Samsung to call it quits on low-value feature phones
South Korean smartphone maker Samsung plans to exit the high volume but low value feature phones segment in India. The move is aimed at increasing the company's focus on launching smartphones above Rs. 15,000. The last batch of devices for the country will be made by contract manufacturing partner Dixon in December. The exit will happen in the next few months or by year-end.
Why does this story matter?
India is one of the major feature phone exporting countries in the world, with exports worth Rs. 1,496 crore in FY21. However, Samsung's share in the market is a meager 12%. On top of that, the value such handsets generate is incomparable to premium smartphones. Samsung's decision to quit the segment will be an unexpected blessing for its rivals Lava, HMD Global, and Itel.
PIL scheme mandates company to make phones above Rs. 15,000
According to market experts, Samsung's decision to quit India's low-value feature phone business is linked to its participation in the government's production-linked incentive (PLI) scheme. Under the scheme, multinational brands are required to manufacture phones above Rs. 15,000 (factory price) to avail the benefits. People close to the matter suggest that Samsung will launch mostly such handsets going forward.
Samsung is behind Itel and Lava in feature phone segment
Samsung was once the leader in India's feature phone segment. However, now the company lies in third place behind Itel and Lava, which take the first and second spots, respectively. The shipment of basic handsets in India saw a 39% year-on-year decline in Q1 2022.
Samsung leads India's affordable premium segment
In the quarter that ended in March 2022, contribution of basic phones in Samsung's quarterly shipment was 1% in value and 20% in volume. In Q1 2022, the tech giant led the market in the affordable premium (Rs. 30,000-40,000) segment and was the top brand for 5G handsets. The company aims to capture the overall top spot from Xiaomi by concentrating on higher-value handsets.
