Spec Cents: Selling Phones in India
By: Omar Zahran
Tags: Gadgets, Pricing Strategy, Technology, Business, Smartphones

Image Credit: Elle via Unsplash

When I was in middle school, my school would have a multicultural day once a year. The event was a great way to experience where all of my classmates were coming from. Living in New York ensured that there was always a diverse representation from all over the world and the event would always open my eyes up to different food and traditions that were so different from what I lived in my own life. Having these days every year in school is a contributing factor to me being naturally curious about other cultures. In the current world we live in, the internet has made the world so much smaller than it used to be. Through social media and various other online tools, we can get a pulse on how life in other countries actually is.

This global exposure has also shown me how different areas market product as opposed to here in the United States. The differences can sometimes be very stark and is a commentary on how companies have to navigate cultural differences in order to be successful internationally. Beyond simply adhering to cultural norms such as those in the far east, there is something to be said for understanding how culture can dictate priorities of a population in one country compared to another. One such situation that has always fascinated me is the development of smartphones in the Indian market and how much it differs in the way of priorities from Western markets.

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The Growth Market

Most people today feel that the smartphone has plateaued. That there is no longer any growth in the segment since everyone already has a smartphone, the sure sign of a mature product. While this may be the case in the US, this is absolutely not the case in India. The country is still seeing year over year growth in smartphone sales. This is why the country has become such a priority for so many smartphone manufacturers in recent years. In many ways the country is the last frontier for industry dominance much like the Gold Rush in the United States in the mid-1800’s. Recently, the country overtook the US as the second largest smartphone market behind China and it has been given a new level of priority in terms of marketing, manufacturing, and scope.

The dynamics in the country are unique as India is a developing country that is increasing its manufacturing capacity and is also a growth market. The mix of this has led many Chinese smartphone manufacturers to set manufacturing facilities in India to aid this growing demand for smartphones while enhancing the country’s economy due to favorable workplace policies that were instituted by the country. The benefit of this has led to lower smartphone prices as the result of reduced shipping and supply chain complexities, which has also led to the increasing demands of the Indian smartphone consumer.

Whenever a new phone is announced in the comment section there are bound to be a few commenters who live in India saying how the price is too high for a phone made by Google, Apple, or Samsung and that the Xiaomi Pocophone or new device from Redmi or Realme offer better specs for less. Here in the west, we don’t know of these brands and would likely never consider them because they lack proper name recognition. This is where the difference lies between India and the West: in the west we value reputation and brand, in India it is all about specs and nothing else.

When Samsung comes out with a Galaxy phone with the latest specs and charges roughly $1000 for it, we here in the US don’t think too much of it. This is because we respect Samsung as a brand and feel that they have built up enough brand equity to warrant a $100 or so year over year price hike. In the Indian market, loyalty is a lot harder to come by. A $100 price increase is a deal breaker because there are so many other options in the market. Here in the US we have Samsung, Apple, Google, OnePlus, and maybe LG as options that are presented to us. In India, those companies are present in addition to brands such as Huawei, Realme, Redmi, Xiaomi, Oppo, and Vivo. That’s without even mentioning all the smaller homegrown Indian brands that sell at the low end in the country. A plethora of options is the situation in India, and all these choices lends itself to a lack of brand identity and loyalty.

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Specs Vs Identity

Here in the United States we engage in fanboyism a lot. We buy into a brand, buy into an ecosystem. We appreciate design and reputation, the reason why people buy iPhones and Galaxy devices is not that they are always on the bleeding edge but rather have just enough improvement to warrant the upgrade. There are certain aesthetics that we appreciate here in the western markets that can be characterized as more of a feeling than hard fact. There is an aura of chic to using an iPhone, using a Galaxy phone gives the user a feeling of appreciation for new tech and style. Google’s Pixel lineup is predicated on giving the mobile photography crowd the best pocket camera on the market. These are all emotional responses that these phones give us as users.

This is far from the case in India. There is a standard spec to price ratio in the country that has triggered a sort of race to the bottom when it comes to price. In 2020 that spec sheet goes something like this for an Android phone: SnapDragon 865 processor, at least 8 GB of RAM, at least 128 GB of storage, at least a 90 hZ refresh rate screen, and at least 3 cameras on the back of the phone. All of these specs need to be had for under $500 or else the phone is overpriced and not worth it. The Indian consumer will look at the Pixel 4 and instantly dismiss it because it does not check all of these boxes, whereas the new Oppo phone does so that phone wins the purchase. If Xiaomi has one upped Oppo the next time that a phone is purchased then the allegiances will shift just that fast. Loyalty lasts for as long as the price remains competitive.

Here in the West, we have an appreciation for software, for an accessory ecosystem, for optimizations that create the identity emotion response from our gadgets. In India, the phone is a tool and a tool that is price matched across the plethora of options available to the consumer. A company like OnePlus has understood this and took the necessary steps to be able to succeed in this new and quite volatile market. The company recently launched their new OnePlus 8 and 8 Pro internationally. When it was unveiled it was shown that the company would be increasing its prices to more align with the competition at the high end from Apple and Samsung. Many customers in India were immediately preparing to write off the company immediately since they no longer were competitive on price. It then came out that the Indian price would be roughly $150 less, and there was a sense of relief. OnePlus recognized the pulse of that market and knew that they needed to stay competitive on price in order to remain relevant in that country.

This is the challenge for companies trying to enter the Indian market currently. Name recognition will not be enough to ensure a level of success, neither is extended software support. The name of the game will always be price and making sure that the price is low enough to remain competitive with the competition. Here in the US we will always read tech blogs that complain about software that is overbearing with too many overlays and inconsistent design. The fascinating thing about the Indian market is that while there is an appreciation of great software, it is far from a priority.

Perhaps this is the result of an abundance of competition, but the Indian smartphone market in many ways is like getting into a nightclub. The spec to price ratio in many ways is a cover charge to even be considered for entry into this last hallowed land of opportunity for smartphone relevance. The market is incredibly difficult to gain penetration into, but it is also the most crucial market in the industry currently. Companies have to have multifaceted marketing and pricing strategies in order to be successful both in the West and in India. This is where companies like HTC have failed, by trying to establish and flex brand identity in a market that has very little time for such trivial things. In many ways, the nature of the Indian consumer is foreign to an American like myself. But in another aspect, it is encouraging to see the consumer able to dictate what the manufacturer must do to succeed at such an altering level. Much like the multicultural days from my childhood, I find myself enthralled and fascinated by the way that this market operates. If only more places demanded more from their companies in various industries like the Indian consumer has done with their smartphones.