The smartphone shipments in India reached 24.4 million units in Q1 2016, recorded a not-so-encouraging 12% YoY growth, according to the latest report by Canalys. Samsung again emerged as an undisputed leader, followed by Micromax, Intex, Lenovo, and Lava.
The rising star of the Indian smartphone market Lenovo has recorded an unprecedented 63% YoY growth in its quarterly smartphone shipments. Lenovo’s overnight success may be attributed to its state-of-the-art budget phones and intuitive mouth-to-mouth marketing.
Apple recorded an astonishing 56% Y-o-Y leap in iPhone sales. The Brand value of Apple and availability of previous versions of iPhones at an affordable price instigated the desire in consumers to own an iPhone even if it is an older version. That’s right, despite the smaller screen and outdated hardware, the older version of the iPhone especially the iPhone 5s arising as the silent driver and in turn delivering an admirable growth for Apple in the Indian smartphone market. Apple’s commendable growth rate in India falls just behind Lenovo, though the iPhone maker currently holds 8th position in the smartphone market in India.
The report also scrutinises the premium smartphone segment, i.e. smartphones priced above $300 (Rs. 20,000). While Samsung still holds its numero uno position in the smartphone market in India, it appears to be losing its grounds as the company’s smartphone market share declined from 66% in Q1 2015 to 41% in Q1 2016. However, during the same time, Apple’s market share in India grew from 11% to 29%.
The adorable and well established international brands like Sony, LG, and Microsoft are still struggling to carve a niche in the Indian Smartphone market. Lack of marketing and decision to stick with expensive smartphones were the foremost reason for the downfall of brands like Sony and LG. Lack of apps and not so robust app ecosystem were the prime reasons behind lukewarm response received by Microsoft in India.
The debut of Chinese smartphone OEMs like Coolpad and LeEco in the budget phone market made the competition stiffer for already struggling players, especially for Micromax in India. Micromax, the poster boy of the smartphone devices growth in India, is apparently going through a storm created by the Chinese smartphone OEMs. Consequently, the smartphone market share of once the Indian smartphone juggernaut fell by a couple of percentage points to 16.7% in Q1 2016.
Smartphone Shipments: Enormous Potential In India
The geographic growth potential of a country acts as a magnet for pulling the established and blooming businesses alike to compete for their products. As the smartphone markets of developed countries, and many developing countries as well, have either saturated or is gradually moving towards saturation, India is emerging as the most viable and promising markets for mobile players with just 17% smartphone penetration. The market far from saturation portrays a big window of opportunity for the smartphone vendors as a big chunk of the population is still void of a smartphone. According to Gartner, India is estimated to record a 29% growth in smartphone shipments in 2016, compared to 7% globally.
The tier-3 towns in India pose a huge market opportunity for entry level and budget smartphones. The adoption rate of smartphones has increased considerably in these areas, as smartphones are accounting 60% of the total mobile phone market.
The rising LTE penetration
The rising LTE penetration in India has drawn a majority of international players towards Indian markets. Of the total number of smartphones that were shipped in India during Q1 2015, two-third of the total number of smartphones was LTE capable.
The debut of Reliance in LTE segment with Jio Lyf has been terrific, Within few month of its launch, Lyf has captured 7% of the total market of LTE smartphones in India. The competition in LTE-enabled smartphone segment is intensifying with Lenovo, who is trying to strengthen its 4th position by launching more budget LTE-smartphones while other home brands like LAVA and Reliance giving it a stiff competition.
Heating competition in budget smartphone segment
A majority of Indians lack brand loyalty and prefer probing features and price instead. The Average Selling Price (ASP) of smartphones in India has reached a new low of Rs. 10,700 ($160) as of 2015. Whereas the market share of the premium smartphones has been on a constant decline, thanks to Indian users who prefer scrutinizing price and features but not the brand.
The competition in the budget smartphone segment has reached a cut-throat level as the new Chinese smartphone manufacturers like Xiaomi, Oppo, LeEco, etc, trying to lure more buyers with their cutting-edge smartphones tagged with pocket-friendly prices. Consequently, the heat of the competition toppled Micromax’s smartphone market share from 22% in Q4 2014 to 14.1% in Q4 2015.
The flash sales worked wonders for Lenovo; its A6000 series garnered sales of approximate 1 million units. The rising penetration of e-commerce websites contributing 37.7% of total sales in tier-1 and tier-2 cities has catalyzed the smartphone flash sales as well.
Samsung dominated the Indian smartphone market as the Korean electronics giant has been targeting the budget phone market and premium segments alike. Samsung safeguarded its throne once again and posted 27% Y-o-Y growth in the smartphone market with its cutting edge J series and S series smartphone. The behemoth also ruled the LTE segment of smartphones which was followed by Reliance Jio.
According to counterpoint research, Intex, despite an intense competition from the new Chinese entrants in the budget smartphone segment, still able to hold its 3rd position by the number of smartphones shipped in Q1 2016. The strategy of targeting the tier-2 and tier-3 cities has produced fruitful results for Intex garnering a massive growth of 45% Y-o-Y in Q1 2016.
In a nut shell, the Chinese smartphone manufacturers have slowly started stealing the show from lead players. In Q1 2016, all together, they have captured 21% smartphone market. While Xiaomi and Lenovo are strengthening their presence in India, Oppo and Vivo presented a commendable show during the first quarter of 2016, showing an astounding 183% and 759% Y-o-Y growth in their smartphone market share in India.