Amazon is a tech giant that has its business set across various sectors but a major part of its revenue comes from 2 main avenues - Amazon.com the e-commerce business and Amazon Web Services that deals in server management and cloud services.
Amazon is now looking to venture into the smartphone business - which in itself is a very competitive space but Amazon is building its ecosystem around Amazon Prime - A subscription that offers various Amazon services like Prime Video, Prime Music, and free delivery for all Amazon orders, an Amazon smartphone in the hands of the users would help this ecosystem grow.
Okay before we do a deep dive and analyze the question of whether Amazon should come out with a smartphone let's clarify a few things:
So how we'll approach this problem is by first trying to understand the current smartphone and telecom market in India, we'll then look at the user demographics and then look at the various segments of smartphones in India. Once we've looked at all these segments and the sort of user problems each segment is solving, we'll try to identify whether Amazon should enter the market and which market to enter as well.
The major players in the Indian smartphone market are Xiaomi, Samsung, Vivo followed by other smaller brands. Xiaomi is the leader in the market with a 28% market share and Samsung being a close second. Source.
While talking about the competition we should also look at the various telecom networks that are present in India, what their share is, and is there a possibility to partner with one of these networks when launching the phone. In the telecom space in India, there are 2 big players in the name of Jio which is Reliance company, and Airtel which is a Bharti Airtel company. The third player is Vodafone Idea, however, it is losing its market share at a landslide pace to the other two players we mentioned and the company seems to be in dire straits.
It is important to note India is the second-largest mobile market with more than 400 million mobile phone users and this market is only going to grow with smartphone penetration in tier 3 and tier 4 towns as well villages being very low at the moment.
One thing to keep in mind and note is that Google is partnering with Jio to take out India's most affordable smartphone and try to capture the market of India which either are on really slow internet speeds like 2G or first-time users of the internet.
India has a diverse range of people and if we were to segment smartphone users by age group in Indian, it would look something like this:
This tells us that ~70% of the Indian smartphone users are less than the age of 35 and that could be a user segment that could be looked at.
It is also important to note that close to 300 million Indians either don't have access to proper internet or cannot afford a smartphone. This is a huge untapped market that Jio and Google are planning to capture with their partnership
So the Indian smartphone market can be divided into 3 major segments: