India is on the cusp of a full-fledged digital revolution. The industry bodies predict that in the coming months the internet usage is going to escalate impressively with the rural areas showing higher growth rate as compared to the bigger cities. Interestingly, this will boost the adoption of smartphones not just in the class A cities but also in class B and C cities as more and more users will opt for a smartphone rather than the PC as the web access device.
The Federation of Indian Chambers of Commerce and Industry (FICCI) and KPMG International in March this year have estimated that the number of internet-enabled smartphones in India would reach 24 million in 2012, more than double the level of 2011. “In India the usage of mobile phones is very different. We see the metros having a larger concentration of smartphones, while feature phones still remain the first choice for people in smaller towns. But we expect that as the prices of smartphones come down and the telecom packages become more affordable, the young generation in the smaller cities and developed rural areas might opt for low-end smartphones,” explained Anuj Khanna Sohum, founder & chairman, Affle Group.
In fact the growth rate that has picked up this year is projected to continue to grow through 2016. FICCI/KPMG also say that internet connections will shift from fixed to mobile over the next four years, with mobile internet hitting 392 million connections in 2016, dwarfing the 51 million fixed connections in that year.
According to a report by eMarketer ‘India Online: Defining the New ‘Digital Class’ despite the growth momentum substantial obstacles remain for the market to become truly evolved. The report stated that right now the country can best be described as a place of vast, untapped potential. “Internet penetration in India remains quite low, at just under 9% of the population, but due to the country’s massive population, it trails only the US and China in terms of total internet users. While recent economic growth has helped develop a wider middle class, a sharp divide remains between India’s haves and the have-nots, with the economies of the most populous cities, often referred to as the “metros,” outpacing those of rural areas,” eMarketer report explained.
This gap is reflected in internet usage. The Internet and Mobile Association of India (IAMAI) had reported that in June 2012, 71% of “active” internet users—80 million—were in cities, while the remaining 31 million lived in rural areas. However the association projected that that the number of active internet users in rural areas will climb by 7 million between June and December 2012, to reach a total of 38 million. By comparison, the number of active internet users in cities will jump by just 4 million over the same time period. This shows that urban markets have reached a certain level of maturity.
Giving an insight into the reason why need for internet access will drive smartphone growth and vice versa, Sohum said that now the users in smaller towns and rural areas have got net savvy using desktops and PCs, and are ready to move into the next phase of web access. “There is higher level of awareness among them and they are willing to spend on mobile devices that will offer them better anytime, anywhere access to the Internet,” he added. eMarketer report further stresses the fact by stating that mobile devices will supplant PCs as the primary means of accessing the internet which means that smartphone ownership will make significant inroads over the coming years.