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Delhi-based professional Sutanuka Dasgupta spent about two weeks researching a phone last month. Her smartphone was about a year old and she wanted to change it. After speaking to friends, family and others, she decided to give up the idea, realising that her current phone would last much longer.

India’s smartphone users, once known for upgrading every six months, have started turning away from the market. A combination of rising prices and lack of incentives has brought upgrade cycles from six months in 2015, to 9-12 months in 2016-17 and up to 24 months in 2020.

According to experts, the time frame is 27 months now, and Tarun Pathak, research director at Counterpoint Research, said it might increase by another month or two by the end of 2022.

To be sure, the slowdown in upgrade cycles is a global phenomenon as well. In the US, the cycle is pegged at 33-34 months, but some of those markets have higher penetration of phones, and are more mature.

According to Pathak, consumers have increasingly been buying more mid-tier phones, which is why they hold on to the devices longer. He pointed out that phone firms make more trade-offs on mid-segment smartphones after the pandemic, in order to adjust for growing component prices.

Smartphone makers have been dealing with increasing freight prices and a global shortage of chips for almost two years now. Industry predictions say that this shortage could continue well into the year, and last till 2024 for some industries.

As a result, experts said that the emphasis on mid-segment devices has become an industry-wide strategy to overcome the shortage of components. According to Counterpoint Research, shipments of phones priced under 10,000 accounted for 30% of all smartphone shipments in the quarter ended December 2021, dropping by 5% year-on-year. On the other hand, shipments in the 20,000 and 30,000 segments accounted for 23% of all shipments and grew by almost 100%.

“There are not many smartphones in the 7,000-8,000 segment. Samsung and Xiaomi have almost vacated the space as it is difficult to do business and stay profitable in this segment.

Also, demand in this segment has shrunk," said Navkendar Singh, research director at IDC India.

Singh agreed that the first quarter of 2022 was lean, but said it isn’t an indicator of falling demand.

Instead, he said that “organic growth of smartphones" hasn’t been happening for “quite some time now", owing to lack of innovation and meaningful upgrades in newer phone models.

The trend isn’t limited to the urban or tier-1 markets either. Mudit Sethia, who runs a mobile retail store in Kishanganj, Bihar, said that the highest selling phones in his store are the ones priced between 13,000 and 20,000, as opposed to the 7,000-10,000 phones he used to sell pre-pandemic.

As a result, his customers are buying with EMI tenures that last for at least 9-12 months.

Singh noted that 2022 will be a challenging year for the industry.

“We don’t think even H2 will be able to salvage the market as it is difficult to top 160-165 million shipments every year," he said.

“The market might actually contract for the first time," said a top executive at one of India’s largest phone firms.

According to Singh, the only thing that could lead the market to grow in the next few years is 5G network connectivity, but it will take time for vendors to bring that to phones that sell at less than 10,000, due to growing component costs.

Many users are turning to the used or refurbished smartphone market.

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