popular. So Morro will not really make a huge change to that scene.
• Corporate usage of anti-virus applications has always been for-fee and I doubt if any company is going to risk its assets on a free offering.

Morro will find users in the home/SOHO segment and if it can help bring down the number of infected PCs that are corralled into botnets, well, then I say more power to it.

This week I happened to read yet another prediction that we will have to kiss Moore’s Law goodbye in five years time. This is not the first time that I’ve read such predictions and so far they’ve always been proved wrong. People making such predictions like to compare technology to other industries such as the railroads but they’re wrong. You never had the kind of exponential change in any other industry on the scale that we have seen in IT over the past three decades. I think that Moore’s Law will continue to apply for the foreseeable future which is at least a decade from now. Beyond that, all bets are off.

prashant.rao@expressindia.com