Changing India – Surging Mobile Internet users in India

Mobile internet users in India is expected to increase from 159 million users in 2014 to 314 million mobile internet users by end of 2017. Number of mobile Internet users in India have grown exponentially due to combination of factors like low cost of device, decrease in cost of data and increasing smartphone penetration in India. Huge growth in mobile internet users in India is being led by increasing wireless connections and spectacular mobile phone adoption in India. Further, mobile market in India is characterised by increasing smartphone market and a decreasing feature phone market. I have discussed state of internet in China in my previous blog Chinese Mobile App Market. In this blog, I will be discussing state of internet penetration in India, particularly mobile internet and smartphone penetration in India.

Increasing internet penetration in India being led by surging smartphone users
 
 
 
Above image shows a woman in Mumbai watching a movie on her smartphone. For many people in India, mobile phone is only way to access internet.
 
India mobile internet market is one of the leading internet market in the world and it continues to rise higher and higher.  India has third largest Internet user base in the world with more than 50 per cent internet users being mobile only Internet users. But, there are huge chance of improvement in internet usage in India as internet penetration in India (19%) is quite low as compared to other developing and developed countries (Australia – 89.6%, USA – 86.8%, Japan – 86%, Brazil – 54.4%, China – 46%, India – 19.19%).


Growing Internet Users in India: Led by wireless connections

 

Total internet users in India was approximately 278 million by Oct 2014 and this user base is estimated to touch 354 million by 2015 and 503 million by 2017. The growth in mobile devices in India has become a key driver for increasing overall Internet subscriber base in India. Similarly, mobile internet users in India is expected to increase to 314 million by end of 2017 from existing 159 million mobile internet users in 2014 and thus registering a CAGR of 27.8% for period 2013 – 2017. 

Increasing internet users and mobile internet users in India

Rural India has largely been untapped market and thus has good potential for high mobile internet growth. Rural India had 61 million active users in 2014 and 6.7% of overall rural population (905 million) was active mobile user in 2014. Thus rural mobility is an area yet to be untapped and can be a great drivers of overall mobile internet growth in India. A suitable environment of government led initiatives, good 2G technologies, increased mobile device penetration, decreasing handset price and decreasing data tariffs rural mobility will drive the overall rural mobile internet growth story.

High speed Mobile Internet fuelling to mobile user growth in India

 
India has estimated 114 million, 67 million market and 4million 2G, 3G and 4G users respectively  as on June 2014. 2G user base is expected to decline with commensurate increase in 3G user base. Currently 3G users constitute 36% of overall mobile internet users in India and this user base  is projected to increase with an annual growth rate of 61.3% during 2013-17. The convergence of 3G tariff towards 2G tariff is the main reason for increased 3G user base in India. 4G has only started to set its foot in the market but increase in 3G and 4G LTE based user base augurs well for higher mobile internet adoption in the future.

Mobile Internet market In India

Mobile Internet ecosystem in India includes handset manufacturers, technology providers, content and service providers and telecom operators delivering service to the end consumers with the policy and regulatory environment impacting the entire ecosystem. Further, large of Indian mobile users are still uses feature phone even though feature phone shipments are on a slow but steady decline as can be seen below:
Increasing Smartphone users in India and decreasing feature phone users in India

The mobile internet landscape in India is very promising with key main feature being as following:

  • Increase in smartphone penetration with rural India still awaiting digital fortunes
  • Migration of mobile user base from feature phone to smartphone with easy access to low cost smartphone leading to increased smartphone penetration
  • Shift to high speed mobile internet with user base shifting from 2G to 3G and 4G LTE based service
  • Large investments in several aspects of mobile internet value chain
  • Innovative mobile based content and service offering from national and international players leading to increased demand for Internet based services such as chat, social media, video and music through mobile. This increased content consumption through mobile has also accelerated internet usage through mobile
  • Growth in mobile internet ecosystem led by leading OEMs launching low cost, value-for-money and affordable internet based smartphones and tablets at very cutthroat prices. Steady decline in smartphone price is narrowing gap between smartphone and feature phone price and making smartphone affordable to large number of Indian users. Further, arrival of international vendors esp Chinese vendors has also led to increased competition in smartphone market with array of smartphones available to end users at very affordable price
  • Premium segment smartphone market in india is led by Samsung but Samsung’s dominance at premium segment is seriously getting challenged by Apple which is leveraging desire for higher-quality devices by Indians. The main reason for Apple’s growth was successive iPhone 5s price cuts, despite its smaller screen and outdated hardware.

Shift from feature phone based user base to smartphone based user based and untapped Rural India, which have not yet reaped any benefit of digital fortunes, hold very promising future for overall mobile internet penetration in India.