It’s Touch And No Go

• Market dominated by low cost entry-level phones; touchscreens are too expensive for  most users (Rs 7,500 to Rs 40,000)
• Even in the premium segment, the demand for touchscreens is largely led by the craze for the iPhone
• India, as most of Asia, likes text messaging; users find it more convenient to use button-handsets
• Early-adapters prefer Blackberry-type enterprise phones because of the easy interface and features like e-mail 
• Climatic extremes are not favourable; manufacturers now using applications for social networking to push touchscreens

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India’s Calling Card

• 10 mn connections sold every month
• 7-7.5 mn use entry-level phones (
• 3 mn use premium handsets
• High-end smart phones make up 10-15% of the 3 million premium phones sold every month; touchscreens: below 1% Smart phone sales expected to grow by 6-8%.  Touchscreens may see flat growth.

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Indians just don’t seem to be touch-sensitive—at least with mobile phones. Those oh-so-cool touchscreen handsets are “in”, the “next big thing”, and are gaining ground across the globe. But the Indian consumer remains untouched. The world’s second-largest mobile phone market (and the fastest-growing one) has given this new technology the cold shoulder. According to market estimates, touch phones account for less than 1 per cent of the overall handsets in the country. Even the iconic iPhone is yet to spark off the now-mandatory cult following in India.

Sure, touchscreen phones are high-end offerings in the large quantity-low quality Indian mobile phone market. Entry-level phones dominate the market and this trend is expected to continue for the next two-three years. “A large number of people are buying mobiles for the first time and they prefer conventional phones to touchscreen ones,” says Vineet Taneja, director (marketing), Nokia India. About 75 per cent of mobile phone users belong to this category. Of the remaining 25 per cent, the majority is into text messaging and e-mails and prefer phones with buttons.

“There is no driving force for touch-screen phones here,” admits Prashanto K. Roy, chief editor, Cybermedia, pointing to a market singularly focused on acquiring subscribers and serving them the basic services. At around $4-7, average revenue per user (ARPU) in India is one of the lowest in the world. In the US and Europe, it is around $50. It’s obvious India is a mass mobile market but touch-screen phones haven’t really made an impact even in the small (and lucrative) premium phone segment.

Touchscreen phones are priced between Rs 7,500 and Rs 40,000. Consumers have to pay the full price of a handset here—unlike the US and Europe where it’s mostly bundled with the service plan. With the replacement market yet to pick up, the incentive to spend on a new device is low. Says technology analyst and consultant Harish Bijoor: “People in the middle and bottom of the pyramid use phones for a little over seven years while even those at the top use it for three-and-a-half years. This is much more than global numbers.”

At the heart of the unpopularity of touchscreens is the discomfort most users experience with them. Outlook spoke to a cross-section of mobile users and most of them felt the features were attractive, but were more eye candy than practical. “I prefer my Nokia communicator because of its clearly defined function buttons,” says Amit Sharma, a freelance software consultant in Delhi.

Even early adapters—evolved users and the first to endorse new technologies—have shied away, primarily because of difficulties in using touchscreens. Many found a tightly squeezed virtual keyboard cumbersome and time-consuming as letters keep getting mixed up. Indian temperature extremes and dust conditions also have an impact on the accuracy of functions. “One of the biggest problems of a touchscreen phone is the user interface. Heavy users want to do a dozen things on the phone with the minimum keystrokes. Here even dialling a number is a problem. Accuracy of the screens is yet another issue,” says Kishore Bhargava, president, India Linux Users Group.

Most heavy users prefer the Blackberry or enterprise phones because of easy handling. Besides, handset manufacturers’ contention that touch phones promise better internet experience has not been borne out. According to industry estimates, the sales of smart phones grew modestly over the past year, and that too thanks mostly to RIM’s Blackberry range. A very small portion of this was touchscreens. The Blackberry devices, already the favourite of executives, have become more popular ever since they started coming “unlocked”, allowing users to go to any service provider. Analysts say smart phone demand may increase by 6-8 per cent, but touchscreens may see flat growth.

Handset sellers too feel that numbers are yet to reach respectable levels. Says Harshad G. Shah, owner of one of Mumbai’s biggest handset retailers: “With the iPhone being too expensive (it retails at Rs 36,000), there is demand for touchscreens in the Rs 10,000 range.” The numbers, however, are still small. Of the 175 phones Shah sells in a day, only about 25 are touchscreens.

Handset manufacturers, however, disagree and feel the market for touchscreens can only grow from here. They are increasing their exposure in this segment (both Nokia and Samsung have 8-9 touchscreen models in the market). Says Sunil Dutt, country manager (telecom) for Samsung: “In a flat market, touchscreens accounted for 12-15 per cent of our overall sales. We should see better figures this year.” The company’s sub-Rs 10,000 Star is probably the largest selling touchscreen phone in India, but the numbers are still small.

Companies are now betting on new and popular applications to push numbers. Nokia is pushing its Express Music range to attract the iPod generation. The market leader, lagging behind in this category, has recently dropped the prices of its touchscreen models and launched two new models at around Rs 10,000. Others are banking on features like GPS and social networking.

Globally, however, companies are betting big thanks to iPhone’s cult following. Companies expect this following to increase. As per a study by research firm Strategy Analytics, by 2012, 40 per cent of all mobile phones will incorporate touch-sensitive technology. But analysts feel India has not shown any signs of this trend. The Indian mobile market has always proved analysts wrong. Or so hope the handset makers.