India once perceived by the west as a land of snake charmers has emerged as one of the biggest internet and mobile phone markets in the recent times. With about 111 million smartphone shipped in India and 243 million active internet users by the end of the second quarter of this year the country presents enormous opportunities for smartphone vendors. The numbers just scratch the surface of market share which is yet to be tapped in the country.
According to the latest report from Market Monitor service for Q3 2014 (Jul-Sep), Indian smartphone market saw a significant annual growth of 64% in Q3 2014 owing to huge sales from domestic and Chinese vendors. The numbers seem a bit paled in comparison to the year-over-year growth of 84% in Q2 2014. The dominance of Samsung Electronics Co Ltd. (KRX:005930) over the Indian smartphone market continued with its market share standing at 25%. Closely following on its heels were Micromax and Karbonn, both capturing 20% and 10% smartphone market share respectively. In the combined segment of smartphones and feature phones it was a neck to neck battle between Samsung and Micromax. Motorola which emerged as one of the top five brands in Q2 2014 owing to Moto G and Moto E which sold like hot cakes as the sale went live on Flipkart, retained its number four spot. But the report also adds that there will be stiff competition among rivals Karbonn, Sony, Lava-Xolo and Xiaomi and Motorola-Lenovo for outnumbering each other.
As device manufacturers look beyond the urban areas and expand to semi-urban and rural areas there is a scope for exponential growth. This is the reason homegrown players like Micromax, Spice, Lava and Chinese OEM’s like Xiaomi have jumped into the bandwagon and have flooded the market with budget smartphones starting as low as 6,000 INR (US$100). Since the starting of Q1 2014, lot of dramatic changes have been occurring in the country which has emerged as the second largest mobile phone and third largest smartphone market globally.
The pricing strategy adopted by Chinese players like Xiaomi, Huawei Motorola-Lenovo and homegrown bevy of manufacturers like Micromax, Lava, Karbonn and Xolo has significantly lowered the Average Selling Price (ASP) of smartphones. The entry level smartphones are available to the consumer for as low as 6,000 INR (US$100). For the price sensitive Indian audience which expects a value for money device is easy to lure with the devices put on offering by the OEM’s. The flattering designs and impeccable features which are bundled and presented at such low prices by these players is leading to huge sales. The big players like Samsung have realized the potential of this market segment and are coming up with low budget smartphones such as Galaxy Star. In the last quarter, Samsung led the sales of smartphone ranging 6,000-8,000 INR (which contributed to 30% of total sales) but close on its heels were Micromax, Lava, Xiaomi and Motorola.
Motorola, Sony, Lava make it to the big Million Smartphone Club
Many of the OEM’s managed to achieve significant milestones in this quarter describing their success story in the ever important Indian market. At par with the likes of Samsung, Micromax and Karbonn these brands reported shipments of more than million smartphones in a single quarter.
The Moto X, Moto G and Moto E line of products rolled out by Motorola has received a warm welcome by the audience and the company shipped more than a million smartphones for the first time in India in a single quarter Q3 2014.
Sony crosses the 1 Million mark unit shipments for its Xperia range smartphones in India for the first time in a single quarter (3Q 2014). The flagship Xperia range includes devices Xperia C, Xperia M dual and the Xperia Ultra T2.
Lava’s Iris X1 and X5 saw strong momentum during the quarter owing to which the brand joined the million smartphone club shipping 1 Million units for the first time in India in a single quarter. It is important note that the figure doesn’t include sales of Xolo smartphones.
The report predicts Xiaomi, Xolo, Gionee and Intex might join the ivy league of smartphones to ship million smartphones per quarter in the upcoming quarter.
Battle to intensify in the coming quarters:
After Xiaomi’s overwhelming debut in the third quarter of 2013 with its Mi3 model priced at $230, the chinese smartphone startup has plans to give the big guns like Samsung a run for their money. Its latest device in offering is Redmi 1S is priced at INR 6,000 (US$100) and packs in features like 4.7”HD display and 1.6 GHZ 4x processor. At this point, it would be interesting to read our earlier analysis that explains How and Why Xiaomi’s Redmi 1S could be the biggest threat to smartphone vendors in India. The only competitor for Redmi 1S can be the recently launched Huawei’s Holy 6, priced at INR 6,700 (US$115).
With Android One, Google has taken a step further and has intensified the competition among low budget smartphone vendors. In collaboration with Micromax, Karbonn and Spice, Google launched the first ever Android One devices in India. Though the initial acceptance has not been as high as anticipated but in due course of time it might springboard with new partners and strategic pricing. It will also be seen facing a tough time from the key Chinese players like Xiaomi or Huawei.
Whoever wins the battle, the ultimate winner will be the customers as the OEM’s strive to make better technology more affordable.