According to the International Data Corporation's (IDC) Quarterly Mobile Phone Tracker, India registered 109.1 million units of smartphone shipments with a marginal 5.2 percent annual growth in CY2016. In CY Q42016, smartphone shipments clocked 25.8 million units, registering similar volumes as that of CY Q42015 but declining sharply by 20.3 percent over the previous quarter. This is mainly due to a seasonal decline after an all-time high festival quarter and demonetization in the month of November, which led to relatively lower consumer sales in November and December.
“This is relatively lower than expected smartphone shipments for India owing to sluggish first half and demonetisation at the end of year” says Karthik J , Senior Market Analyst, Client Devices, IDC. “Feature phone to smartphone migration has slowed down as prices of smartphones are still quite high for a feature phone user. Also, ease of use, long battery life and durability of feature phones continue to be relevant for large numbers of users of this category,” adds Karthik.
In the smartphone market, the share of China-based vendors touched a whopping 46 percent in CY Q42016, as their shipments doubled over the same period last year, while the share of homegrown vendors further slipped to 19 percent. “This is first time when none of the homegrown vendors were able to make their position in top five,” says Jaipal Singh , Market Analyst, Client Devices, IDC India. “The decision of sticking with a 3G-heavy portfolio and prioritising the price game over product experience is working against the dominance of homegrown vendors,” adds Singh
Also, the trouble is going to aggravate further for homegrown vendors as China-based vendors have now entered the high volume feature phone market, which has traditionally been dominated by the homegrown vendors. China's Transsion Group which entered the Indian market in CY Q22016 with their “itel” brand climbed to the 2nd spot in the overall mobile phone market with aggressive shipments of feature phones in CY Q42016. Transsion is also expected to launch few more brands in the later half the year within the same price bands where homegrown vendors are competing.
Feature phones remain the dominant category in the total mobile phone market, with annual shipments of 136.1 million units. The category declined by only 9.4 percent in CY2016 as compared to 16.2 percent in CY2015.
Online sales in the smartphone market remained at 31.2 percent in CY Q42016 with Xiaomi and Lenovo accounting for more than half of the channel’s volume. Interestingly, in the marginally growing smartphone market, online smartphone shipments volume grew over 10 percent annually in CY2016.
Samsung continued to lead the smartphone market by a large margin with 25.1 percent share despite a 13.1 percent sequential decline in CY Q42016. However, Samsung’s annual shipments grew 3.2 percent in 2016 driven majorly by the J-series. The J2 continues to be a key contributor for Samsung, accounting for almost half of vendor’s total shipments in CY Q42016.
Xiaomi climbed up to 2nd place with 10.7 percent share in CY Q42016 against 3.3 percent share in the same period last year. Year-on-year shipments grew threefold while sequential growth was 15.3 percent in CY Q42016. Xiaomi also expanded its retail presence with the launch of an exclusive model for offline channels in CY Q42016.
Lenovo (including Motorola) slipped to 3rd place as shipments declined 17.4 percent sequentially in CY Q42016 and 14.5 percent over CY Q42015. Motorola’s E3 Power and Lenovo’s K5 series accounted for almost half Lenovo’s shipments in CY Q42016.
OPPO made it to the top 5 list in CY Q42016 with 8.6 percent share. OPPO has been growing at a steady rate all through 2016 with the year ending at a healthy 29.9 percent sequential growth in CY Q42016. With a strong retail presence and aggressive marketing, OPPO has established itself as a key player in the Indian smartphone market. Also, the vendor’s recent inroads into online channels is likely to give an incremental push for the vendor.
vivo is yet another China-based vendor making its debut in the Top 5. vivo dethroned Reliance Jio from 5th place by clocking in a healthy 50.8 percent sequential growth in CY Q42016 with 7.6 percent vendor share. Similar to OPPO, vivo’s strength lies in its offline presence, and its extensive visibility has helped the vendor to grow more than 4 times in 2016 over the previous year.
IDC India Forecast:
IDC expects 2017 to be a test of survival for many vendors as they struggle to survive in this extremely competitive smartphone market, possibly leading to consolidation.
“The feature phone segment is likely to contribute the majority of mobile phone shipments in 2017; the migration to smartphones is expected to further slow down due to the introduction of low-cost 4G feature phones and its continued relevance to its sizeable target consumer. However, replacement demand would drive most of the smartphone shipments in 2017,” says Navkendar Singh , Senior Research Manager, Client Devices, IDC India.
“Online has become an integral channel and it is imperative that even offline-only vendors explore the possibilities to be competitive in this space while managing price parity,” adds Singh. – Communications Today Bureau