An air-conditioner has a new competitor: A smartphone.



Increasing smartphone sales are hitting the air-conditioner (AC) business as households are spending a larger share of their disposable income on trendy gadgets than consumer durables, a senior industry player said here Wednesday.

"The Indian AC market could have reached six million units a year had it not been for the smartphone sales," Blue Star AC business executive director B. Thiagarajan told media here.

According to Thiagarajan, smartphone purchase is a recurring expenditure as on an average a smartphone lasts only 18 months, after which a consumer resorts to buying the device again to keep up with his aspiration of remaining market trendy.

The Blue Star director said that while the adoption of ACs in China stands at 50 million with an average penetration rate of 25 percent, the Indian AC market is limited to just 3.75 million annual sales with a penetration rate of three percent.

According to research firm GfK, which tracks actual sales data of mobile devices, during the January-September 2014 period, 147 million mobile phones are estimated to have been sold.

In terms of valuation, it accounted for Rs.39,000 crore for the first nine months and the total mobile phone market was pegged at Rs.57,000 crore for last year.

The research firm said total mobile phone sales in India may touch 200 million units this year, of which 53 million would be smartphones.

Thiagarajan said the incidental price of power efficient five-star ACs is one of the considerations for low adoption.

"For each of the star ratings, the price increases by seven percent on an average. However, interestingly, while high-end mobile prices are within the same bracket of basic five-star rating ACs, the sales of smartphones surpass AC sales," he said.

He said it is all because of the consumer's quest to keep himself technologically updated.