India Smartphone Market Readies Itself for Festive Sales

IDC said that 28 million smartphones were shipped to India in Q22017, which was just modest 3.7 % QoQ growth and a “meagre” 1.6% YoY) increase. Just as the market had started to recover from the impact of demonetisation from late last year, the implementation of the Goods and Services Tax (GST) in the country from July 2017 meant weak sell-in shipments in the second quarter as the focus was on clearing existing inventory. However, vendors’ proactive steps in absorbing the impact of GST helped to stabilise the sell-in for the month of June.

The third quarter of the year started slowly as sales channels adjusted to the new taxation system but they quickly recovered within a few weeks. The Indian smartphone market is now preparing for the biggest quarter so far; offline channels have already cleared the old stocks and eTailers are getting ready for mega online festivals. Vendors are set to launch new models in the Diwali festive period.

After three quarters of continuous decline, Indian vendors registered 18% QoQ growth in Q2 2017 but share remains limited to 15% of overall smartphone market. On the other hand, China-based vendors, with their “massive” ongoing marketing spend and channel expansion, further cemented their position with 54% market share and registered 9% QoQ growth in Q2.

Upasana Joshi , Senior Analyst, IDC India, said:

“Indian vendors have shown an early sign of recovery and now when most of them are ready with their 4G product portfolio, a new set of China-based competitors have entered in the sub-US$150 segment. Indian vendors are putting all their efforts and second half of year will be crucial, either it will see a revival of Indian vendors or emergence of new dominance in the sub-$150 segment from China based vendors”.

Samsung retained its leadership position with a marginal decline of 4% from the same period of last year. Samsung is already facing pressure from China-based vendors in the mid-tier segment and competition has intensified even more for the vendor as the online-focused vendors have started to strengthen their grip in the offline segment.

Xiaomi secured second place with a healthy 25% QoQ growth in Q2. The vendor continues to expand its offline presence with the opening of Mi homes, Mi authorised stores and partnering with the key large format retail stores. This helped Xiaomi to triple its offline shipments in the second quarter of the year. Also, Xiaomi’s Redmi Note 4 with over 2 million shipments in Q22017 has become the highest shipped smartphone in a single quarter in the history of the Indian smartphone market.

Vivo remained in third place with 26% QoQ growth and captured 13% market share in Q22017 – a significant jump from a mere 4% market share in the same period last year. New launches coupled with aggressive investments on above-the-line marketing activities and in-shop promotions were the key driving factors.

Oppo climbed up to fourth place, though shipments declined by 13% QoQ. Oppo has strengthened its portfolio in the $200 – $300 segment and aggressively positioning itself as a strong competitor in this segment.

Lenovo (including Motorola) slipped to fifth place as its shipments declined 25% QoQ. However, its Motorola brand saw a healthy 17% QoQ growth helped by a couple of new launches at the end of quarter.

Overall mobile phone market shipments saw a modest 6.5% QoQ growth after declining consecutively for two quarters. 34 million units of feature phones were shipped in the Q22017 with 8.9% growth from the previous quarter but remained flat as compared to the same period last year.

IDC India Forecast:

Historically, the third quarter of the year is also the biggest quarter for feature phones as most of the purchases happen during the festival time and vendors start filling the channel in preparation. The feature phone market is going through a transformation as the much awaited Reliance 4G feature phone is expected to hit the market in the Q32017. ‘’Reliance’s 4G Jio Phone has created an excitement both on the channel and consumer front. This may stabilise the declining feature phone market in the short term and year 2017 is expected to end with a similar volume to last year,” said Navkendar Singh , Sr. Research Manager, IDC India “The experience of early adopters will be crucial for the 4G feature phones in the 2G dominated category. Network connectivity, battery performance, and internet-enabled multimedia experience will carve the path to the next phase for this category,” added Singh.