Is the Govt killing feature-phone market for good?

The Union Government mandated a new rule that beginning 2018 all phones sold in India must have a ‘panic button’ and GPS functionality. The move is aimed at making lives of women safer however this may also wipe out nearly 40%--100 million phones a year—mobile phone market in India.

The development has however not gone done well with some mobile phone manufacturers. Indian Cellular Association (ICA), President, Pankaj Mohindroo, in an Economic Times report, said that the implementation of GPS in new mobile handset will not be in the interest of consumers at the bottom of the pyramid.

Four out of 10 mobile phones sold in India today are feature phones. These are phones with basic functionality and retail for as low as Rs 500 per piece.

Industry experts say that adding GPS feature phones will increase their cost by nearly 100%. Simply put, adding GPS could take the price of a feature phone to Rs 1,000-1,600. With the cheapest smartphone in India, with GPS functionality, retailing at under Rs 2000, the death-knell for feature phones market isn’t a fantasy anymore.

According to Neil Shah, Research Director – Devices and Ecosystems, Counterpoint Research, “Adding a GPS and related integration into the low-level OS in feature phones will be challenging as it could raise the phone prices by at least $2-$3 (Rs 133-200) and also put pressure on the battery life of the feature phones,” said Shah.

The GPS component alone is expected to cost up to Rs 66.4 ($1), while the required software and technical enhancement is expected to raise the cost even further, according to an Economic Times (ET) report.

Although, the feature phone market in India is already on its last legs, this move by the Government is only likely to act as a catalyst.

Shah of Counterpoint Research said, “By the time this new rule is implemented, the contribution of feature phones to the total sales will be less than 10% of the total sales volumes which will be mostly under sub-$20 price points. So it will very much depend if feature phones will phase out by then or this rule makes feature phones phase out."