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4G ‘dumb’ phones are set to grow 5,000% this year and it could be a ‘blessing in disguise’ for Apple

An Indian farmer talks on his mobile phone in the outskirts of Hyderabad on May 12, 2011.
Noah Seelam | AFP | Getty Images
An Indian farmer talks on his mobile phone in the outskirts of Hyderabad on May 12, 2011.

With smartphone growth slowing, a boom in so-called 'dumb,' or feature, phones could be the next big thing in the sector, according to Counterpoint Research.

In a statement published Tuesday, Counterpoint forecast that more than half a billion 4G capable feature phones will be shipped globally over the course of the next five years, and that demand for such models will grow more than 5,300 percent this year. Counterpoint describes the trend as a "big short-term opportunity" for the mobile industry.

Counterpoint says that more than 400 million feature phones were sold globally in 2016, whereas smartphone growth slowed to 3 percent year on year.

According to Counterpoint, there are 1.3 billion feature phone users globally, mostly from emerging markets in Asia and Africa. The polarization of economies and technology available means that in mobile phone terms, 2G and 4G networks are growing. 3G represents the squeezed middle sector of the market.

Counterpoint suggests that cellphone operators want to drive this trend. Because 2G networks are considered old and inefficient, operators are looking to catapult people on to new 4G networks.

However, the majority of the 2G user base is not keen on upgrading to a 4G smartphone, largely due to pricing and the lack of literacy in the newer technology.

"Voice calls and texts remain the king," Counterpoint says, which makes the case for 4G feature phones.

Apple is investing heavily in India as it views the country as a future growth market. But in an environment where people are still buying sub $200 phones, it is finding the environment tough. Upgrading people to the idea of 4G could help.

Neil Shah, research director of devices and ecosystems at Counterpoint Research, told CNBC via e-mail that, Apple's main competitor "Samsung shipped some 50 million (non 4G) feature phones last year. They will have to also launch a 4G feature phone to arrest any churn of decline. They won't be able to sustain with just 2G/3G feature phones this year."

Shah added that, "for Apple in India, their cheapest phone starts from US$450 ... (the trend) is a blessing in disguise for Apple as these laggard 2G feature phone users will rapidly get used to 4G networks and will itch for a better phone when they upgrade in next two years. Basically, this trend will help these users to cross the chasm – which is what Apple would actually like."

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