Feature phones could add some relief to a sluggish smartphone market

New research from Counterpoint Research points towards the feature phone as a possible saviour of the mobile industry over the next couple of years.

Although it may sound like a slightly odd claim, the research follows on from a Qualcomm announcement earlier this week after the launch of its 205 Mobile Platform, designed to bring 4G LTE connectivity and 4G services to entry-level feature phones. The theory here is that while smartphone growth is slowing, there might be a resurgence for 4G-capable feature phones in regions where such models are still commonplace.

Over the course of 2016, year-on-year growth in the sluggish smartphone industry decreased to 3%, though there are still roughly 1.3 billion feature phone users worldwide. In fact, 400 million feature phones were sold last year. As telcos aim to move the users to the cost efficient 4G networks, 4G capable feature phones with the core value proposition of VoLTE calls will provide a short-term opportunity for players looking to bump up profit margins.

The demand here will be in regions such as South-East Asia and Africa, where the feature phone is still commonplace, though networks are moving swiftly with the 4G revolution. Here, 3G handsets and users are being slowly squeezed out, while there are other regions where rural 2G networks are coming under threat as well.

India is a prime example, though Reliance Jio is one company whose efforts in rolling out 4G networks, while also offering attractive tariffs based on VoLTE, is enabling customers to move through to 4G. Smartphones may not be a realistic purchasing decision for a lot of these customers, but a 4G-capable feature phone fits the bill quite nicely.

Based upon these market conditions, the team at Counterpoint Research estimate 60 million units of 4G capable feature phones could ship across the course of 2017, with India accounting for almost 50%. In fact, the team estimate roughly 200 million 4G-capable feature phones could be sold in India through the next five years. This could account for a $6 billion industry in India alone.

Some manufacturers might turn their noses up at this market (no names mentioned), however there does seem to be a highly profitably opportunity for those who capitalize on the market quickly.