Give Me A Smartphone, And I Shall Move The World

India's mobile revolution

Give Me A Smartphone, And I Shall Move The World

The rate of tech adoption in India is fundamentally changing the economic landscape -- primarily enabled by the increasing use of smartphones, which have seen phenomenal growth thanks to low-cost handsets and cheap data.

To give some perspective on India’s 650 million mobile phone users in 2017, some 300 million fell into the smart category. And the kicker? The country’s still comparatively low smartphone penetration means that there are hundreds of millions of more users to come.

Empowering India's population

The socioeconomic effects of this are wide-ranging, and particularly exciting in its empowerment of India’s large poor population. Take healthcare for instance. In a country where the national system is falling short, thus forcing many to make out-of-pocket payments to private providers with little transparency, there are apps with which people can compare the price of medicines directly on their phones. Or education, which is hobbled by the country’s acute shortage of qualified teachers. Here too, so-called ‘mobile-learning’ apps are proliferating at a rapid pace, giving children and students access to an impressive range of educational tools. 

India's smartphone leaders

From an investment perspective, there are many direct and indirect beneficiaries of India’s mobile revolution, most obviously the handset makers themselves who are salivating at the growth rates displayed. Samsung Electronics has been the market leader for many years, capturing close to one-fourth of the smartphone sales in 2017 (see chart). 

 

 

As for the competition, China’s Xiaomi is hot on its heels, with three other Chinese players taking the third, fourth and fifth spots. However, Samsung hasn’t been resting on its laurels, last year announcing a significant investment in its key Noida plant in Uttar Pradesh.

Notably, all of the top players have local manufacturing footprints, which means that they aren’t subject to tariffs on imported smartphones. These duties – part of the government’s ‘Make in India’ plan – have been a real stumbling block for other global businesses such as Apple, last year forcing it to change course and start production of its iconic iPhone in the country.

Smartphones enabling explosive growth

Of course, there’s more to the story than handset sales. With hundreds of millions of Indians now possessing what are effectively handheld computers, areas such as social media, e-commerce and fintech are seeing explosive growth too. Indeed, we would argue that we are now at a point where it is well-nigh impossible to think about investment opportunities in India without factoring in technology – and the smartphone is a central protagonist in this story.

Chart source: Statista, International Data Corporation. Top five smartphone companies by unit sales in 2017.

 

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