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What’s Holding Back Smartphones in India & Brazil?

Was reviewing some old research reports and came across a Pew Internet study from February 2014 that talks about mobile phone and internet usage in emerging/developing markets. There is a lot of great stuff in this report. You can get it here. Looking at this report, I was struck by the low smartphone penetration in most emerging markets and the lag of Brazil relative to China, Russia and South Africa.

cellphones and smart owner in emerging markets3 of the BRIC countries are on this list, China, Russia & Brazil, plus the close cousin South Africa. Unfortunately, India is missing, but I was able to track down the stat for India from a reliable source.

  • According to IDC, India’s smartphone penetration is at 10%

So, we put this all together and we get:

  • Brazil: 15% market penetration
  • Russia: 23% market penetration
  • India: 10% market penetration
  • China: 37% market penetration
  • South Africa: 33% market penetration

For comparison, the US has ~70% penetration. Even though none of these countries are close to the US number, the penetration in Russia, China and South Africa is still impressive.

Seeing them all together, I realize that India is also lagging behind in penetration. I wonder why. My first hypothesis is that the lag is due to much lower per capita income making it harder or less-appealing for people in these countries to buy a smartphone.

Hypothesis: Because smartphone penetration increases as income increases, lower income BRIC countries will have lower smartphone penetration than countries with higher per capita incomes.

A little research lets me see if this is true:

CountryGDP per Capita (USD Current)
S. Africa6,618

-Data from the World Bank

So my hypothesis about income doesn’t explain both India & Brazil. It might fit for India, but Brazil is second only to Russia in GDP per Capita. Interestingly (but not relevantly), China & South Africa have similar GDP per Capita.

Other hypotheses:

  1. Purchase price of smartphones is too high?
  2. Cellular network coverage isn’t developed enough to support smartphones.
  3. Mobile internet usage isn’t at the level yet to “push” smartphone adoption.

I’ll be working on the purchase price hypothesis next.

Let me know if you have any other theories about why Brazil and India are lagging. We definitely see growth in shipments in these markets but the penetration seems out of whack with the other BRICs.

Cellphone & Smartphone Ownership table: Pew Research Center, February, 2014, “Emerging Nations Embrace Internet, Mobile Technology” 

Featured image courtesy of the ITU

Published in Working Blog

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