1

March 2019

A Study by KPMG in India and India Cellular & Electronics Association

Impact assessment of open os ecosystem for DevIces In InDIa

Table of contents

1. Executive Summary 11

2. Mobile Devices Market Overview 17

3. SignificanceofOperatingSystemin 23 device ecosystem

4. ImpactAssessmentofOpenOSEcosystem 32

5. AlignmentofOpenOSwithkeynational 44 priorities

6. Glossary 53

7. Appendix 54

4

6

7

8

9

10

Executive Summary

12

TheIndianmobilejourneyhascomealongwayeversincecellphoneswerefirstintroducedin1995.Thelaunchofopensourceoperatingsystem(OS)formobiledevicesin2008usheredinthesmartphonerevolution.

Between2014and2017,theIndiansmartphonemarketgrewatacompoundedannualgrowthrate(CAGR)of37%invalue,i.e.fromINR54,900croretoINR1,43,000crore1. Consequently, IndiaovertookUSAtobecomethesecondlargestmobilephonemarket(intermsofunits),afterChinaandisamongstthetop20fastestgrowingmarketsforsmartphonesglobally2. Manufacturingfacilitiesforhandsetsandalliedindustrieshaveincreasedfrom3in2014to268in 20181.

• Thesourcecodeisfreetodownloadandiscustomisable

• Userscanlegallymodify,re-distributeandre-invent it

• Mainprincipleispeerproductionbycollaborationwithendproductblueprints

Android is the most widely used open source mobile operating system globally.

SomeofthebestfeaturesofAndroidwouldincludetheabilityofOEMstoproducehighlycustomised,innovativedevicesandtheabilityofuserstotailordevicestotheirneedstomore

quickly access content, including by creating multiplehomescreensandaddingwidgets.

Italsohasanexcellentcapacityformultitasking-makingitidealforapplicationinvariousbusiness

scenarios.

Business Benefits

Major Handset OEMS

• Reduced barriers to entry–ThenumberofsmartphoneOEMshasincreasedfrom7 in 2009 to ~80 in 20183

• Market size expansion–No.ofsmartphonessoldincreasedfrom 2 million units in 2009-10 to 117 million units in 2017-181

• Device differentiation–OEMscanhighlycustomize devices

Application Developers

• Increased talent pool – Estimated 72% of mobile application developers are using open OSasthebaseoftheirdevelopment4

• Accesstolargermarket–Withlowerfeetopublishandavailabilityofastandardisedplatform,developersgeteasyaccesstouserbaseof152 countries via ~300 app stores5

Some of the other open source mobile OSes are – Tizen, Plasma Mobile, Librem,

pmOS, Lineage OS, etc.

Open source mobile OS

ThisimpressivegrowthcanbeattributedtotheprevalenceofopenmobileOS,whichhasledtoreducedbarrierstoentryforOEMs.Androidisthemostwidelyusedopensourcemobileoperatingsystem.Itisfreeofcostandisavailablefordownloadwithoutanyriders.

TheopenOSecosystemisalsoprovidingadditionalimpetustoGovernmentofIndia’sinitiativessuchasMakeinIndia,DigitalIndia,StartupIndiaandSkillIndia(refertoFigure2fordetails).Ithascatalysedthegrowthofavastconsumerbase,expansionofmanufacturingfacilitiesandestablishmentofathrivingsetofsmall,mediumandlargescaledevelopers.

Source:1. ICEA; 2.IDC; 3. Bureau of Indian Standards; 4. India Mobile Talent Report by Belong.co

Impact of open source mobile operating

13

PlayersintheopenOSecosystemincludehandsetOEMs,ODMs,alliedindustrymanufacturingunits,mobileapplicationdevelopersandconsumers.Theyconstantlyinteractandco-operatewitheachother,thusfacilitatingcollaborativedevelopmentforall.Theeffectsandbenefitsofthisphenomenonhavecascadeddowntobusinesses,consumersandthesocietyatlarge.Theconstantevolutionaroundopensourcemobileoperatingsystemsisalsostimulatinganarrayofcomplimentaryinnovations-resultinginanincreaseinthenumberofapplicationdevelopersaswellasgivingrisetoahostofconnecteddevices,making IoT a conceivable reality. Digital accessoriessuchassmartdevices,wearables,etc.haveemergedascatalystsforrapideconomicgrowthandconsumerempowerment.

Indiaisalinguisticallydiversecountrywithasmanyas22officiallanguagesandover1600spokendialects10.MajorityofIndiansuseindigenouslanguagesastheirfirstlanguageandthisnumberisgrowing.IndusOS,apopularmodified(butcompatible)versionofAndroidhasgainedalotoftractionduetoitsfocusonlocalIndian languages.

Inlinewiththistrend,thenumberofusersaccessing internet in local Indian language reached234millionbytheendof2016surpassingthosethatdosoinEnglish.ThisnumberhasgrownataCAGRof41%between2011 and 201610.

Moreandmorepeopleareconsumingcontentintheirownlanguage.Growingsmartphonepenetrationisalsodrivingthedemandfor

Consumer Benefits

• Increased affordability–TheASPofsmartphoneshasreducedby16%fromINR14,000in2009toreachINR11,800in2017-181

• Retail price of entry level smartphones has fallen from INR 12,000 in 2008-09 to INR 1,400 in 2017-186

• Increased choices–Reducedtimetomarkethasresultedinmoresmartphonemodelsacrosspriceranges;averagenumberofsmartphonemodelsperOEMhasincreasedby5X in the last 5 years7

• Access to more apps – ~ 2.8 million apps*canbedownloadedfrommajorapp-storesofOpensourceOS5

Societal Benefits

• Job creation–Atotalof6.7lakhjobs8 havebeencreatedduetoproductionofmobilephonesinIndia.Outofthese-

• Increased GDP per capita9 – Growing penetrationofsmartphoneshasmadeonlineserviceslikemobilebanking,sharedeconomyservices,e-commerceetc.moreaccessibleforconsumers.Ithasledtogreatervalueadditionfrommanufacturersandappdevelopersaswellasarobustsalesandmarketingecosystemtherebycontributingtoeconomicgrowth

Numberofdirectjobscreatedduetomanufacturing/ofopensourcemobileOSbasedhandsetssince 20148

1.38 Lakhs

Numberofindirectjobscreatedduetomanufacturing/ofopensourcemobileOSbasedhandsetssince 20148

4.15 Lakhs

Cumulative increase in GDP Per Capitaoverthelastfiveyears

1.4%

Source: 5. Statista; 6. Press Release & KPMG Analysis; 7. KPMG Research and Analysis; 8. ICEA, KPMG Analysis; 9. World Bank, KPMG Analysis; 10. KPMG-Google Report; Indian Languages-Defining India’s Internet 2017

*This number is the sum total of all the apps available on Google Play Store, Amazon Appstore and BlackBerry World. The number does not account for double counting of applications that may be present in multiple stores.

system on businesses, consumers & economy

14

Source: KPMG Analysis

handsetswithbettercompatibilitywithlocallanguageswithrespecttomessaging,curatedcontent, voice assistant etc.

Currently,mobilehandsetssupportmessagereadabilityinall22officiallanguagesandinputtextinthreelanguages.

ThemodifiablestackofopenOSisakeyfactorenablingtheintegrationoflocallanguagecapabilitiesinsmartphones.

Furthermore,asmobileinternetusersinsmallercitiesandruralIndiaincrease,theroleofindigenouslanguagesinsmartphonesandmobileappsisexpectedtogainmoresignificance.

Growingpenetrationofsmartphoneshasmadeonlineservicesmoreaccessibleforconsumers.AccordingtoaresearchconductedbyIAMAI,nearly77%ofurbanusersand92%ofrural

usersconsidermobileastheprimarydevicetoaccesstheInternet.Thereportstatedthatmobilenowrepresentstwooutofthreeminutesspentonline.ThishashelpedIndianinternetcompanieswidentheirreach.MostoftheentrantsinthestartupunicornclublikeOla,Paytm,Flipkartetc.havebeenabletoleveragethisreachsuccessfully.

Ithasalsoledtotheproliferationofahostofalliedactivitiessuchassales&distribution,mobilecentricmarketing,e-commerce,digitalpaymentgatewaysetc.Alltheseactivitiesarehavingacumulativepositiveimpactontheoveralleconomy.

AllthisgrowthhasbeenmadepossiblelargelyduetoadventofopensourcemobileOS.Ithaswidenedtheeffectivemarketavailableforbusinessesandcreatedtherightcircumstances

Smartphone Proliferation Leading to Increased Business Activities in the country

• Theproliferationofsmartphonescombinedwithfavourablegovernmentpolicieshasledtotheestablishmentofmanufacturing/assemblyunits

• Ahostofalliedmanufacturingunitsproducingbatteries,chargers,phonecovers,earphonesetc.

• SmartphoneshavebecometheprimarymodeofinternetconnectivityforalargeportionofIndia’spopulation.Thishasledtoaconsiderableinducedimpactonbusinessspanningacrossvariousverticals.Forexample:

– Companiesareinvestingheavilyinbrandcommunicationviasmartphonesmakingiteasierforbrandstoestablishthemselves

– Increaseindigitalliteracyandcomfortwithonlinepaymentshasledtotheproliferationofdigitalpaymentgatewaysandwallets

– Onlineshoppinghasshiftedthetrendfrome-commercetom-commercewithmanybrandslikeOla/Uberbeingavailableonlyonphones

• Smartphoneadoptionhasenabledthedevelopmentofanentirevaluechainaround it

• Thisincludestransportationservices,distributors,retailers,salesforceandassociatedmobilerepair/accessoryoutlets

Direct

Induced

Indirect

1

3

2

15

foranentrepreneurialpopulationtoassertitsagencyandindependence.

OpensourcemobileOSthrivesoncollaborativegrowth.ThefoundationoftheecosystemestablishedaroundopenOSliesinmany-to-manyinteractionsthatenableallstakeholderstodelivervaluetotheendcustomer.

TheopenOSplatforminteractswithvariousstakeholdersinthisecosystemtoprovidesupport(engineeringanddevelopment),updates(versionandsecurity),referencearchitecture,testhardwarecompatibilityaswellaspromote

Figure 1 : The interactions in an open source ecosystem

devicedevelopment.Theseinteractionsfosterandenrichtheecosystem,leadingtofurtheradvancements.Italsomaintainsthebasicstackandiscentraltotheevolutionoftheecosystem.

Thenextdecadeisexpectedtogiverisetoplethoraofindustriesbasedonopen-sourceconcepts,suchasinformationsharingandjointinnovation.Anintuitivenetworkofconnecteddevicesisemergingasthenextbigwave.Thishasbeguntoimpactdiversesectorssuchashealthcare,education,governmentandfinancialservices.

1,2&3inthefigurearethestakeholderecosystems(apartfromconsumers)interactingwiththecentraloperatingsystem’splatform.EachboxwithintheopenOSplatformareainthefigure,representsanactivitycarriedoutbythemanagementofthesaidplatform.Eachofthethreestakeholderecosystemsfurthercompriseofcomponentsthatinteractwitha)eachother–representedbyarrows;b)anactivitybeingcarriedoutbythemanagementoftheOS–representedbythecoloredboxesaroundeachactivity.Thecolouroftheoutlineoftheboxesinthecentercorrespondtothecoloursofthecomponent/sub-componentintheecosystemthattheactivityinteractswith.

Source: KPMG Analysis

VAS

Brand Distribution

OS Customisation

Manufacturing

MOBILE BRANDS

App Development/Monetisation

OS Customisation

SOFTWARE ECOSYSTEM

OS version updatesDevice DevelopmentSupport

App DevelopmentCommunity

App Development Tools

OPEN OS PLATFORM

Reference Architecture

Hardware TestingTools

Partner EngineeringSupport

EcosystemDevelopment

Security updates

OS Customisation APIsBasic StackMaintenance

1 2

Manufacturing Component Ecosystem Software Development Security

ODM3

16

Figure 2 : Alignment of open OS ecosystem with key national priorities

*These are not unique factories but a split of the total number of units operational (342) in 268 unique factories

Source: 11. ICEA; 12. Frost and Sullivan; 13. Research Gate; 14. Emarketer; 15.TRAI; 16. Yourstory; 17. Google; 18. National Skills Network; 19. NASSCOM

• In2017-18,82%ofthemobilephonesweremanufactureddomestically11

• 120millionunitsofsmartphonesweremanufactureddomesticallyin201711;thisisexpectedtogrowataCAGR of 48.4% between 2017 and 202512

• Manufacturingunitsformobilehandsets&alliedindustrieshaveincreasedfrom3 in 2014 to 268 in 201811

• Therewere115mobiledevicerelatedalliedmanufacturingsetups*operatinginIndiain2017-1811

• OnthebackofincreasedaffordabilityofopenOSformobilephones,smartphonepenetrationincreasedfrom0.3% in 2009-1013 to 26% in 2017-1814

• Smartphonesarebridgingtheurbanruraldigitaldivide;therewere109 million smartphone users in rural India in 201715

• Theruralpopulationisgainingeasieraccesstoagriculturerelatedinformation,betterhealthcareandeducationthroughappssuchasMicrolekha,Srijan,OpAsha,etc.Thisisbringingthemonestepclosertowards inclusion16

• Theadventofthedigitaleraandincreasingprevalenceofsmartphoneshascreatednewjobopportunities,leadingtotheneedforupskillingandre-skillingtheexistingworkforceinIndia

• NSDChasundertakenseveralinitiativestoequipthetalentpoolwiththerequiredskillsetforthesmartphonedrivendigitalera17

• InNovember2017,Googleannouncedanewscholarshipprogramaimed at training 1.3 lakh app developers and students across India

• Asofendof2017,morethan1,80,000 studentshavecompletedcoursesdevelopedbyGoogle

• GSMAanditspartnershavelaunchedtheMobileInternetSkillsTrainingToolkit(MISTT)toreducethedigitalskillsbarrierinIndia18

• Therewereover5,000techstartupsinIndiabytheendof2017;~60%ofthesestart-upsprovideB2Cservices,primarilyviamobileapps19

• ManyIndianstartupslikeOla,Paytm,havebeenvaluedatmorethanabilliondollars(joiningthecovetedunicornclub)byleveragingtheexpandingsmartphoneuserbase

• AccordingtoasurveybytheGlobalAcceleratorLearningInitiative(GALI),Indiahasaround259startupincubatorsandaccelerators

• ShellE4,Target,SAP,Microsoft,Qualcomm,Cisco,Google,Bosch,Intel,GEHealthcare,IntuitaresomeoftheMNCsoperatingstartupaccelerators in India

• GoIhasalsobeenactivelyinvolvedindrivingthiswaveofincubation–NITIAayog,MeitY,MSME,stategovernmentshavealllaunchedinitiativesaimedatpromotingstartups

Make in India

Digital India

Skill India

Startup India

`

17

Mobile Devices Market Overview

18

Evolution of Mobile phones in India

July1995sawthefirstcellphoneservicebeinglaunchedinIndia.By1998,thetelecomnetworkhadexpanded,cellphoneshadbecomemorepopular,andcallratesconsiderablylessexpensive.TheseeventscollectivelymarkedaturningpointintheIndianmobilephonejourney.

Totaltele-densityinIndiahasincreasedfrom1.94%in1998to92.8%asofMarch,20181. Thisincreasehasaidedtheevolutionofanentireecosystempivotedaroundmobilephones.ThiscomprisesofnotjusttelecomoperatorsandOEMs/ODMs,butalsochipsetdesigners,softwaredesignersandapplicationdevelopers.

AlthoughIndiahadpredominantlybeenafeaturephonemarketdrivenby‘valueformoney’customers,theintroductionoffeaturerichopensourceOSphonesbyinternationalbrandsin2009andlocalbrandsin2010,allowedsmartphonestogaintractionintheIndianmarket.

IndigenousbrandssuchasMicromax,Karbonn,Lava,etc.particularlyhelpedinthisregardbyincorporatingfunctionalitiestobettersuitlocalneedsandpreferencesataffordablepricepoints.TheseincludedIndiaspecificproductfeaturessuchasdualsimcompatibility,longerbatterylife,on-devicemusiccapabilityetc.,whichfurtherpropelledsmartphoneadoptioninIndia.

Between2014and2017,theIndiansmartphonemarketgrewataCAGRof37%invalue,i.e.fromINR54,900croretoINR1,43,000crore2. In 2017,IndiaovertookUSAtobecomethesecondlargestmobilephonemarket(intermsofunits)afterChina3.Italsocontinuestoholditspositionasthebiggestfeaturephonemarketglobally4. Thecountryhasmaintaineditspositionasoneofthefastestgrowingsmartphonemarketsandisamongstthetop20fastestgrowingmarketsforsmartphones4aroundtheglobe.

Source: 1: TRAI; 2. ICEA ; 3. Canalys; 4. IDC

Source: KPMG Research & Analysis

Figure 3 : Journey of Mobile Phones in India

1stphone byMotorola

CDMA by Reliance

Color Screens

Bluetooth

Camera

Front Camera by Sony Motorola

Nokia starts manufacturing

100+ min mobile

shipments in a year

Touchscreen phones –iPhone launched

MTNL launched 3G data services

1stAndroidphone-

HTC

QWERTY keypad -

blackberry

4G smart phone launched by Huawei 100+ brands are selling

mobile phones in India

Battery Dash Charger – One Plus

Jio feature phone is

launchedIndia becomes the 2nd

largest smartphone market

India becomes the 2nd largestproducer of phones overtaking

Vietnam

Digitisation, Mobile Internet of Things, 5G

1995

2002

2003 2005 2G

2006

2008 2009 3G

2012

2013 2014

2015

2016

Post 2018

4G

2017

100 mn smart phone shipments in

a year

19

Thesmartphonemarketwitnessedahealthy14%annualgrowthin20174.Thefeaturephonemarketalsowitnessedapositivegrowthinthesameyear,afterrecordingadeclineforthreeconsecutiveyears.ThiswaslargelydrivenbythetractiongainedbythenominallypricedJiophoneslaunchedtowardstheendof2016.

Jiophoneisafeaturephonewithsomesmartcapabilitiesasitprovideslimitedinternetconnectivity, online entertainment services, digitalpaymentsupportaswellasaccesstocertainhighusageapplicationslikeFacebookandWhatsApptoitsusers.LaunchedatapricepointofINR1500,itisaimedatreachingmorepricesensitivecustomerswhocannotaffordentrylevelsmartphones.However,Jiophonediffersfromasmartphonewhichtypicallyoffersfull-fledgedinternetconnectivity,touchscreencapability,QWERTYkeypadandaccesstothirdpartyappsdownloadableviaanappstore.

Thelastthree-fouryearshavewitnessedasharpincreaseinthenumberofapplicationsavailabletosmartphoneusers.Thesespanacrossvariousverticalsandfunctionsandhavemadehandheld

Figure 4 : Mobile Phone Sales India (in Million units)4

Figure 5 : Player wise share of Smartphone & Feature phone5

• Featurephonereferstoabasicmobilephonewithlimitedcomputingcapabilities

• SupportedbymultipleOS(includingopenOS)andcanrunproprietaryfirmware,withthird-partysoftwaresupportthroughaplatformlikeJavaME

• Somehighendfeaturephonesnowhavelimitedinternetcapabilitieswithcertainpre-loadedapplications

• Somefeaturephonesnowhaveaccesstoappstores(egKaiOS)thatenableuserstodownloadapps

• Smartphonereferstoamobilephonethathasadvancedfunctionssimilartoapersonalcomputerandhasacomprehensiveoperatingsystemrunningthedevice

• Thesecomputingfunctionsinclude ability to install and run downloadedapps,email,webbrowsing, etc.

Source: 4. IDC; 5. Counterpoint

152 165 158

118 115 117

270 280 275

2015 2016 2017

Feature Phone

Calendar Year

Smart Phone

47%

9.0%8.0%

6.0%

30.0%

JioSamsung

Feature Phone Market Share % Q2 2018 Smartphone Market Share % Q2 2018

NokiaItelOthers

29.7%

23.9%21.2%

12.6%

7.6%

5.0%

XiaomiSamsungOthersVivoOppoTranssion

20

phoneshasexpanded.Associatedcentralandstate-ledincentiveschemeshavefurthercomplementedthisexpansion.AsaresultmanydomesticaswellasinternationalbrandshaverampeduptheirmanufacturingcapabilitiesinIndia.

TheMakeinIndiainitiativeisencouragingOEMstomanufacturedomestically,byprovidingthemadifferentialdutyadvantage.LocalmanufacturingisprovidingOEMsmorecontroloverthemanufacturingprocess,qualityandcustomisationoffeatures.Thenumberofmanufacturingfacilitieshaveincreasedfrom3in2014to268in20186,withmajorplayerslikeSamsung,Xiaomietc.investingheavilytomanufactureinIndia.

Fromavolumeperspective,2016wasapivotalyearforIndiaastheshareofdomesticmanufacturingsurpassedthatofimportsintermsofthetotalretailsalesofmobilephonessold.Itisestimatedthatby2019,closeto95%6ofmobilephoneswillbemanufactureddomestically.

Mobilemanufacturingsectorsuffersfromahostofproblems,includingstringentlaborlaws,poorinfrastructureandaninefficientsupplychain.Thesefactorsarehinderingthegrowthofthissectorandleadingtosub-optimalprofitlevelsforlocalmanufacturers.TheGovernmentaimstotacklesomeofthesehindrancesbyimplementingthePhasedManufacturingProgram(PMP).Withtheimplementationand

Figure 6 : Indian Mobile Phone Market (% contribution to volume)6,7

Source: 6. ICEA; 7. Counterpoint

devicesanintegralpartoftheconsumer’sdailylife.Consumersarenowlookingforenhancedexperience,seamlessend-to-endconnectivity,longerbatterylifeandefficientdatautilisationataffordableprices.Phoneswithlargerscreensizes are making a comeback as more and more consumersaccesscontentontheirphones.Embellishmentsintermsofwearablesandphoneaccessoriesisalsoanupcomingtrendamongsttoday’sconsumers.

TheASPofmobilephoneshasdeclinedby~16%fromINR14,000in2009toreachINR11,800in2017-186.Someofthereasonsforthisare:

DecliningASPcoupledwithincreasedimportdutiesonmobilecomponentsprovidesanincentiveforOEMstomanufacturelocallyinIndia,thuspromotingthe‘MakeinIndia’initiative.

Manufacturing Landscape

MobilephonemanufacturinghasbeenprevalentinIndiasince2005.However,withthelaunchof‘MakeinIndia’programinSeptember2014byGovernmentofIndiaandimplementationofnecessarypolicyreforms(raisingexcisedutydifferentialbetweendomesticandimportedphones),domesticmanufacturingofmobile

Reduced developmental costs

Localisation of manufacturing value

chain

Higher SKUs across product portfolio

33%

41%

68%82%

95%

67% 59%

32%18%

5%

2014-15 2015-16 2016-17 2017-18 2018-19(P)

Domestic Manufacturing Imports

21

Figure 7 : Manufacturing Landscape in India in 2017

SamsungXiaomi (Hipad)

Blackerry (Optiemus)Oppo

OnePlus (Oppo)Lava

Xiaomi (Foxconn)Moto

Xiaomi (Foxconn)Nokia (Foxconn)Honor (Flex)Motorola (Flex)

Micromax

NOIDA/ Delhi/ NCR

BADDI

SRI CITY

SRIPERUMBUDUR

* The manufacturers of the brands mentioned on the map are specified in brackets

• IndiareplacedVietnam to become 2nd largest producer of mobile phones8 in 2017

34%

Individual OEMs likeMicromax, Lava,Samsung

EMS*

37%

19%

38%

6%

Mobile plantsBattery PlantsAdapter PlantsOther Factories (Wiredheadsets, USB Cable,Mechanics etc.)

66%

Source: Counterpoint

* EMS (electronics manufacturing service) is a term for a contract manufacturer in the electronics field that not only makes products for OEMs but also offers assistance with a wide array of value-added services like support with design, design for manufacture etc.

• In2017-18,225million8handsetswereassembledand/ormanufacturedinIndia

• IndividualOEMsoperatecloseto1/3rdofmanufacturingfacilitiesinIndia,withEMSesoperatingtheremaining2/3rd 9

• In2018-19,Indiaisexpectedtoproduceapproximately290millionunitsofmobilehandsets8

Source: ICEA

* The split represented in the graph is based on the activities carried out by the plants. Example - some plants manufacturing mobiles, battery and adapters will be included in all three heads.

Source: 8. ICEA; 9. Counterpoint

Split of Manufacturing Units (2017-18)

22

successofvariousphasesofthisplan,Indiaisonthepathtohavearobustindigenousmobilemanufacturingecosystem.Introductionofdutyarbitrage under PMP is incentivising Indian and foreignbrandstograduallymovemanufacturingto India.

Connected Devices Ecosystem

Smartphoneshavebecomeanintegralpartoflife,makingthescenarioofnotbeingconstantlyconnectedtotheinternetathingofthepastformostpeople.Theconsumers’increasingneedtostayconnectedispavingthewayforahighlyintuitiveecosystemofconnecteddevices.

Meanwhile,hardwareimprovementsareincreasingthecapabilityofdevices.Technologicalinnovationslikemachinelearningandblockchain,

coupledwiththeproliferationofdataavailable,areenablingdevicestobecomesmarter.Thistechnologydrivenecosystemisincreasinglypenetratingeveryaspectoflife.Smartdeviceswhichincludesmartwatches,wearables,connectedspeakersetc.arechangingthewaymillionsofIndiansinteract,dobusiness,andstayconnectedtoeachotherandtheworld.

Thegrowingconnecteddevicesecosystemisunderscoringtheimportanceoftheunderlyingsoftwareusedtorunthem;thesoftwareisnotonlycentraltohowusersinteractwiththedevicesbutalsohowthesedevicesinteractwitheachother.Opensourcesoftware,likeAndroidOS,thereforeisplayingakeyroleinthisecosystemdevelopmentbystandardisingtheplatformthattheseconnecteddevicesinteracton.

*OEM are the producers and designers of mobile phones for their own brand and an ODM are the companies carrying out production for another brand

The Three Phases of Smartphone Evolution

1993 TheFirstSmartphone-The

SimonbyIMB-wasdevelopedtocatertotheneedsof

enterprises

2007 Applebrokethroughthe

smartphonemarketwiththelaunchofiPhone,targeting

consumers

2008 onwards Androidphoneswerelaunchedinthemarketin2008.Sincethen,Android’sopensourcetechnologyhasloweredtheentrybarriersallowingmultiplevendorstobuildhandheld

devices

1999 Blackberry revolutionised smartphonesbyadding

featureslikeEmail,Internet,Fax,Webbrowser

End of 2007 GoogleunveileditsAndroidMobileOperatingSystemfortouchscreenmobiledevicessuchassmartphonesand

tablets

Phase 1: EnterpriseDriven

Phase 2: Consumer Driven

Phase 3: ClosingtheGap

DuringthisphasealltheSmartphonesweretargetingenterprisesandthefeaturesandfunctionswereaspercorporaterequirements

KeyFeaturesofthisphaseincluded

• Emailandchatting

• Socialwebsiteintegration

• Audio/video,internetaccess

Industryfocusisshiftingtowardsclosingthegapbetweenenterprisecentricand consumer centric smartphones.Keyfeaturesinclude:

• Improveddisplayquality

• Betterdisplaytechnology

• StablemobileOS

• Morepowerfulbatteries

• EnhancedUserinterface

• Lowcosttoattractmorecustomers

23

Significance of Operating System in device ecosystem

24

Figure 8 : The changing mobile phone value chain

Value Chain of Handheld devices & role of Mobile Operating System

Sinceitsinceptionin1970s,themobilehandsethasundergonemanyphasesofevolution.Thishaslargelybeendrivenbymajorchangesinhardware,networktechnologyandinnovationsinthemobileoperatingsystem.

MobileOSistheprimaryinterfacebetweentheuserandhis/herdevice,andisthusthecornerstonedetermininguserexperience.Itthereforeplaysavitalroleinbothcustomeracquisitionandretentionforhandsetplayers.AnOEM’schoiceofmobileOSnotonlylaysthefoundationforitsproductandmarketingstrategy,butalsodeterminestheamountofcontrolthatitcanexerciseonthesoftware.

Beforetheriseofopensourceoperatingsystems,handsetvendorsandcarrierspossessedmaximumcontroloverthemobilehandsetvaluechain.TheydecidedtheOSthatwouldrunontheirhandsets,thecontentthatwasaccessibleaswellastheapplicationsavailabletotheuser.

Withtheemergenceofopensourcemobileoperatingsystems,thiscontrolhasnowbeendistributedevenlyacrossthevaluechain.Due

tothechangeintheroleandcontrolexercisedbyeachplayer,thebusinessmodelshaveundergonearadicalshift.Thestakeholdersarenowfocusingonevolvingtheirrespectiveproducts.

Evolution of Mobile OS

Before2008,allmobilecarriersdeveloped‘verticallyintegratedwalledgardens’ofservices,devicesandapplications.Theyinvestedinproprietarytechnologiesandgeneratedrevenuebyexploitingintellectualpropertyrights.Theyimposedwallsaroundtheircontent,wheretheonlyappsandringtonesavailablefordownloadwerethosefromthecarrier’sappstore.AlthoughtheyprovidedWirelessApplicationProtocol(WAP)browsers,thepageswererestrictedtotheoperator’sportal.Sincemostmobileoperatingsystemsatthetimewereclosedandproprietary(includingproprietaryforksofSymbian,anOSusedbymultipleOEMs),therewasnoeasywaytoonboardarangeofappslikeGPSnavigation,gamesetc.ontoanydevice.Theproblemwiththisapproachtobusinesslayinitsinabilitytocapturevaluefromcrowdsourcedinnovation.

Pre 2008 Post 2008

Content Owners

OS Providers

VASAggregators

HandsetVendors

Carrier USERS

Third Party Players

OSProviders

VAS Aggregators

Handset Vendors

Carrier

Applica- tion Stores

USERS

Source: Industry Reports, KPMG Analysis

25

AfreeandopensourcemovementstartedwiththelaunchofLinuxoperatingsystemandeventuallyledtothedevelopmentofAndroid.ThelaunchofAndroidopensourceplatform(AOSP)in2007turnedthetideawayfromwalledgardensoftware,usheringinaneraofcollaborativegrowth.Ithelpedleveragethepowerofdistributedinnovationinsourcing

Theevolutionofanopensourcemobileoperatingsystembenefitsallthestakeholders.Businessesachievegreateropportunityformonetisationandprofitabilitywhiledevelopersleveragecollaborativegrowthtodelivervaluetoconsumers,whoarespoiltforchoice.Fragmentationoftheoperatingsystem’scodeisoneofthebiggestchallengesarisingasaresult

ThehistoryofopensourcesoftwaremovementdatesbacktotheevolutionofLinuxwhichwasprecededbyheavilyguardedverticallyintegratedwalledgardenofhardwareandsoftware/operatingsystems.Linuxkernelwasdevelopedanddistributedwiththeaimofopeningthegatesforinnovationandcollaboration.

Operatingsystems,traditionallytiedtohardware,weremakingmoneyfromcompaniesthatreliedonthestabilityoftheircoreservers.Linux,however,adoptedadecentraliseddevelopmentalapproach.Itwasdevelopedasakernelandtheremainderoftheoperatingsystemwasdevelopedarounditbyitsvendors–RedHat,Ubuntuetc.Linuxhascarriedtheopensourcestorywithit,servingasanicebreakerforthousandsofotheropensourceprojectsthatwouldhavefailedtogainlegitimacyontheirown.

• Highreliabilityandstability

• Proprietaryhardwareandserversoftware

• Veryresponsivesupportcontracts

X LinuxwasdismissedasitwasassumedthathardwareandopenlydistributedOScouldnothandleenterpriseworkload

• AdaptabilityandElasticity

newideasandexpertisefromacommunityofdevelopersbymakingtheOSavailablefreeofcost.Thisledtorapidevolutionofthemiddlewarelayer,therebyfreeingapplicationvendorsfromthehassleofbuildingappsfromscratch.Reduceddevelopmentalcostsduetoafasterpaceofinnovationhelpedachievecosteffectivenessforbusinesses.

ofanopensourceOS.Asthebasicstackisopen,itisdifficulttohaveahomogenousdesignwithrespecttobothhardwareandsoftware.Managing security also becomes a concern in suchanenvironment.Thus,themostcrucialdecisiontomakefortheopenOSadministratoristodeterminehowmuchofthestackshouldbekeptopen.

Figure 9 : Timeline of some key Mobile OSes

Symbian

Windows (till 2017) iOS Android KaiOSTisen*

Blackberry (Till 2015)

1998 2007 20152002 2008 2016

*Only a few smartphone models were launched. This OS is still used in connected devices.

Source: KPMG Analysis

The evolution of Open Source – The LINUX story

Applications Applications

DeviceOperatingSystemBase

Device Hardware Device Hardware

Ubuntu LinuxKernel RedFox

26

Emergence of a Collaborative Ecosystem

Theadventofopensourceoperatingsystemhaspromotedcollaborativegrowth,givingrisetoanentireecosystem.Thisecosystemcomprisesmobilebrands,OEMs,ODMsandsoftwaredeveloperswhoconstantlyinteractwitheachother.ThemanufacturersinteractwithODMsforupdatedhardwarecapabilities.Thevalueaddedserviceprovidersinteractwiththesoftwaredevelopmentecosystemtofigureoutwhatadditionalfunctionalitiescanbeofferedonthehandset.Thesoftwareecosystemreliesonthemobilebrandsforitsmonetisation.

TheopenOSplatforminteractswithvariousstakeholdersinthisecosystemtoprovidesupport(engineeringanddevelopment),updates(versionandsecurity),referencearchitecture,testhardwarecompatibilityaswellaspromotedevicedevelopment.Italsomaintainsthebasicstackandiscentraltotheevolutionoftheecosystem.

Androidisthemostprevalentopensourceoperatingsysteminthemarkettoday.Itisfreeofcostandisavailablefordownloadwithoutanyriders.

Figure 10 : The interactions in an open source ecosystem

1,2&3inthefigurearethestakeholderecosystems(apartfromconsumers)interactingwiththecentraloperatingsystem’splatform.EachboxwithintheopenOSplatformareainthefigure,representsanactivitycarriedoutbythemanagementofthesaidplatform.Eachofthethreestakeholderecosystemsfurthercompriseofcomponentsthatinteractwitha)eachother–representedbyarrows;b)anactivitybeingcarriedoutbythemanagementoftheOS–representedbythecoloredboxesaroundeachactivity.Thecolouroftheoutlineoftheboxesinthecentercorrespondtothecoloursofthecomponent/sub-componentintheecosystemthattheactivityinteractswith.

Source: KPMG Analysis

VAS

Brand Distribution

OS Customisation

Manufacturing

MOBILE BRANDS

App Development/Monetisation

OS Customisation

SOFTWARE ECOSYSTEM

OS version updatesDevice DevelopmentSupport

App DevelopmentCommunity

App Development Tools

OPEN OS PLATFORM

Reference Architecture

Hardware TestingTools

Partner EngineeringSupport

EcosystemDevelopment

Security updates

OS Customisation APIsBasic StackMaintenance

1 2

Manufacturing Component Ecosystem Software Development Security

ODM3

27

Symbian OSwaslaunchedin1998byaconsortiumofOEMsandhadmajorityofthemarketsharefrommidtolate 2000’s. It was a closed ecosystem, forkedbyitsmanystewards,untilthefirstversionofopensourceSymbianwasreleasedin2009.Ithadacomplicatedcodestructurewhichcouldnotaccommodatefunctionalitiesliketouchscreens,gesturesetc.Duetotheafore-mentionedreasons,itwasunabletocapitaliseonthesmartphoneera.

TizenisanopensourceoperatingsystembasedontheLinux kernel. It includesmultipleprofiles(in-vehicleentertainment,TV, Wearables and Mobile)toservedifferentindustryrequirements.ItiscontrolledbySamsungandbackedbyIntel.ItisbeingusedtorunSamsung’ssmartwatches,TVsaswellasitsconnectedcarservices.TheTizenprojectresideswithintheLinuxFoundationandisgovernedbyaTechnicalSteeringGroup.

Launchedin2007,itisaproprietarymobileoperatingsystemownedbyApple. Itistargetedatthepremiummarketsegmentandisthemostsuccessfulexampleforaclosedmobileecosystemtoday.Inspiteofnotcommandingmajorityofthevolumemarketshare,ithasasignificantportionoftheprofitabilitypie.

Owned by Microsoft, a mobile OS version was released in 2000 (Pocket PC). It was renamed as Windows in 2003.ThisOSwasdesignedforpocketPCsandwasprimarilyaimedattheenterprisemarket.Itlackedinbundlingtherightmixofapplicationssoastoappealtotheconsumermarket.

Firstreleasedin1999,ithasitsrootinthepagermarket.Itlauncheditsfirstdevicewithvoicecallingcapabilitiesin2002andhad4 million subscribers by 2005butitsfocusremainedtheenterprisemarket.In2006, BlackberrylaunchedPearldevices–firstlineofconsumerfriendlydevices.BBreacheditspeakin2013with85millionsubscribers.In2016,itdecidedtolicenseitsphonestopartnersinsteadofdesigningthem.BlackberrydevicesnowbeinglaunchedrunonAndroidmobileOS.

Launchedin2008,itisanopensourcemobileoperatingsystemthatusesaUNIXlikekernelatitscore.Itisfreeofcostandisavailablefordownloadwithoutanyriders.Thisisencouragingacollaborativeapproachtoinnovationandsustainabilitythusrevolutionisingthesmartphoneindustry.Itreleasesonemajorupdateeveryyearandfrequentsecuritypatches.Throughtheyears,Androidhasaddedvariousfunctionalitiesinitsstack.Thelatestversion–AndroidPie-isintroducingfunctionalitiesforgesturenavigation,adaptivebatteryandbrightness,appactionstoquicklystarttasksbypredictingwhattheuserwantstodo.Ithasgreatlyimprovedsecurityfeaturesbyrestrictingaccesstomic,camera,andallsensors.

Androidlaunchedaspecialversion“AndroidGo”tocatertotheentry-levelsmartphonemarket.ThisstrippeddownversionofAndroidcomewithlowersystemrequirementsandensuresapowerfulonlineexperience.

AndroidisalsoforayingintotheconnecteddevicesmarketwiththelaunchofAndroidTV,AndroidAuto,AndroidThingsandWearOS.AlltheseOSeshavebeendevelopedspecificallyfortheconnecteddeviceecosystem.

Sy

MB

IAN

TIz

EN

IOS

WIN

DO

WS

BLA

CK

BE

RR

yA

ND

RO

ID

Source: KPMG Analysis

Overview of some Key OSes

28

Platform Business Model Map

Source: KPMG Analysis

Asanoperatingsystematthecenterofanopenecosystem,AndroidmobileOSisaplatformprovidingvaluetomultiplestakeholders,enhancingtheoverallnetworkbenefits.Someofthesebenefitsandvaluehavebeensummarizedbelow:

• ThePlatformBusinessModelMapisananalyticalandvisualisationtooldesignedtoidentifyallthecriticalpartiesinamulti-sidedplatform.Itanalyseswherevaluecreationandexchangestakeplacewiththeplatformbusinessandamongstthedifferentstakeholders.

• Aspikerepresentseveryothercustomerthatisattractedbytheplayertotheplatform

• Asweetenerprovidesnomonetaryvaluetotheplatform,butdoesprovidevaluetootherparties

• Lynchpinistheplayerthatdictatesthemostpowerandattractsmorecustomersthananyother

Platform Business Model Map of Android Mobile OS

Android Mobile

OS

Custom & pre – installed applications

Support for integration Software updates with

added functionality support Brand value

Device to host OS Distribution

Manufacturers

Pre installed apps Access to app store (third party

apps) Access to Google’s product suite Seamless synchronisation across

all google supported devices

$ for in-app purchases Data (user data for better

personalisation)

Users

Direction of value exchange – from Android to player

Direction of value exchange – from player to Android

Sweetener

Lynchpin

Platform

Transporters, distributors, retailers of phones

Hardware suppliers Design houses Mobile repair outlets Mobile Accessories (designing,

manufacturing, distribution & sale)

Support for integration and ironing out integration issues

Software updates with added functionality support

Distribution medium (Play Store) Access to large user base

$ share of app/ content sales/ subscription

Customer retention Enhanced customer

experience and usage

Application Developers Ancillary Services

Increase in efforts by players results in increase of manufacturers

Increase in efforts by players results in increase of users

Increase in efforts by players results in increase of ancillary services

Increase in efforts by players results in increase of app developersServices enhanced due to the

platform but not directly related to it

268 manufacturing units have been set up as of end of 2018

~323 million open OS users as of end of 2018

~72% of application developers currently use open OS

29

Androidisahighlycustomisableoperatingsystem.ManyOEMscreatea“skin”torunontopoftheAndroidoperatingsystem.Thisskinaltersmanyaspectsofthephone’suserinterface(UI),fromthemenudesigntothehomescreenshortcuts.Somechangesaremoreaestheticinnaturewhileothersgomuchdeeperintotheoperatingsystem.

As of 2017, 72% of smartphone brands in India are customising Android OS10

Why OEMs Customise Android

Some examples of customisations made by OEMs

Differentiation User Retention Additional Services Push the envelope

APPLICATIONS

SETTINGS

NOTIFICATIONS

DESIGN

ADDITIONAL SERVICES

AddOEM&carrier-brandedpre-installednon-removableversionsofapps-calendarapps,contactsapps,notesapps,andeventhephonedialer.

E.g..Samsung’sHealthapp,Xiaomi’sskinMIUIloadsitsownapplicationinplaceofGoogleapps;OnePlus’sOxygenOSaddsauniquetextmessageappinplaceofGoogle’sstandardapp.

MovethesettingsoptionsaroundorevencompletelyreformattheSettingsapp.E.g.SamsungaddsmanyofitsownsettingstoitsdevicesthatsometimessupersedeAndroid’sstocksettings

Changethewaynotificationscomeuponthescreen.

Eg.Huaweiskin’s(EmotionUI-EMUI)notificationshadehideslockscreennotificationsoncetheuserdropstheshade,Xiaomiredesignsthedrop-downnotificationbarinitsMIUI.

Addcustomicons,animations,fonts,HDwallpapers.

E.g.OnePlusgivesuserstheabilitytocustomisethecolorschemeoftheirdevicesinOxygenOS.SomeOEMs,likeXiaomi’sMIUI,offerfullthemestores.

BlackberryismakingchangestotheAndroidkerneltoprovidethemostsecuredversionofAndroid.

Addserviceslikecloudservices,“outofthebox”features,integratedorsupplementalsecuritylayers.E.g.OnePlus’sOxygenOShasanApplockerthatletstheuserassignfingerprintentryintocertainappstheywanttokeepprivateeveniftheirphonescreenisunlocked.

Source: 10. Euromonitor and KPMG Analysis

Customisation of Android by different brands

30

Source: 11. Google; 12. BI Intelligence; 13. NASSCOM; 14. IDC

Source: App Annie 2017 Retrospective Report

Open OS: Facilitating Complementary Innovations Beyond Handsets

Astheecosystemaroundopensourcemobileoperatingsystemdevelops,itispromotinganarrayofcomplimentaryinnovations.Thisisresultinginanincreaseinthenumberofapplicationdevelopersaswellasgivingrisetoahostofconnecteddevices,makingIoTaconceivable reality.

Application Developers

Byachievingbroaddissemination(ofcompatibledevices),Androidprovedanattractiveopportunityfordeveloperstopursue.Theecosystemencouragesinnovativeapplicationdevelopmentandleadstotheformationofacommunityofdeveloperswhosupporteachother.IndiaisthesecondlargestdeveloperecosystemintheworldandisestimatedtoovertaketheUSby202111.

Mobileappdesignanddevelopmentareessentialcomponentstoalmosteverysinglebusinessandindividualtoday.TheopenecosystemisthusfurtheringtheeraoftechnologystartupsinIndia.Thesestartupsspanacrossverticalsandfunctionsrangingfromgamedevelopmenttothoseleveragingartificialintelligencein

Some Facts about the Indian App Industry

InQ12018Indiawasthe#1 market globally by combined downloads on iOS&GooglePlay

India ranked 29th globally byrevenueoniOS&GooglePlayStoreinQ12018

DownloadsinQ12018havegrown250%overQ12016 in India

Applicationstorerevenuein India grew 140%inQ12018overQ12016

ordertoprovideutilitytotheconsumer.Thisproliferationofapplicationsinthemobileuniverseisenhancingconsumerexperience,elevatingitbeyondthehardwarespecificationofthedevice.ThebiggestboonforcomplimentaryinnovationshasbeentheadventofcuratedappstoreslikeApple’s“AppStore”andGoogle’s“PlayStore”.Theyhavedemocratisedthedistributionofinnovationstotheconsumers.

Internet of Things (IoT)

TheadventofopensourceOSisrapidlypavingthewayformoreinnovativeIoTdevicesbyforginggreateruniformity,standardisationandtheconsequentdecouplingofinformationfromaparticularphysicaldevicetoincludeahostofsuchconnecteddevices.Thenextdecadeisexpectedtogiverisetoaplethoraofindustriesbasedonopen-sourceconcepts,suchasinformationsharingandjointinnovation.Anintuitivenetworkofconnecteddevicesisemergingasthenextbigwave.Thishasbeguntoimpactdiversesectors,suchashealthcare,education,transportation,governmentandfinancialservices.

• ConnectedhomedeviceshipmentsareexpectedtogrowataCAGRof67%overthenextfiveyears,fasterthansmartphonesortablets,andshipmentsareexpectedtocross1.8billionunitsby201912

• TheglobalmarketforIoTin2020willbeworthUSD373billionintermsofrevenue,withUSD194billionandUSD179billionstemmingfromhardwareandsoftwarerespectively13-IndiawillaccountforatleastUSD15billionofthistotalrevenueforecast13

• Therewere60millionconnecteddevicesinIndiain2017–estimatedtoreach1.9billion units by 202013

• Wearablesconstituteamajorproportionoftheconnecteddevicemarket-India’swearablesmarketsizetouchedUSD157million in 201714

Some Facts about the IoT Industry

31

Astechnologyadvances,gadgetsandwearablesareenhancingtheinterconnectedutilityformobileusers.Machine-to-machineinteractionsareincreasingasIoTconnectsourlivesintoonegiantwebofdevices.Thispresentsanewwaveofopportunitiesforbusinesstocapitaliseupon.

• Launchedin2014asasuccessortoGoogleTV

• MostoftheAndroidTVfunctionsrunonproprietarysoftwarenotfoundonAOSPeg.GoogleFirstTimeInstallWizard,GMSetc.IthastobelicensedfromGoogle

• AsofMay2018,AndroidTVhas3,600appsandgames

• MyBoxTechnologiesisworkingincollaborationwithGoogletodevelopAndroidTVbasedhybridset-upboxesfortheIndianmasses

• AJBLLinkBarwasreleasedinMay,2018.ThisisaasoundbarpoweredbyAndroidTVwithGoogleAssistantintegrated

• SomeofthebrandsthathavelaunchedAndroidTVsareHaier,Hisense,Nvidia,Philips,Sony,TCL,Westinghouseetc.

• OriginallylaunchedasBrilloin2015–rebrandedasAndroidThingsin2016

• StrippeddownversionofAndroidOSdesignedtopowerlight–weightdeviceseg.smartdisplaysofkitchenappliances,connectedspeakers,smartthermostatsetc.

• Worksinthebackground,allowingsmartdevicestohandletheirowntasksasopposedtoserversdoingtheprocessing

• EnablescompaniestoshipIoThardwaremoreeasilyasAndroidThingsusesthesamedevelopertoolsasstandardAndroid

• ThefirstdevicesincludespeakersfromLGandiHome,aswellassmartdisplaysfromLG,Lenovo,andJBL

• Launchedin2014asavoice-enabledplatformforcars

• AndroidAutoistheplatformforbringingmobileoperatingsystemtothecar-essentiallymirrorsone’sphone—withaspecialon-screeninterfacedesignedforthecartobringhomescreens,maps,music,communication,voiceandapplicationsontothedisplayinthecar

• Mahindra&Mahindra,MarutiandTatahavetiedupwithGoogletoprovideAndroidAutobasedinfotainmentsystemsinitscars

• FromMay2018,AndroidAutoisbeingdirectlybuiltintotheheadunitsofVolvo

• By2022,AndroidAutoisexpectedtobetheexclusivein-dashoperatingsystemformillionsofcarsfromtheRenault-Nissan-MitsubishiAlliance–theyestimatetosell14millionvehiclesin2022

• OriginallylaunchedasAndroidWearin2014–rebranded as Wear OS in 2018

• StrippeddownversionofAndroidOSdesignedforwearabledevicesandsmartwatches

• SomeofthekeysfeaturesincludesmartsuggestionsthroughGoogleAssistantwithvoice(ifdevicehasabuilt-inspeakerorisconnectedviabluetooth),enablingcontrolofsmartdevicesathomewiththeWearOSwatch,bettercompatibilitywithnon-Androiddevices

• SomebrandsusingWearOSare:Casio,Diesel,EmporioArmani,Fossil,Guess,Misfit,MichaelKors,Polar,Skagen,TAGHeuer

Android OS moving beyond handsets

32

Impact Assessment of Open OS Ecosystem

33

Impact of Open OS Ecosystem

Overthelastdecade,thecountrysawtheriseofanewtrendthathasencompassedday-to-daylivesofIndianconsumers.DevelopmentofafreeopensourceOSavailablefordownloadwithoutanyriderswasamajordrivingforcebehindrisingsmartphonepenetration,signalingthebeginningofadigitalboominIndia.TheimpactofopenOScanbecategorisedintothreebroadareas:Business,ConsumerandSocietalbenefits.

Thedigitalecosystemiscreatingnewbusinessopportunitiesforplayersacrossthevaluechainbyexpandingtheoverallmarket.Byachievingbroaddissemination(ofcompatibledevices),openOShasprovedanattractiveopportunityfordeveloperstopursue.

Consumers are being introduced to a new way ofconnectingtotheworld.Theresultingdigitalroadwayisprovidingthemwithalargevarietyofappsusefulinvariousaspectsoflife.Additionally,thisnewwayoflifecomeswithincreasedaffordabilityandconveniencefortheconsumers.

OpenOSecosystemisaidingtheexpansionofmanufacturinglandscapeinthecountrybyloweringthebarrierstoentryforOEMsandenhancingconsumers’appetiteforsmartdevices. It is also contributing to economic growthbycreatingnewemploymentopportunities.

Figure 11: Impact of Open OS Ecosystem

Source: Industry Reports, KPMG Analysis

Business Benefits

Consumer Benefits

Societal Benefits

• Morenumberofplayersduetolowerbarrierstoentry

• Increaseinmarketsize

• AccesstoalargermarketbeyondowncountryforApp-developers

• Devicedifferentiation

• Largerangeofsmart-devicesacrosspricepoints

• Lowerpricesforentrylevelsmartphones

• Multipleappsavailableacrossdiversecategories,addingtocustomerconvenience

• Creationofnewemploymentopportunities

• Contributiontowardseconomicgrowth

34

Business Benefits

Emergenceofopen-sourceOShaspositivelyimpactedvariousindustryplayersinthevaluechain,withOEMsandappdevelopmentbusinessesbeingtheprimarybeneficiaries.ReductionindevelopmentalcostswithrespecttothetimeandresourcesneededalongwithsimplificationoffuturemaintenancearethemajorbenefitsforOEMs.Appdevelopersareexperiencinglowerdevelopmentalcostsandhaveaccesstoaglobalaudiencethankstotheimprovedappdistributionframework.

Source: 15. Bureau of Indian Standards; 16. ICEA; 17. India Mobile Talent Report by Belong.co; 18. Google Play Console Support, Business of Apps

OEMs

AtthestartoftheOSrevolution,therewere7keyOEMssellingsmartphonesinIndiaaspartoftheirproductportfolio.By2018,thisnumbergrewto~8015.Withafewexceptions,mostoftheseOEMspredominantlyhaveopenOS-basedsmartphonesintheirportfolios.

TheintroductionofAndroidstacklayer,hasstandardisedthebaseonwhichOEMs,ODMsandappdeveloperscanworktoeasilydeveloptheirproducts.Thisstandardisedbasehasledtotheeliminationofhighfragmentationcosts.Theabsenceofsuchabasemighthaveledtoadifferentscenariowithconsiderablylessernumberofplayersoperatinginthemarket.

Figure 12: Business Benefits of Open OS

Figure 13 a: Smartphone Value (in INR Crore)

Figure 13 b: Smartphone Volume sold (in Million units)

~95% of smartphones

sold are Open OS based devices

OEMs

• Riseinnumberofplayers-7majorsmartphoneOEMsin2008-09to~80OEMsin2017-1815

• Smartphonesalesgrewfrom2millionunitsin2009-10to117millionunitsin2017-1816

App Developers

• Growingmobileappdevelopercommunity,with72%usingopensourceOSforappdevelopment(2016-17)17

• Lowerregistrationfeesandaccessto152countries’marketvia~300appstores18

1,37,904

2800

2009-10 2017-18

~50x

2009-10 2017-18

~59x

2

117

35

ManyglobalOEMshaveidentifiedIndiaasoneofthefocalmarketsforsmartphones.TherapidlyincreasingsmartphonepenetrationinthecountryhasledtoaproportionalincreaseinrevenuesfortheOEMs.

Alongwithreductionindevelopmentalefforts,opensourceOScommunityprovidesperiodicupdatesofthereferencearchitecturetotheOEMs.Thistranslatestolowermaintenancerequirements.

Source: 19. Euromonitor

Lowercostsfordevelopmentandmaintenanceresultedinincreasedmarginsmakingthesmartphonemarketlucrative.Thusoverthepastdecade,manynewOEMshaveenteredthespace.Thesecurrentlyaccountformajorityofthemarketshare-11entrantsnowcomprise~75%ofthesmartphoneunitssoldbythemajorplayers19.

Figure 14: Market Share of Smartphone Units Sold

Figure 15: Enterprise Cases for Android

ManybusinessesarecustomizingtheAndroidkerneltodriveefficiencyintheirworkflows.Someoftheexamplesarementionedbelow:

Foodorderingmechanismsinsomerestaurants now uses customized versionsofAndroid-

• Replacetheuseofpaperandpentodigitaldevicestoplaceorders

• Thesystemsynchronizeswithaservercomputerinthekitchenorder data being directly displayedontheLCDscreen

• Thisreducestheleveloferrorsthatoccurinthekitchenaswellasstreamlinestheoperations

Manufacturingindustryisextensively using customized versionsofAndroidto

• MeasureAssetPerformance

• TrackInventory

• ImproveInspectionProcess

• ManageInternalEquipmentService&RepairwithPreventive Maintenance Schedules

• SupportDealerswithaStreamlined Service Process

Source: Euromonitor, KPMG Analysis

4.5%

0.3%

68.0%

12.5%

14.7%

SamsungAppleNokiaBlackberryOthers

2008-09 2017-18

29.7%

23.9%12.6%

7.6%

26.2%

XiaomiSamsungVivoOppoOthers

36

App Developers

ThroughopenOSbaseddevelopmentswithsafeguardsagainstfragmentation,theapp-developmentcommunitygetaccesstoconsumermarketsallaroundtheworld.Theycannowtargetmorethan1billionusersworldwide.ThroughopenOSbasedappdistributionplatforms,app-developerscanreachconsumersin152countries.ApartfromGoogleplay,theycanreachouttoconsumersthroughapproximately300otherthirdpartyappstoresaswell20.

Accesstosuchalargemarketfortheapp-developersmeansmoredemandfortheirproductsacrossvariousgeographiesresultinginincreasedmonetisationopportunities.

Widermarketreach,lowerregistrationfees,betterdevelopmentsupportandrelaxednormsforplacingtheapponthestoreshasledtomoredevelopersusingtheopensourceOSstacktodeveloptheirmobileapplications.

Asof2017-18,72%ofestimated1millionmobileappdeveloperswereusingopenOSasabasefortheirproductdevelopment21.

App-developershavetopayaregistrationfeeforplacingtheirappsonasmartphoneappstore.WhileAndroidopensourceOSchargesaone-timefeeofUSD25fromthedeveloper,thecorrespondingrecurringfeechargedbyaclosedmobileOSisUSD99perannum22.Thisimpliesconsiderablesavingsfortheapp-developerswhointendtoplacetheirappontheopensourceOSforanextendedperiod;furtherthereisnolimittothenumberofappsthattheycanintroduceoveraperiodoftime.

ThestandardisedopensourceOSbaselayerhasincreasedtheeasewithwhichappdeveloperscandeveloptheirproducts.Furthermore,thereisnolongeraneedtoreplicateappsfordifferentplatforms.Thisallowsthemtofocusoncomingupwiththerightproductratherthangettingentangledincomplexproductdesigningtechnicalities.

ThereisaconsiderabledifferentialintermsoftimetakentoportanapponanopenOSversusthattakenonaclosedOS.Ittakes1-2hourstolaunchanapponanopensourceOSapp-storewhereasittakes4-5daystodosoonaclosedOS22.

Thesebenefitshaveresultedinmajorityoftheapp-developingcommunityusingAndroidOS.

Googlehasmadeanactiveefforttopromotequalityappsinthepastthree-fouryears.Theyhaveset-upadedicatedBDteamaspartoftheir‘DeveloperOutreachProgram’.Underthisprogram,appdevelopersareprovidedfullsupportbyGoogle,notonlytillthetimetheappgoesfullylive,butalsopostthat.

Source: 20. Google Play Console Support, Business of Apps; 21. Press Releases, India Mobile Report by Belong.com 2017; 22. Industry Interactions by KPMG in India

Figure 16: App-developer talent Pool Distribution (2016-17)

62%

26%

10%2%

Android only iOS only Android and iOS Windows

Source: India Mobile Talent Report by Belong.co

37

Consumer Benefits

Apartfrombusinessbenefits,theopenOSecosystemhasresultedinmanyconsumerbenefitsinadigitallyconnectedsociety.Withtheentryofmultipleplayersinthemarket,Indianconsumershaveaccesstoahugevarietyofsmartphonestochoosefrom.Addingtothis,thesharpdropinthecostsassociatedwithopenOSarepassedontotheconsumers,leadingtoincreasedaffordability.

Simultaneously,alargenumberofmulti-featureappshaveemergedacrossdiversecategories,addingtocustomerconvenienceandenhancinguserexperience.

Adecadeago,mobilewasjustadevicetomake/receivecallsandexchangetextmessages.Today,astandardmobilecansupportarangeoffeaturesvaryingfrommessaging,internetaccess,wirelesscommunicationsintheshortrange(Bluetooth,Wi-Fi)tobusinessapplications,photography,gamingandvideography.Withintensifyingcompetitioninthesmartphonemarket,playersarecontinuouslyexperimentingwithnoveltechnologiestopackphoneswithaneverincreasingarrayofimpressivefeatures.

Figure 17: Consumer Benefits of Open OS

Lower Entry-level prices: Availably of smartphones for as low as INR 3,000.

Falling ASP: Open source OS based smartphones available across range a of price points, majority falling under Rs 10,000

Source: Euromonitor, KPMG Analysis

More Choice: Availability of numerous devices with > 1500 open source OS based models

Convenience: Availability of large number of apps across diverse categories for customers

38

Figure 18: Smartphone Prices

Average Smart-phone selling price (INR)

OS wise smartphone distribution by price range (INR)

Source: ICEA, KPMG Analysis Source: Pricebaba.com, KPMG Analysis

Source: 23.Press Release, KPMG Analysis; 24. Pricebaba.com, KPMG Analysis

Affordability of Smart Phones

Witheachpassingyear,smartphonescreensarebeingamplifiedtohigherresolutions,camerasarebeingimprovedtohigherpixeldensities,internalstoragecapabilitiesaregettingenhancedwhileprocessingpowerisfastapproachingthatofPCsandlaptops.

Apartfromtheirutility,smartphoneshavebecomeastylestatementfortoday’sgeneration.Manufacturersarepayingcloseattentiontodetailsinordertocomeupwithsleekerappearances.Thesmartphonerevolutionhasalreadyintegratedalmostallthefeaturesthatwereoncedonebyotherdigitalgadgets(includingcomputersandcameras)intotoday’smobilephones.

TheavailabilityofanarrayofchoicesinsmartphonescanbeattributedtotheconsistencyoftheOScodeacrossthesedevices.

ThishasshiftedthefocusofOEMstowardscateringtodifferentconsumersegmentsbyexperimentingwithnewfeaturesinsteadofindividuallydevelopingcomplexOSes.

In2010,thecostofanentrylevelbasicsmartphonewasashighasINR12,000.TodayanentrylevelsmartphoneisavailableatINR1,400andcomesloadedwithmultimediafeaturessuchas messaging, social media, video entertainment, etc23.

Furthermore,thecountryhaswitnessedaconsistentfallinaverageretailsellingpriceofsmart-phonesoverthepastdecade.LowerdevelopmentcosthasenabledmoreOEMstomanufacturesmartphonesandleveragetheeconomiesofscalewhichinturnisresultinginlowerpricedphonesbeingmorereadilyavailable.

AmongstavailableAndroidbasedsmartphonemodels,~70%lieinthesubINR10,000category24.

14,000

11,799

2008-09 2017-18

~16%

68%

3%

42%

19%

15%

25%

7%

12%

33%

3%

21%

4%

48%

Android iOS Windows

< 10,000

10,001 - 20,000

20,001- 30,000

30,001- 40,000

> 40,000

39

Access to a large variety of Apps

Sinceitsadvent,theopensourceOShasreachedallcornersoftheglobe.Thisopportunitywaswell-perceivedbytheapp-developmentcommunityandthusthedemandforgood-qualityappshasbeenwellsupplementedbydevelopers.

AnextensiveuniverseofappsisavailableforAndroidconsumersandthisisoneofthemajorreasonswhyconsumerspreferAndroidbasedsmartphones.Google’sapp-store,called‘PlayStore’,givesconsumersaccesstomillionsoffreeapps.

Googlealsoprovidesasuiteofin-builtappsunder‘GoogleMobileServices’.TheseincludebasicappssuchasGoogleSearch,Gmail,Calendar,internet browser, etc. OEMs are issued licenses tomakethissuiteavailableontheirhandsets.This,howeverisonlydoneafterensuringitscompatibilitywiththeirdevices.Thereadilyavailablesuiteofappshasenhancedcustomerconvenience.

InQ12016,Indianconsumersspent2.5timesmoretimeonappsascomparedtothatinQ1201425.Indiansmartphoneusersspent~119minutesonappsinadayinQ1of2015.Thiswentupmarginallytoabout122minutesinQ12016.ThetimespentbyIndiansmartphoneusersonappsinadayinQ12017,hassignificantlyrisento160 minutes in a day25.

Thetrendofvideostreamingappshasalsobeenontherise,withasharpgrowthinrevenue.Theperiodbetween2016and2015saw600%riseintotaltimespentontop10videostreamingapps25.ThisindicatesthattheIndianconsumeristakingfulladvantageoftheappuniverse.

Withtheexpansionoftheapp-developmentcommunity,developersaretryingtheirbesttogiveconsumersaccesstobetterfeaturesandprovidethemwithmorethanjustutilityservices.Asaresult,consumersnowhaveanarrayofbestinclassappsinvariedcategoriestochoosefrom.

Figure 19: Some Facts about App Usage in India

Indians installed an avg of ~80 apps on their smartphones per month in 2017 while using ~40 of those apps

Indian smartphone users on average use about 11 apps a day and spend about 160 minutes in apps in a day

Indians were second in terms of average time spent per month per user on mobile shopping, with close to 90 minutes

Indian smartphone users spend time on ~11 apps (higher than in France and South Korea, which are two countries with one of the highest internet penetration in the world)

Source: App Annie 2017 Retrospective Report

Source: 25. AppAnnie Retrospective report 2017

40

Societal Benefits

OpensourceOSiscontributingtosocio-economicbenefitsaswell.Increasingsmartphonepenetrationhascontributedtojobcreation,withdomesticmanufacturingandappdevelopmentbeingkeycontributorsforemploymentgeneration.Thisisfacilitatingeconomicgrowthaswell.

AboostintheoperationsofallplayersacrossthemobilephoneecosystemincludingOEMs,app-developers,telecomoperatorsandotherindirectactorsinvolvedatthepointofsalethroughoutthecountry,haspositivelyimpactedthesupplysideoftheeconomy.

Employment Generation

TheproliferationofsmartphonescombinedwiththeGoI’sPhasedManufacturingProgramandlowerlaborcostsisdrivingOEMstomanufacturesmartphonesdomestically.In2017,82%27ofthe

Smartphonesareestimatedtoaccountfor54%ofthetotal225millionunitsofmobilesmanufacturedinIndiain201727.Assuminguniformdistribution,thisimpliesthatatleast115OEMandalliedunits*areengagedinsmartphoneproduction,leadingtocreation

Figure 20: Societal Benefits Associated with Open OS

Figure 21: Contribution of Open OS ecosystem to device manufacturing (2017-18)

*These are not unique factories but a split of the total number of units operational (342) in 268 unique factories

Source: ICEA, KPMG Analysis

Source: 26. World Bank, KPMG Analysis; 27. ICEA

Employment Generation

• Employmentopportunitiescreatedinmanufacturing

• App-development

Smartphone Manufacturing units*

Allied Industries Manufacturing Units*

Smartphones produced (Lakh Units)

People Employed since 2014 (Lakhs)

68 115 1201 5.5

Economic Growth

• Cumulativeincreaseof1.4%inGDPPerCapitaGrowthoverthelast5years26

mobilephonesweremanufactureddomestically.Thesmartphonemanufacturinglandscapehassignificantlycontributedtowardsemploymentgenerationinthecountry.

of5.5lakhjobs(outof6.7lakhtotaljobsduetoproductionofmobilephonesinIndia)27.ThenumberofpeopleemployedinthemanufacturingsectorisexpectedtoincreasewithIndiatargetingtoenhanceproportionoflocalisationinmanufacturingthroughGovernmentintervention.

41

DuetoproliferationofsmartphonessupportedbythegrowingopenOSecosystem,theapp-developmentcommunityhasalsoprospered.Thisisaddingtotheemploymentgenerationinthecountry.DuetolowercostofdevelopmentascomparedtothatinothergeographiessuchasAmericaandEurope,theappdevelopmentcommunityisamajorattractionforglobalorganisations.ThereisasizablefreelancingpoolofappdevelopersbasedoutofIndia.

Economic Growth

AstudybyWorldBankindicatesthatwithevery10%increaseinmobilepenetration,theGDPpercapitagrowthincreasesby0.8%foranemergingeconomy.

Thisisduetothecumulativepositiveimpacttodemandaswellassupplysideoftheeconomy.Thesupplysideispositivelyaffectedbygreatervalueadditiononpartofmanufacturers,app-developersandotherplayersinvolvedacross

thevaluechain.Boosttomobiletelephonyhasenhancedproductivityandefficiencyoftheworkforcebyincreasingeaseofaccesstoinformation,reductionintraveltimeandassociatedcosts.Thisisleadingtoenhancedbusinessproductivity.

Figure 22: Impact of Open OS Smartphone Penetration in last 5 years

Source: World Bank Report, KPMG Analysis, Emarketer

% Penetration of Android Smartphones % Impact on GDP Per Capita Growth

0.4%0.3%

0.5%0.2%

2013-14 2014-15 2015-16 2016-17 2017-18

17.4%

1.4%

Cumulative increase in Android

Penetration (2014-18)

Cumulative increase in GDP per capita growth (2014-18)

7.4%

12.1%

15.4%

22.2%

24.8%

42

Source: Industry interactions by KPMG in India, KPMG Analysis

Priorto2008allmobilecarriershaddevelopedtheirown‘verticallyintegratedwalledgardens’ofservices,devicesandapplications.Androidrevolutionisedthisvaluechainbydistributingthecontrolamongstallstakeholders.SincetheinceptionofAndroid,Googlehastakenmanystepstocontinuallyevolveandmaintaintheecosystembypromotingcollaborativegrowth.

Benefits of using open OS for OEMs and developer community

Robust Feedback Loop• Takesthefeedbackofallstakeholdersintoaccountwhiledevelopingthenextversion

• HasasetofstrictKPIs(Retentionnumber,Engagementrate,Conversionrate,Monetisationetc.)andhelpsdevelopersimproveperformanceoftheirappbasedonthesaidKPIs

QC time Providessupportfordesigning,integrationandtestingwhichreducestheQualityControltimeofhandsetbrands&developerstherebyreducingtheirtimetomarket.

Resource pool• Takesthefeedbackofallstakeholdersintoaccountwhiledevelopingthenextversion

• HasasetofstrictKPIs(Retentionnumber,Engagementrate,Conversionrate,Monetisationetc.)andhelpsdevelopersimproveperformanceoftheirappbasedonthesaidKPIs

• Releasesasecuritypatcheverythree-fourmonths

• Thebrandshavetoreleasethesecuritypatchontoalltheirdevices&theapplicationmustpasstheirseriesofteststoensureitisnotinterferingwiththesecuritylayerdeployedinthestack

• GooglepublishesalistofAndroidapprovedsmartphones.ThishasbeendonelargelytocontroltherisingnumberofincompatibledevicesintheAndroidmarketandtoensurethesafetyandprivacyoftheenduser

1

2

3

4

43

EmergenceoftheopenOSecosystemhaspresentedunprecedentedgrowthopportunitiesforIndiancompanies.GovernmentofIndiaisalsoleveragingtheecosystemtofurtheritsaimofDigitalIndiabypromotingmobilegovernanceviaapps.

An Indian App Developer’s foray into the Global Gaming App Market: NukeBox Technologies

Domestic brand achieving Manufacturing Excellence - Lava

Some examples of Success Stories from India

1

3

2

4

Source: Industry interactions by KPMG in India, NPCI, Venturebeat

Source: KPMG Analysis, Industry Interactions by KPMG in India

• Launchedin2009,LAVA’stoplineandbottomlinehavewitnessedaCAGRof90%sinceinception

• ItcrossedtheUSD1billionmarkinrevenuesin2015-16–haswitnessedanoverallsmartphonesalesgrowthof248%overthelast5years

• Theshareofsmartphonesinitsdomesticsalesmix(valuewise)hasincreasedfrom17%in2012-13to57%duringthefirstninemonthsof2017-18

• Lavaisnowsellinginsome14-15countriesofSAARC,MiddleEastandAfrica.Exportsareabout40percentofbusiness

• AccordingtoCyberMediaResearch’s(CMR)“RetailSentimentIndex2018”,thethreekeyparametersforchannelpartnersweresell-outschemes,timelypayoutandtransparencyindealings-DomesticsmartphonemakerLavahasbeenrankedfirstbytheIndianretailersontrustworthinessaswellastimelypayouts

• Mobilegamedevelopmentstudiofocusingondevelopingandpublishinginnovative,originalandhigh-qualitygamesforaglobalaudience

• Decidedtofocusonproducingitsowngamesafterworkingon~200gamesinawork-for-hirecapacity-theideaforFood Truck Chef was conceived

– Downloaded 4.7 million times in 100 days (recordingUSD1.3millioninrevenue).Thenumberofdownloadswas~16 million by Sept2018

– BecametheNo.1Androidcasualgamein40countries;chosenas“Best of 2017” and “Awesome Game Made In India”bytheGoogle Play store

– MadeittotheTop 100 Grossing Charts in more than 100 countriesontheAppStoreand Google Play

• Aimingtomovefrompaperbasedgovernancetom-governancetoincreasetransparencyandefficiencybyleveragingthepopularityofsmartphonesandmobileinternet

• AppswerefirstdevelopedontheAndroidplatformtoavailcostbenefitsofopenOSandmakeuseofitshighcaptivebase

• UMANGapplaunchedinNov2017asaonestopshopforallthekeygovernmentservices-7.8milliondownloads;90%areonAndroidbaseddevices

• BHIMapplaunchedinDec2016toenablefast,secure,reliablecashlesspaymentsthroughmobilephones–over33milliondownloads;morethan90%areonAndroidbaseddevices

• OtherappslikeIRCTC,mPassportseva,cVigiletc.havealsobeenlaunched

• End-to-endtelecomecosystemcompany-involvedinmanufacturing,retail,anddistributionofmobilehandsetsinIndiasince1997

• FormedaJVwithWistronin2015,tosetuptelecommanufacturingfacilities.Currentlyhas2factorieswith21assemblylinesemploying1600people

• 100%ofsmartphonesproducedareAndroidphones

• Inkedthelicense to design, manufacture and distribute BB devices(usingsecureAndroidversions)intheIndiansubcontinentinFeb2017

An Indian OEM manufacturing Blackberry Devices : Optiemus Infracom

Leveraging Technology to Empower Citizens: Government of India

44

Alignment of Open OS with key national priorities

45

Digitaltechnologybasedsmartdevices(likesmartphones&wearables)haveemergedascatalystsforrapideconomicgrowthandconsumerempowermentallacrosstheglobe.OpensourceoperatingecosystemisprovidingadditionalimpetustoGovernmentofIndia’skeyinitiativessuchasMake-in-India,DigitalIndia,StartupIndiaandSkillIndia.Ithasfosteredthegrowthofalargeecosystemcomprisingconsumers,manufacturersanddevelopers.

Make in India

MakeinIndiaisamajornationalprogramoftheGovernmentofIndia,designedtofacilitateinvestment,fosterinnovation,enhanceskilldevelopment,protectintellectualpropertyandbuildbestinclassmanufacturinginfrastructureinthecountry.TheprimaryobjectiveofthisinitiativeistoattractinvestmentsfromallacrosstheglobeandstrengthenIndia’smanufacturingsector.

OpensourceoperatingsystemhasenabledbothEMSesandOEMstooptimiseand

Table: Current & Upcoming Investments in Mobile Manufacturing (INR Crore)

enhanceproductdesigntoaccommodatehigherprocessingflexibilitytherebystreamliningthemanufacturingprocess.

Thus,ahostofdomesticandinternationalOEMshavemadeanentryintotheIndianmobilephonemarketoverthepastfiveyears.ThishasbeenfacilitatedbylowerbarrierstoentrymadepossiblebyanopenOS,andagrowingdemandforsmartphones.FavorablegovernmentpolicieshavealsoprovidedapositivepushtothemobilephonemanufacturinglandscapeinIndia.

In2017,82%28ofmobilephonessoldinIndiaweremanufactureddomestically.ThishasbeenmadepossiblelargelyduetotheimplementationofthePhasedManufacturingProgram(PMP),underwhichdifferentialimporttariffsarebeingimposedonmobilephonecomponentsinstages.Itisestimatedthat,withtheincreaseinlocalmanufacturing,India’sproductionwillexceedits domestic demand by 202028.AlongwithpromotingmanufacturinginIndiafordomesticconsumption.

Activity Companies Investment Time Period

ProductAssembly&Packaging

•Gionee

•Xiaomi

•Videocon

•JiviMobile

INR1,250Crore 2016 – 2019

BoardProcessing,ProductAssembly&Packaging

Lava INR2,615Crore 2016 – 2022

ManufacturingofDisplayFab Foxconn INR34,000Crore 2018–NotSpecified

BoardProcessing,ProductAssembly&Packaging

Samsung INR5,000Crore 2018 – 2020

ProductAssembly&Packaging Comio Intex INR1,150Crore 2018 – 2019

R&D iVoomi INR250Crore 2018-2019

Source: KPMG Research, Frost and Sullivan

Source: 28. ICEA

46

InFY17-18,PMPcoveredthedomesticproductionofmechanicalcomponents,diecutparts,microphonesandreceivers,keypadsandUSBcables.InFY18-19,itwillalsoincludeprintedcircuitboardassemblies,cameramodulesand connectors.

PMPisincentivisinglocalsourcingofcomponentsaswellassettingupofSMTlinesthusincreasingdomesticvalueadditioninthemobilehandsetmanufacturingvaluechainfrom5%to15%29.

ThisincreaseisduetothelocalisationofPCBassemblyinadditiontomobilephoneassembly.ItisestimatedthatduetothemobilecomponentslocalisationasperPMP,domesticvalueadditionwillincreaseupto45%inthenextthreetofouryears29.

Thegrowingmobileecosystemisalsogivingapushtomanufacturingfacilitiesforalliedindustriessuchasaccessories,handsetcovers,

Figure 23 : Domestic Handset Production (2017-2018)

• In2018-19,atotalofINR1.65lakhcroreworthofhandsetsisestimatedtobesoldinIndia-approximately30%growth30

• EstimatedmanufacturingofmobilephonesinIndiaby2025–1,250millionhandsets30

Source: ICEA, KPMG Analysis

Source: 29. Industry interactions by KPMG in India; 30. ICEA; 31. Frost & Sullivan

chargers,screenguards,etc.Manufacturingunitsformobilehandsets&alliedindustrieshaveincreasedfrom3in2014to268in201830.

In2017-18,225millionhandsets,including120smartphoneunits30,wereassembledand/ormanufacturedinIndia.

ThedomesticmanufacturingofsmartphonesisexpectedtogrowataCAGRof48.4%between2017 and 202531.IndiaisalsoexpectedtosurpassChinaasthepreferreddestinationformanufacturingofmobilehandsetsinthenot-so-distantfuture.

Indiaisexpectedtoproduce520millionphonesbytheendof2019whichwouldrequireabout170 SMT lines30.By2025,itisexpectedthatIndiawillproduce1.2billionphones.Thistranslates into about 415 SMT lines30.From2014,approximately5.5lakh30jobshavebeencreatedbyvirtueofsmartphonemanufacturing/assemblyinIndia.Thisisestimatedtogoupto18-20lakhjobsby202530.

53%47%

Smartphone Feature phone

Volume in million units

Total225

Total132

91%

9%

Smartphone Feature phone

Value in ‘000 INR Crores

47

Digital India

DigitalIndiawaslaunchedinJuly2015byGovernmentofIndiatoempowereverycitizenwithaccesstodigitalservices,knowledgeandinformation.Thiscampaignaimstoconnectruralareaswithhigh-speedinternetnetworkandimprovedigitalliteracyacrossIndia.Smartphoneshaveemergedasaconvenientone-stopdestinationforeverymodeofcommunicationthattechnologycanputforward.ThesehavethusplayedakeyroleinbringingIndiaontoadigitalplatform,ensuringthecampaign’slastmilereach.Throughitsmultipleofferingssuchascamera,calculator,fitnessmeasurement,andmore,ithasbecomeanintrinsicpartofeverydaylife.OnthebackofopenOS,Smartphonepenetrationincreasedfrom0.3%in2009-1032 to 26%in2017-1833.

Further,Indiaisalinguisticallydiversecountrywithasmanyas22officiallanguagesandover1600spokendialects34.

MajorityofIndiansuseindigenouslanguagesastheirfirstlanguageandthisnumberisgrowing.

Inlinewiththistrend,thenumberofusersaccessing internet in local Indian language reached234millionbytheendof2016,surpassingthosethatdosoinEnglish.ThisnumberhasgrownataCAGRof41%between2011 and 201634.

Moreandmorepeopleareconsumingcontentintheirownlanguage.Growingsmartphonepenetrationisalsodrivingthedemandforhandsetshavingbettercompatibilitywithlocallanguageswithrespecttomessaging,curatedcontent, voice assistant etc.

AsperaGoImandate,allmobilehandsetssoldinIndiawillneedtosupportmessagereadabilityinall22officiallanguagesandinputtextinatleastthreelanguages-Hindi,Englishandoneregionallanguage35.ThishascomeintoeffectfromMay2018.Furthermore,asthenumberofmobileinternet users in smaller cities and rural India increases,theroleofindigenouslanguagesinsmartphonesandmobileappsisexpectedtogainmoresignificance.

ThemodifiablestackofopenOSisakeyfactorenablingtheintegrationoflocallanguagecapabilitiesinsmartphones.SmartphonevendorssuchasMicromax,Karbon,Intex,etc.havealsopartneredwithIndusOS-anAndroidstackbasedregionalOSplayer-tocatertoregionallanguagespeakers.E.g.LAVAproduced~30lakhopenOSsmartphoneswithindigenouscapabilitiesinQ22018,supporting22officiallanguages35.

Smartphonesarealsobridgingtheruralurbandivide.Byenablingaccesstopreviouslyunavailableinformationandremotefacilities,smartphonesareemergingasaninstrumentforempowermentinruralIndia.

Figure 24: Smartphone users (in million) & Penetration

292

337

381

23%

26%

29%

18%

23%

28%

33%

38%

2016-17 2017-18 2018-19(P)

Users Penetration

OpenOSbasedhandsetaccountsfor89%ofusers

Source: Emarketer, Industry Interactions by KPMG in India

Source: 32. Research Gate; 33. Emarketer; 34. KPMG-Google Report- Indian Languages-Defining India’s Internet 2017; 35. ICEA

48

AG

RIC

ULT

UR

E

Current State

• Studiesindicatethatweather parameters have up to 67%impactonvarianceincropproduction

• 47% of Indian farm land still relies on monsoon rains, leaving farmersvulnerabletounpredictableorchangingweatherpatterns

• CropInsurance

• DigitisationofLandRecords

• AccesstoFinancialServices

• Informationonagriculturalpolicies

• Product:Launchedin2007,RMLFarmer–KrishiMitra.k.a.Farmbee-providesinformation service covering farming advice, weather forecasts and market prices

• Impact: Average 5-15% increase in income forfarmersusingRMLservices

• Coverage:RMLcoversmorethan70%ofthefarmingpopulationacross17 Indian states

Potential Useful Services Benefits/ Use Cases

Source: Journal of Climatology & Weather Forecasting 2017, Vodafone Connect Farmers Report 2015

Source: 36. TRAI, 2017 37. Financial Express 2017; 38. Yourstory.com. 2017

Astheurbanmarketgraduallyreachessaturation,ruralgeographiesareincreasinglybecomingmoreimportantforbrandsforensuringgrowthandtraction.Owingtoincreasedadoptionandbetteraffordability,2017recorded109millionsmartphoneusersinruralIndia36.RuralIndiaisestimatedtoaccountfor60%37ofthenewmobilesubscribergrowthin2018.

WithentrylevelpricesforsmartphonesaslowasINR1,400,residentsoftierII,tierIIIcitiesandvillagescanafforddevicespackedwithfeaturesforcommunication,socialmediaandentertainment.

WithdataconnectivityspreadingtoremoteareasinIndia,smartphonesareprovidingaccesstoessentialservicessuchashealthcare,agriculturaltools,financialservicesandeducationthusfurtheringGoI’sobjectiveofdigitalinclusion.

ThroughappssuchasMicrolekha(amicrofinancelendingplatform),Srijan(aplatformforprovidinginformationaboutcrops),OpAsha(aTBdetectionApp),etc.,theruralpopulationhasgainedconvenient access to smart agriculture tools as wellasbetterhealthcarefacilities,bringingthemcloser towards inclusion38.

Smartphones: Fostering inclusion by bridging the Rural-Urban divide

49

BA

NK

ING

H

EA

LTH

CA

RE

ED

UC

AT

ION

Current State

Current State

Current State

• Only ~1/3ofIndia’sruralpopulationhasabankaccount and only 8% have taken a formal loan

• Forapopulationofapproximately1.3billion,thereareonly1,55,000 bank branches and 2,00,000 ATM i.e. millions ofpeopleinIndiahavelimited access to banking services

• IndiahasthehighestnumberofTB patients

• In2016,2.79millionofnew TB incidences were reported i.e. 211 cases per 100,000 population

• Itisestimatedthat40%of the Indian population is infected with TB bacteria

• Teacherpupilratioforsecondarysectionsi.e.IX-X,stands at 1:27 and average annualdrop-outrateforthesame sections is 17.86%

• Limitedavailabilityofquality education and uncertainty of employmentaftercompletionofformaleducationarekeyfactorsforhighdrop-outrates

• Bankingservicesclosertohome

• Informationrelatedtoloansand insurance

• Easilyaccessiblefinancialproductsandservices

• Remotetele-consultations

• Health-relatedinformationthroughmobilephones/village kiosks

• Remotetuitions

• Vocationaltrainingcourses

• Skilldevelopmentandplacementassistance

• Product:Launchedin2010, MoneyOnMobile offersfacilitiesformoneytransfer,MOMATM,MOMCart,DTHrechargeandBillpaymentsthroughtheirappor SMS based services in rural India

• Impact:AsofJuly2018,MOMisfacilitatingmonthlytransactionsofapprox.INR 7 Crorethroughitsnetwork

• Product:Launchedin 2013, OpAsha app identifies and diagnoses TB in a patient

• TheappaskstheuserasetofquestionsbasedonwhichahealthworkerenterscontactdetailsofthesuspectedTBpatient

• Impact:Theapphassuccessfullyidentifiedmorethan7000 TB patients in multiple locations

• Product:BYJU’Sisalearningforschoolstudents.TheappofferscomprehensivelearningprogramsinMathematicsandScienceforstudentsbetween classes 4th-12th

• Impact:16 million registered students on itsplatform.Studentsare attracted to online education on account ofaffordabilityandflexibilitywithrespecttocommencement dates and studyschedules

Potential Useful Services

Potential Useful Services

Potential Useful Services

Benefits/ Use Cases

Benefits/ Use Cases

Benefits/ Use Cases

Smartphones: Fostering inclusion by bridging the rural urban divide

Source: KPMG Report-Online Education in India in 2021, 2017

Source: Inc42.com-MoneyonMobile putting its on underserved rural India

Source: Ruralmarketing.com

50

Source: Industry Reports, Google, Pluralsight

Source: 39. NSDC; 40. National Skills Network; 41. Internet and Mobile Association of India; 42. NASSCOM

Skill India

Thepervasivenessoftechnologyintoday’sworldhascreatednewjobopportunities,leadingtotheneedforupskillingandre-skillingtheexistingworkforceinIndia.WithdigitaltransformationandemergenceofnewagetechnologieslikeAR/VR,AI,etc.,thetechnologicalskillgapisincreasing.Thenumberofmobileapplicationdevelopersisontherisebuttherequirementfortrainedsmartphoneapplicationdesignersisoutpacingtheresourcetalentpool.

AccordingtoNationalSkillDevelopmentCorporation,Indiaislikelytohaveanincrementalrequirementof24.4crore39skilledpeopleby2022inhighgrowthsectors.Mobileapplicationdevelopmentisoneofthefocussectorshere.NSDChaslaunchedspecificcoursesincollaborationwithGoogle,toimprovethemobileappecosystem.

Inaddition,GSMAanditspartnershavelaunchedtheMobileInternetSkillsTrainingToolkit(MISTT)toreducethedigitalskillsbarrierinIndia40.

FortheIndianeconomy,thekeychallengenowistrainingnewtalentaswellashelpingthecurrenttalentpooltostayrelevant.Toovercomethischallenge,theNationalDigitalCommunicationsPolicy 2018 aims to train 1 million workers in new age skills.

Startup India

ThevisionofDigitalIndiaisdrivingthestart-upecosystemofthecountrytothenextlevel.Withmobileinternetpenetrationreaching59%and18%41inurbanandruralareasrespectively,themarketfortechnologybasedstartupshasincreasedmanifoldinthepastdecade.

Withover1000techstartupsbeingregisteredin2017,thetotalnumberoftechstartupshasreached5000overthelastfiveyears42, makingIndiatheworld’sthird-largeststartupecosystem42.~60%ofthesestart-upsprovideB2Cservices,primarilyviamobileapps.Withagrowthof167%,thefundingofentireIndianstartupecosystem(ledbyunicorns)amountedtoUSD6.4BillioninH1-201742.

AccordingtoasurveybytheGlobalAcceleratorLearningInitiative(GALI),Indiahasaround259startupincubatorsandaccelerators.ShellE4,Target,SAP,Microsoft,Qualcomm,Cisco,Google,Bosch,Intel,GEHealthcare,IntuitaresomeoftheMNCsoperatingstartupacceleratorsinIndia.GoIhasalsobeenactivelyinvolvedindrivingthiswaveofincubation–NITIAayog,MeitY,MSME,stategovernmentshavealllaunchedinitiativesaimedatpromotingstartups.

Democratising Tech Learning

InNovember2017,Google announced anewscholarshipprogramaimedattraining1.3lakhdevelopersandstudents across

India.

Theyaimtofund1,00,000 and

30,000scholarshipsontechnologylearningplatformPluralsightand

educational institution Udacity, respectively.

ThisinnovativeprogramisdesignedaroundAndroid

developers,Mobilewebdevelopers,

CloudarchitectsandData engineers.

From2016-17,Googlehas

engagedoverhalfa million students anddevelopers

across India throughmorethen200programs

and initiatives, all designedtohelpthemimprove

theirdevelopmentskills.

Asofendof2017,327,000 Udacity studentshave

alreadycompletedcoursesdeveloped

by Google on in-demand

topicssuchasMobile and Web development,

MachineLearning,AR/VR,ArtificialIntelligence and CloudPlatforms.

51

Conclusion

OpensourcemobileoperatingsystemhassignificantlycontributedtoIndia’stechnologicaltransformationbyusheringinaneraofaffordablesmartphones.Ithasfosteredthedevelopmentofanecosystemaroundmobilephones,positivelyimpactingbusinesses,consumersandthesociety.

IthasloweredbarriersofentryforOEMsaswellashelpedstreamlinethemanufacturingprocessthroughincreasedstandardisation.OEMscanthusexploiteconomiesofscale,enablingthemtodeliverphonespackedwithfeaturesatconsiderablylowerpricepoints.Consumersare being able to derive more utility not only throughthesefeaturesbutalsofromappsavailableonsmartphones.Theincreasedappetiteforappsisfosteringthegrowthofahealthyappdevelopmentenvironmentandastartupecosystemwhichinturnisspurringdevelopmentofnewskill-setinthecountry.

Indiaiswitnessingthedevelopmentofarobusthandsetmanufacturinglandscapethathas

emergedduetoproliferationofsmartphones,strengthenedbyGoI’sinitiativeslikethePhasedManufacturingProgram(PMP).

Withincreaseddevicepenetration,Indiaisupwardlytraversingthedigitaladoptioncurvegivingrisetoahostofconnecteddevicesrangingfromwearablestoconnectedtelevisionsandsmartspeakers.

OpenOSisplayingapivotalroleinconnectingIndiaoveradigitalplatform.ForalargeportionoftheIndianpopulation,internet-enabledsmartphonesaretheirfirstpersonalcomputer,musicplayer,TVscreen,cameraetc.

Thepositiveimpactoftheopenoperatingsystem on businesses, consumers and society canbefurtherenhancedthroughfavorablepolicyinterventionsandbyencouraginggreatercontributionsfromallthestakeholdersinvolved,inordertounleashthefullpotentialoftherapidlyevolving and growing ecosystem.

52

Android1.0waslaunchedin2008anditslatestversionAndroidPiehasbeenlaunchedin2018.Throughtheyears,Androidhasaddedvariousfunctionalitiesinitsstack,furtheringinnovationaswellasenduserexperience.InDecember2017,astrippeddownversion,AndroidOreoGo,waslaunchedforentrylevelsmartphoneswithmemoriesaslowas512MB.ItalsohasaccesstoaspecialversionofGooglePlay Store.

Googlehastakenmanystepstoensuresecurityandtimelyupdates.TheyhaverecentlystartedpublishingalistofAndroidapprovedsmartphonevendorswhonowhavetoensurethatalltheirdevicesinthemarketgetproperandtimelyupdates.ThishasbeendonelargelytocontroltherisingfragmentationintheAndroidmarketandtoensurethesafetyandprivacyoftheenduser.

Android – The most prevalent open OS

evolution of android

FrombasicfeatureslikeGmail,Mapsetc.inAndroid1,Googleaddedfunctionalitieslike3rdpartyappwidgets,CDMAsupport,voicecontrollednavigation,speechtotextfunction,andunderthehoodimprovementsupuntilFroyo

Googlelaunched“MaterialDesignStandard”–astandardthemerunningthroughallapplications-initsLollipopversion.ThiseraalsosawthelaunchofcardbasedconceptasacoreUIpattern,OKGooglesupportwithhandsfreevoicecontrol.Nougataddedgoogleassistant,nativescreensplitmodeandshortcutforsnappingbetweenapplications

InOreo,Googleaddedanativepicture-in-picturefeature.autofillfeature,notificationchannelsthatsortnotificationsbasedonimportance,smarttextselection,approvalrequirementforappinstallationonaper-appbasis.Dozewasintroducedtoenableappstorunwhenthephoneisonstandby

InPie,functionalitiesforgesturenavigation,adaptivebatteryandbrightness,appactionstoquicklystarttasksbypredictingwhatyouwanttodo,improvedsecurityfeaturesbyrestrictingaccesstomic,camera,andallsensorsfromidleappshavebeenadded

FromfirstvisualidentityinGingerbread,Googlewentontoaddfunctionalitiestoenhanceend-userexperience.Theseincludedon-screenbuttonsformainnavigationalcommands,unifiedUIforphones&tablets,swipingasanintegralpartofnavigation

Android 1 Cupcake Donut Eclair Froyo

Gingerbread HoneycombIcecream Sandwich Jellybean

2008 - 2010

2010 - 2013

KitKat Lollipop Marshmallow Nougat

Oreo 2017 Pie 2018

Prevalence of Android

~86%ofsmartphonesinusegloballyareAndroidbased

Top5Chinesebrands(OPPO,Huawei,Xiaomi,VivoandLenovo)accountfor~40%ofallAndroidbasedsmartphonesinuseglobally

~66%oftabletsinusegloballyareAndroidbased–794million

IntheU.S.,48.3%ofallactivesmartphonesareAndroidbased

– 125 million

InIndia,96%ofallactivesmartphonesareAndroidbased

– 323 million

Chinaisthe#1marketforAndroidbasedsmartphoneswith

~731millionactiveusers

*These are not unique factories but a split of the total number of units operational (342) in 268 unique factories

2013 - 2016

53

Glossary3G 3rd Generation

4G 4th Generation

AOSP AndroidOpenSourceProject

API ApplicationProgramInterface

AR AugmentedReality

ASP AverageSellingPrice

ATM AutomatedTellerMachine

B2C Business to Consumer

BB Blackberry

BD BusinessDevelopment

CAGR CompoundAnnualGrowthRate

CCTV Closed Circuit Television

CDMA CodeDivisionMultipleAccess

DTH Direct to Home

EMUI EmotionalUserInterface

EMS ElectronicsManufacturingService

FY FinancialYear

GDP Gross Domestic Product

GMS Google Mobile Services

GoI GovernmentofIndia

GPS Global Positioning System

HD HighDefination

IAMAI InternetandMobileAssociationofIndia

INR IndianRupee

iOS iPhoneOperatingSystem

IoT InternetofThings

JV Joint Venture

KPI KeyPerformanceIndicator

MB Megabyte

MeitY MinistryofElectronicsandInformationTechnology

MIUI MiUserInterface

MNC MultiNationalCorporate

MoM Money on Mobile

MSME Micro,Small&MediumEnterprises

NASSCOM NationalAssociationofSoftwareandServicesCompanies

NITI NationalInstituteforTransformingIndia

NSDC NationalSkillDevelopmentCorporation

ODM OriginalDeviceManufacturer

OEM OriginalEquipmentManufacturer

OS OperatingSystem

PC PersonalComputer

PCB Printed Circuit Board

PMP PhasedManufacturingProgram

QC QualityControl

R&D ResearchandDevelopment

RML ReutersMarketLight

SAARC SouthAsianAssociationforRegionalCooperation

SMS ShortMessageService

SMT SurfaceMountTechnology

TB Tubercolusis

TV Television

UBS Universal Serial Bus

UI UserInterface

USD United States Dollar

VR VirtualReaity

WAP WirelessApplicationProtocol

YoY YearonYear

54

Appendix

55

Methodology Applied for estimating Impact Assessment

ImpactAssessmentofAndroidOpenSourceOShasbeencategorisedintothreebroadareas:Businesses,ConsumersandSocietalbenefits.Amixofreliablethirdpartydatasourcesaswellasinputsgatheredviaprimaryinteractionswithplayersintheecosystemhavebeenreliedupontoestimatethesame.

Business Benefits

BusinessbenefitsreferstothegainsrealizedbyhandsetOEMs&alliedsectoronaccountofusageandproliferationofopenOS.Forthepurposeofestimation,HandsetOEMsandApplicationDevelopershavebeenconsideredasthetwokeystakeholders.

OEMs–Themainbenefitislowerbarrierstoentryonaccountofreduceddevelopmentalandmaintenancecosts.ThishasenabledmoreOEMstoentertheIndianmarket.

Theoutputhasbeendepictedintermsofincreaseinvolumeofsmartphones(inmillionunits)soldfrom2009-10to2017-18.Therespectivechangeintermsofvalue(inINRCrore)ofsmartphonessoldhasalsobeendepicted.

Application Developers–Thebenefitstoapplicationdevelopersareaccesstolargemarket,lowerregistrationfeesandeaseofdevelopment(duetobasicstackbeingavailablefordevelopment).

ThishasbeendepictedbythedifferentialofregistrationfeeschargedbyvariousOS

Impact Metric Source

Increase in retail revenue

generated bymajorOEMsb/w2009-2018

VolumesoldbymajorOEMs (million units)

ICEA

ValueofsmartphonessoldbymajorOEMs(INRCrore)

ICEA

ASP(TotalretailsalesValue/Volume)(INR)

ICEA

Table 1: Inputs and sources for calculating business benefits to OEMs

Impact Metric Source

Registrationfee

FeechargedbyAndroidandiOS

Primary Interactions withindustryplayers

Appdevelopertalentpoolbyplatform

Talent distribution (%splitbydevelopmentalplatform)

India Mobile TalentReportby Belong.co

Table 2: Inputs and sources for calculating business benefits to Application Developers

ecosystems,theincreaseinnumberofapplicationdevelopersandtheirdistributionwithrespecttotheplatformtheychoosetodevelopon.

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Impact Metric Source

Increasedaffordability(2009-2018)

ASP(TotalretailsalesValue/Volume)(INR) ICEA

Priceofentrylevelsmartphones PressRelease

OSwisesmartphonedistributionbypricerange(INR)

Pricebaba(productresearchplatform)

Accesstolargevarietyofapps

Numberofappsavailableonclosedandopensourcebasedappdistributionplatforms

AppStoreslist2018–BusinessofApps

Table 3: Inputs and sources for calculating Consumer benefits

Consumer Benefits

ConsumerbenefitsreferstothegainsrealizedbytheconsumersonaccountofproliferationofsmartphonesandentryofmoreOEMsintheIndian market.

Societal Benefits

SocietalbenefitsrefertothegainsrealizedbytheIndiansocietyduetoincreasedproliferationofsmartphones.Employmentgenerationandeconomicgrowthhavebeenconsideredasthetwokeyimpactareas.

Employment Generation–AndroidhasluredmoreOEMsinthemarket,thuscreatingemployment(directjobcreation).Employmentcreationhasbeenestimatedbyusingthepercentagesplitofsmartphoneproduction

vsfeaturephoneproductiontocalculatetheminimumnumberofjobsthatsmartphonemanufacturinghascreatedinIndia.

ApplicationdevelopmentisanotheremploymentopportunitysupportedbyAndroid

Economic Growth-Thisimpactisthroughthepositivepushtothesupplysideoftheeconomythroughthevalueadditionbythemanufacturers,app-developersandotherplayersinvolvedacrossthevaluechain.

Thebenefitstoconsumersareincreasedaffordability,morechoicesofhandsetsavailableacrosspricepointsandaccesstoalargevarietyofapplications.

Thishasbeencalculatedasperthetablebelow:

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Impact Levers for calculation of Impact Calculation Source

Manufacturing(Smartphones&AlliedIndustry)–Directjobs

a.Numberofjobsgenerated(inLakhs)bymobilephonemanufacturingunits(Direct+Indirect)

(a*b)*c%*d

ICEA

b.Ratioofdirecttoindirectjobscreated ICEA

c.%smartphoneproduction ICEA

d.Ratioofemploymentgenerationduetosmartphoneandfeaturephone

Manufacturing(Smartphones&AlliedIndustry)–Indirectjobs

a.Ratioofdirecttoindirectjobscreated

a*b

ICEA

b.Totalnumberofdirectjobscreatedduetosmartphones

Calculated as above

Numberofalliedunits attributed to smartphones

a.Numberofalliedunitsa*b%

ICEA

b.%shareofsmartphonesindomesticproduction

ICEA

Impact Levers for calculation of Impact Calculation Source

ImpactonGDPpercapitagrowth

d.10%increaseinmobilepenetrationraisesGDPpercapitaby0.8%forlowincomecountries

[c(2018) – c(2014)]*d%

World Bank report

Table 4: Inputs and sources for calculating Societal benefits - Employment

Table 5: Inputs and sources for calculating Societal benefits – Economic Growth

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