According to the International Data Corporation's (IDC) Quarterly Mobile Phone Tracker, the India smartphone market saw a shipment of 30.0 million units in 2018Q1, making it the strongest start to a year and maintaining a healthy year on year growth of 11 percent. However, the market remained almost flat compared to the previous quarter 2017Q4.
Xiaomi maintained its lead in the market for second quarter in a row with further expansion in the offline channel and popularity of its models such as Redmi 5A and Redmi Note 5. Various other companies, on the other hand, used the online channel to expand their share in the market, notable amongst those being Honor, iVOOMi and Tenor (10.or). This led to share growth of the online channel within smartphone market from to 34.2 percent in 2017Q4 to 36.0 percent in 2018Q1. Xiaomi increased its share of total eTailer shipments from 32% a year ago to 53% in 2018Q1. "Xiaomi is in a unique position with a diversified channel approach and strong demand in each of the channels. Huawei's Honor 9 Lite also made into the top 5 online models in its debut quarter 2018Q1," says Jaipal Singh, Senior Market Analyst, IDC India.
On the offline front, Transsion continued to drive growth through its brands itel and Tecno by expanding aggressively to smaller towns & cities by focusing on channel management and after sales service
The ultra-high-end segment (US$600+) saw a strong YoY growth of 68% largely due to strong shipments of Samsung's Galaxy S9 series which arrived a quarter earlier this year, and led with a 77% share in this segment. OnePlus, owing to its popular models 5 and 5T, continued to keep more than 50% share in the high-end segment (US$400-US$600).
Commenting on local manufacturing of smartphones, Upasana Joshi, Senior Market Analyst, IDC India, "The recent import duty hike on PCBs, camera modules and connectors by the Indian government, definitely puts cost pressure on the smartphone companies, till such time that they set up lines for CKD (Complete Knock Down) type of manufacturing to reduce this impact. This will increase the challenges for smaller companies even more."
Joshi adds further, "As companies continue to reel under margin pressure due to rising custom duty and raw material prices, retailers and distributors in the offline channel fear a cut in their commissions to absorb the impact of price hikes. Having said that, these partners will have to chalk out a way to mitigate some of the additional burden through special offers or schemes to the end buyer."
The 4G feature phone market continued to grow at more than 50 percent quarter-on-quarter, driven primarily by Jio Phone. The operator disrupted the market by introducing aggressively priced data plans at INR 49 in the initial weeks of the quarter acting as catalyst for growth.
Company Highlights: 2018Q1
Note: "Company" represents the current parent company (or holding company) for all brands owned and operated as subsidiary
Top 5 smartphone vendor highlights
Xiaomi continued to lead the smartphone market in the 2018 Q1 by doubling its volume year on year. Also, its continuous efforts to expand offline footprint has helped get visibility for the brand, thus ensuring availability in more places. In line with the duty hike on populated PCBs, Xiaomi announced its big move towards local manufacturing by setting up its first SMT (Surface Mount Technology) facility in Tamil Nadu in April 2018.
Samsung remained at the 2nd spot in smartphone ranking with flat annual growth in 2018Q1. Samsung's two pronged approach with the focus on low-to-mid range J series and the latest flagships Galaxy S9 series along with Galaxy S8 series and Note 8 in the premium segment drove shipments for the vendor.
OPPO climbed to 3rd position from 5th in the last quarter. While it launched F7 in later half of 2018Q1, bulk of its shipments came from mid-ranged A series with upgraded variants in 2018. The channel realignment to focus on channel partners primarily with high sales contribution continued to build deeper relationships in those channels. In a bid to capture online space, OPPO did its first flash sale exclusive on Flipkart ahead of F7 launch. The smartphone maker is also expected to launch its new online exclusive series under the brand 'Realme'.
vivo slipped to 4th position as its shipments declined by 29.4 percent year-over-year in 2018Q1. However, the brand grew by 2.1 percent as compared to previous quarter. The Y series of vivo continued to generate close to 70 percent demand.
Transsion made its debut in the Top 5 with more than threefold annual growth in shipments in 2018Q1. The China based group has four brands under its umbrella - namely itel, Tecno, Infinix and Spice. With its primary focus on offline channels, itel and Tecno branded phones are doing well in the highly price sensitive India market.
IDC India Forecast:
"The government push for high-end electronics local manufacturing and accompanying duty hike puts most of the mobile phone vendors under further margin pressure. However, a vendor looking to establish itself for long term will have to show commitment by setting up the SMT units here. Key vendors remain committed to the market and are taking steps to manage the hike. IDC expects the smartphone market to continue its double-digit growth in 2018 with the popularity and focus on budget phones, efforts by ecosystem to make devices more affordable with finance schemes, aggressive offline expansion by key players and push by the online platforms driving this growth." says Singh.
