Growing competition resulting in price reductions; the ease of access of content and language localization; government Incentives through “Make in India” and prevalence of internet-enabled services on smartphones are enabling exponential growth in the smartphone segment

1. WORKING SESSION:
RECRUITMENT BEST PRACTICES
MAY 2014
India Smartphone Market:
Witnessing Exponential
Growth
March 2015

2. India at the Cusp of Digitization
Vendor Overview
Smartphone Usage Trends / Use Cases
Agenda
1
Smartphone Adoption in India

3. 3
India is at the cusp of digitization, driven by mobility
254 MnTotal Internet
Users
2014 2019
Total Social
Media Users
Total Data
Traffic
121 Mn 262 Mn 17%
997 PB 4,081 PB
9%
(88 PB)
Expected to grow
by 67%
33%
631 Mn
>90%
(234 Mn)
>80%
(>100 Mn)
20%
CAGR
Footprints of Digital India: Mobile Emerges as a Pervasive Driver
Source: TRAI, Cisco, Statista, Business Today, Zinnov Analysis
%age represent: Mobile users as a percent of Total Users

4. India at the Cusp of Digitization
Vendor Overview
Smartphone Usage Trends / Use Cases
Agenda
Smartphone Adoption in India2

5. 5
Multiple factors are propelling the smartphone adoption at an exponential pace
in India
Immense
Competition leading
to Price Reductions
Ease of
Access of
Content &
Language
Localization
Government
Incentives
through its
“Make in India”
Prevalence of
Internet-enabled
Services on
Smartphones
1
4
2
3
>100 # of mobile brands in India
<$35 Smartphone launched by
Intex (Intex Cloud FX)
~65% Facebook users access
content via smartphones
Spice & Google launched India’s first
Android One Hindi smartphone
>90% Internet access facilitated
through mobile
>100% Growth in online purchases
through mobile in last 2 yrs
~80Mn
Investment by LAVA for
its own manufacturing unit
in India
Source: Business Insider; LiveMint; Medianama; Indian Express; NDTV Gadgets; Mobility India; Zinnov Analysis
₹
Drivers of Smartphone Adoption

6. 6
Smartphones, already outpacing the feature phones’ growth, are expected to
show a massive 36% CAGR over the next 5 years
Source: IDC; Avendus Estimates; Cisco; Zinnov Analysis IDC calculates sales of mobile handsets by tracking the number of handsets that leave the factory premises for OEM sales or stocking by
distributors and retailers. For imported handsets it’s the number of handsets that leaves the first warehouse to OEMs, distributors and retailers.
Smartphone vs Feature
Phone Shipment
23.3 22.514.9 18.417.1
~81 Mn Smartphone Shipped in 2014
51%
-21%
QoQ
Growth
Smartphones
Shipped (Mn)
78%
72% 71% 68% 65%
22%
28% 29% 32% 35%
Q4, ‘13 Q1, ‘14 Q2, ‘14 Q3, ‘14 Q4, ‘14
Smartphone
Feature
Phone
20142012 2013 2019P
651
140
67
29
Smartphone Users in
India (Mn)
36%
CAGR

7. 7
Smartphone Usage: Urban
(by Time Spent in Activities)
Browsing
Offline
Activities
Calls &
Messages
Online Apps
Large Metros
(Population: 40l+)
Mini Metros
(Population: 10-40l)
Tier-I & Tier-II
(Population: 5-10l)
18%
23%
27%
31%
29%
23%
18%
16%
15%
33%
33%
35%
Source: UNSTOPPABLE ! SMARTPHONE SURGE IN INDIA CONTINUES – Nielson (2014); IMRB’s Mobile Internet India 2014 report; Zinnov Analysis
Note: Nielsen report data is for 2013; 1Urban-Rural Split for Smarphone users has been assumed ot be same as that of Mobile Internet Users
Urban Regions lead
Smartphone Adoption in India
Smartphone users in Mini Metros and Tier-I/II cities match their
Large Metro counterparts w.r.t. usage of Online Apps and Browsing
Smartphone users in Mini Metros and Tier-I / II cities show an evolved usage of
smartphone, similar to Large Metros
29%
4%
Urban1
Rural1
Base: 905 Mn
Base: 409 Mn

8. India at the Cusp of Digitization
Vendor Overview
Smartphone Usage Trends / Use Cases
Agenda
Smartphone Adoption in India
3

9. 9
Home grown vendors though commanding a major share, are facing a stiff
competition from Chinese vendors
Samsung 22%
Micromax 18%
Intex 8%
Lava 7%
Xiaomi 4%
Others 41%
Smartphone Shipment by
Vendors, Q4’14
41%
Chinese
Vendors
35%
24%
Indian
VendorsMNC
Vendors
Smartphone Sales by
Brands
• Chinese brands are gaining prominence
• Recently, Xiaomi surpassed all other
brands in sale of 4G LTE smartphones
Source: Dazeinfo, IDC, Nextbigwhat, Zinnov Analysis
Micromax is threatening the dominance of
Samsung
Android
84%
Windows 8%
Blackberry
3%3%
2%
Symbian
iOS
Smartphone User Base by
Operating Systems
Availability of free apps is one of the
reasons for using Android over others

10. 10
Smartphone vendors are adopting new and innovating GTM strategies in order
to gain traction in the highly competitive Indian market
Online
Exclusive1
Experience
Centres2
Brick & Mortar
Model3
OS: Not much in
vendor’s control
Hardware
Differentiation4
Source: Multiple, refer speaker notes
Reduction in cost
No physical distribution, no
seller margin
New brands opting this model
$50-$80
100 # of experience centres
planned by Xiaomi in India
250
# of retail stores planned by
Gionee in India
HW: Vendor can add
HW specs
Selfie-centric
smartphone
cameras
Smartphones with
Octa-core and 64-
bit processors
Vendors are pushing retail
expansion
Vendors opening experience store
to facilitate customer experience
Vendors’ Go-To-Market Strategies

11. India at the Cusp of Digitization
Agenda
Smartphone Adoption in India
4 Smartphone Usage Trends / Use Cases
Vendor Overview

12. 12
Users are spending significant time on their smartphones
Time Indians spend
using apps on their
Smartphones>1 Hr/day
Frequency at which
25% users check
their smartphones
>100
times/day
Time Indians spend on
their Smartphones>3 Hrs/day
87%
Entertainment
78%
Communication
59%
Stay Informed
Usage Trends Smartphones Emerging as Multi-
Activity Portal*
(20% increase in 2 years)
(63% increase in 2 years)
Source: Ericsson ConsumerLab, Performance shapes smartphone behavior, India, 2014; Our Mobile Planet: India – Understanding the Mobile Consumer (Google, 2013)
*Note: Google data is for 2013

13. 13
Smartphone users prefer messaging / chat apps for communication
95%
of users access
chat apps multiple
times per day
The power users and early
adopters of messaging apps
are under 35
21%
users made an
In-app purchase
while using a
mobile messaging
/chat app
Source: Inmobi Insights – Mobile Messaging Apps in India
DIGITAL GOODS (STICKERS, GAMES, ETC )
UPGRADED APP WITH EXTRA FEATURES
UPGRADED APP WITHOUT ADS
PHYSICAL GOODS PURCHASES
Communication App Usage In-App Purchase Behaviour
Launched a dedicated helpline
powered by WhatsApp
Customer Support
Promotion
Promotion via WhatsApp
15% sales though WhatsApp
Business Use Cases
Social Networking
19%
Voice Calls
17%
E-mails
10%
SMS/MMS
10%
Messaging / Chat Apps
44%
Preferred Mobile Communication Modes
15%
27%
35%
38%

14. 14
Consumption of video becoming a prime mobile use case
Popular Video Consumption Mechanisms
Videos shared
through Chat
Aps
Videos Shared
over Social
Media
Streaming
Video Over
Apps
Downloaded
Video Clips
Stream via
Webpages
31%
23% 22%
15%
9%
40%
Late Night in
Bed
25%
While
Commuting
23%
While Having
Dinner
20%
While
Shopping
Preferred Time for Video Consumption
Source: Ericsson ConsumerLab, Performance shapes smartphone behavior, India, 2014
75 Channels
Available on all platforms
1/3 viewers access
videos on mobiles
Video Goes Mobile
hotstar live TV movies
cricket - App
>10Mn app downloads

15. 15
Smartphone is changing the way consumers shop
Smartphones helps user Research
Product Anytime, Anywhere
63%
At Home
20%
On the go
19%
In store
91% have researched
a product or service on
their phone
Research that starts on Smartphones
leads to Purchase Across channels
66% then
purchased via
computer
53% then
purchased
it offline
Smartphones are an Emerging
point of purchase
Source: Our Mobile Plant: India – Understanding the Mobile Consumer (Google, 2013)
Note: Google data is for 2013
54% have
purchased a product
or services on their
smartphone
90% traffic & 80% sales
coming from mobile

16. 16
To address the demand from Tier 2/3 cities and changing consumer shopping
pattern, ecommerce companies are increasing their focus on mobile commerce
8%
More Business Coming From
Tier2/Tie3 Cities
Proportion of
ecommerce’s
addressable market in
top 8 cities
30% -50%
Rise in ecommerce
transactions in Tier 2
and Tier 3 cities
Companies Focusing on
Enhancing Mobile Products
Rise of Mobile Only & Mobile
Focused Companies
>50%
70%
Plans: Mobile only venture in a
couple of years
Plans: Largely a mcommerce
business in 2-3 years
A food ordering start-
up founded in 2013
A mobile wallet
company
100Mn
# of mobile wallets by year
end form the current
>25Mn mark
business from
mobile
business from
mobile
3
# of rounds of funding
received
Changing Consumer Shopping
Behaviour*
~55%$2 Bn
2014
$19 Bn
2019
Size of mcommerce Market
91%
91% have researched a
product or service on
their phone
Factors Prompting ecommerce
Companies to Focus on Mobile
Commerce
A
B
Source: Economic Time; Business Standard; Huffington Post; Our Mobile Plant: India – Understanding the Mobile Consumer (Google, 2013);
Zinnov Analysis *Note: Google data is for 2013

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