The first half of 2016 turned out quite average for the Indian smartphone market. However, the smartphone shipments in India Q3 2016 is expected to clock a record figure of 35 million units, registering a 21% QoQ growth and 25% YoY growth, according to the research firm Counterpoint. This growth apparently has its roots in the ongoing festival season, coupled with the massive discounts on e-commerce platforms like Flipkart, Amazon, Snapdeal, and Paytm. Flipkart’s Big Billion Day and Amazon’s great Indian Festival have contributed to this growth as well.
The most interesting element in the smartphone shipments in India for Q3 2016 was the growing influence of Chinese brands like Xiaomi, Vivo, and Oppo. These brands have collectively catalysed the decline of Samsung’s market share. In Q2 2016, Samsung had 26% shipment share in the market which fell by 4.4% point to 21.6% in Q3 2016. The few of the top Chinese smartphone manufacturers, Xiamoi, Vivo and Oppo, together, claim a share of 32% in Q3 2016 as compared to 27% in the last quarter. The growth has helped these brands to claim a position among the top ten smartphone brands in India of this quarter.
However, despite constant loss of grounds, Samsung remained undeterred from the top position in the list. Micromax stood at second place with 9.8% share, followed by Lenovo-Motorola group with 8.9% share. Reliance Digital’s LYF mobiles made it to the fourth spot with 6.70%. LYF smartphones start as low as Rs 2,999 and have managed to gain more popularity with Reliance Jio’s preview offer that offered unlimited free calls along with free internet data and a bundle of other Jio apps.
Chinese Brands Are Eating Into Other OEMs Market
One of the primary reasons for this change is that, in India, the average selling price (ASP) of a smartphone is $70 (approximately Rs. 5000). Smartphones under $120 price range will continue to contribute around 50% of all overall smartphone sales in 2016. Chinese OEMs are churning out smartphones with powerful hardware under the hood and latest features within this range. Latest features and advanced technology at affordable prices worked like a charm in the Indian market.
Chinese brands have their undivided attention on the Indian market. For instance, Xiaomi has expanded its reach to almost 5000 offline stores to increase the focus in India. The company is also in talks for opening up more production units in India. Moreover, Xiaomi’s Note 3 was a major hit in the market. Xiaomi recently announced that the company sold 1 million units of its smartphones in just 18 days.
The growth of Chinese OEMs in India has also led to a decline in the market share of Indian brands, Micromax, Lava and Intex, by 6% collectively. Samsung is losing its market share despite having the world’s most selling smartphones, Galaxy S7 and S7 Edge, in its kitty. However, it failed to target the major chunk that prefers to buy smartphones around Rs 10,000 (US$150) price range. Low-end smartphones by Samsung are priced high when compared to Indian and Chinese brands.
On a Rs. 10,000 smartphone, the Indian and Chinese OEMs provide better ROI when compared to Samsung. The itching scenario after Note 7 debacle is expected to haunt Samsung at least for the next few months, resulting in Samsung’s smartphone shipments share in India go down further by the end of Q4 2016.
Smartphone Shipments In India Q3 2015 – Q3 2016
Last year, in Q3 2015, the YoY growth in smartphones shipments in India stood at 20% whereas the QoQ growth stood at 12%. Since then, the growth of smartphone market in India has been slow. This was clearly visible in the following quarters as in Q4 2015; the YoY growth clocked 15%. During the quarter, none of the smartphones boosted innovation, due to which users were hesitating to upgrade. However, the first quarter of 2016 saw an impressive 23% YoY growth in smartphone shipments. India had surpassed the US to become the second largest smartphone market. Newer brands continued to enter the market with attractive offerings and aggressive pricing throughout the quarter. Two out of three smartphones shipped were LTE-enabled, and 60% of the devices that were shipped during the quarter were phablets. During Q1 2016, the Chinese brands Vivo and Oppo reported massive year-over-year growth in shipment by 759% and 183% respectively. Since then, the Chinese OEMs continued having a significant influence on the Indian smartphone market.
In Q2 2016, Make in India initiative was the primary reason for the growth of budget smartphones. The count of brands manufacturing/assembling domestically jumped from 10 to 35. It contributed to almost 70% of the total smartphone production volume during the quarter. Lenovo-Motorola group were in the fourth spot during Q2 2016. But in Q3 2016, it jumped to the 3rd place, replacing Intex.
OEM Wars to Get Aggressive
According to Gartner, the total sales of smartphones in India during 2016 is expected to reach 139 million, growing 29.5% YoY. The OEMs are focusing more on disruptive pricing which is the primary reason for the growth. Due to cheap smartphones, the replacement cycle will also decrease to less than two years as these phones do not have the ability to survive over the period. Attractive design and latest features are other reasons for this growth. Chinese OEMs are aggressively launching new and advanced smartphones to win the major chunk in the market. Even Apple has increased its spending on marketing in India to attract more and more customers. The smartphone market in India is more dynamic than ever. It is hard to predict the future with the continuous rise and fall of devices, affecting consumer choices and preferences. But it is always wiser to focus the most on quality than pricing. The smartphone shipments in India in Q4 2016 is expected to reach record high due to the holiday season, but the performance in the quarter will allow us to have a glimpse of the market in 2017.