asp: Coming out of the COVID-19 pandemic, Indians are spending more on mobiles
India’s festive shopping season this year kicked off during the first week of October when online retailing giants Amazon and Flipkart announced their ‘Great India Festival’ and ‘Big Billion Day’ sales. The season will end on November 4 with the Diwali festival.
Counterpoint’s analyst Prachir Singh said due to the pandemic, the consumers may have accumulated savings, which will drive them to opt for a higher-priced device. “India smartphone market ASP has constantly been increasing. The market crossed the monthly ASP of $200 in October 2020 and has been maintaining the trend. During the last festive season, the smartphone market ASP grew 7% month-on-month,” Singh said.
“We believe that the market will witness growth this festive season as well, which may lead the market ASP to cross the $240-mark driven by attractive promotions and offers during the festive season, helping the OEMs and channels to push the premium segment devices that boost the ASP,” Singh said.
He added that the ASP is also driven by multiple financing schemes and options focused on affordability. “Smartphone upgrade plans have seen a growth in adoption. Also, no-cost EMIs make the premium devices affordable for mid-segment consumers.”
TechArch founder & chief analyst Faisal Kawoosa said as against the annual ASP of around ₹15,000 ($200), this festive quarter, people are likely to buy smartphones with average pricing a little over ₹20,000 ($267). The main reason is that the market is primarily driven by replacements, which in case of smartphones, is actually upgrades.
“People, upon changing their smartphones, spend between 15% and 30% more on the new purchase. In India, we have more than 70% of users owning a smartphone of less than ₹15,000, which is the ASP. Now, these users when they go for an upgrade are buying costlier phones to scale up for better performance, which primarily comes through going for higher specs,” Kawoosa added.
Market tracker IDC said the higher ASPs were also due to the higher priced 5G phones and price hikes taken by brands.
“The growth is not demand driven rather is supply led. “5G model launches and overall price hikes by brands due to component shortage and supply chain challenge have led to the ASP increase,” Navkendar Singh, research director at IDC, told ET.
Singh added that consumers and handset brands do not have much choice. “Handset brands are forced to increase prices and consumers do not have great choices at low price points.”