Software Sales To Play A Major Role In Indian Smartphone Market

As hardware components are becoming cheaper day-by-day in India, experts believe that software sales will play an important role in the growing smartphone market in the country.

Earlier, device makers were looking to make money on the hardware they sell. But as there is a fall in margins, vendors are seeing opportunities to help raise the bottom line with software and content distribution deals.

"We don't yet lose money on the hardware," said Suneet Singh Tuli, the CEO of low-cost tablet maker Datawind. The firm is chasing recurring revenue sources through software partnerships and content deals.

"Five years down the line, it is reasonable to expect half our revenues from the recurring stream," he added.

The average selling price of a smartphone in India is already amongst the lowest in the world. Market experts believe that the prices are expected to drop further as low-cost vendors push Google's $100 (Rs 6,000) Android One phones this year in a major way.

Homegrown handset manufacturer Karbonn sells over 650,000 smart devices every month. It makes about 6-7% of the revenues from value-added services. It pre-installs software and apps like Opera's browser, WhatsApp, Amazon, Truecaller and CleanMaster.

When Google announced the Android One initiative for emerging markets at the I/O conference this year, it said phone vendors would be allowed to bundle third-party applications on to the device.

Chinese smartphone manufacturer Xiaomi, which entered the Indian market earlier this month, follows a similar strategy. It heavily banks on software sales for profits.
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