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Back in growth mode
The smartphone market in India has now revived by registering 27.5 million units of smartphone shipments in Q2 2016.

Smartphone shipments posted a healthy 17.1 percent growth over the previous quarter and a marginal 3.7 per cent growth over Q2 2015.

 

Chinese brands dominate

“China-based vendors’ shipments grew 28 per cent over the previous quarter of which Lenovo, Vivo, Xiaomi, OPPO, and Gionee were key contributors to this growth. Until now, Lenovo was the only China-based vendor to ship over a million units in a quarter, while this quarter saw an additional three vendors joining the million shipments bandwagon. Xiaomi’s Redmi Note 3 was not only the top-selling model in online channels but also a star product for the vendor’s, contributing to the majority of Xiaomi’s total shipments in Q2 2016,” said J Karthik, Senior Market Analyst, Client Devices, IDC India.

“The sub $150 segment has been a strong foothold for Indian vendors. However, it is now facing increased pressure from both global and China-based vendors. The aggressive entry of Reliance Jio with shipments of over a half a million 4G devices has captured a significant share in the sub $50 segment at the expense of other Indian vendors’ shares,” pointed out Jaipal Singh, Market Analyst, Client Devices, IDC India.

“The premium segment (US$300+) saw vendor share movement rather than expansion as Chinese makers made a significant expansion in this segment capturing around one-third of this segment in Q2 2016 from just 9 per cent a year ago. OPPO’s F1 Plus shipments grew further, helping the vendor to gain a reasonable share in a global vendor dominated segment,” added Singh.  

Apple’s iPhone SE failed to make any significant impact in the premium segment while its previous generation iPhone 5S continued to contribute to the majority of its sales.


Online sales fall

The online share of smartphones fell to 28 per cent in CY Q2 2016 from 35 per cent in the previous quarter. “Healthy growth in the offline channel, online focused vendors expanding their footprint into retail channel followed by stringent norms to restrain excessive discounting on online platform are some of the reasons that could be attributed to decline in the online share this quarter,” said Karthik.

 

Top players in smartphones...

 

Samsung continued to lead the Indian smartphone market with 25.1 per cent share, registering 10.9 per cent sequential growth over the previous quarter and 15 per cent growth compared to the same period last year. Micromax retained the second position with 19.9 per cent growth over the previous quarter. A slew of new launches backed by new marketing initiatives helped. The Lenovo Group (including Motorola) saw 10.3 per cent growth over the last quarter and the vendor regained the third position in the Indian smartphone market. Moto G4 plus and Vibe K5 Plus were the key drivers for the growth, accounting for more than a third of its total shipments.  Intex slipped to the fourth position in Q2 2016 as its shipments dropped 9.8 per cent sequentially and 30.1 per cent over last year. Reliance Jio maintained its position as the fifth largest smartphone vendor with 12.3 per cent sequential growth in Q2 2016. LYF devices have entered the sub U$50 segment and bundling introductory offers with Jio services helped it gain in retail stores.


Other key trends...

The entry level smartphone ecosystem has mostly upgraded to higher specifications, making lower memory and low-end processor technology obsolete in the market. Also, with consumers’ expectations, adding such devices (eg.: 256MB+512MB) to their portfolios is no longer a feasible option for vendors.

The difference between an entry-level feature phone and smartphone is about Rs.1000 (US$15).Vendors are finding it difficult to match the prices of feature phones and hence reopening the market, clocking good volumes of feature phones to capture entry-level/ first-time buyers.

With the festive season approaching, shipments are expected to hit the channel during the end of Q3 2016 and shipments of both smartphones and feature phones are predicted to sequentially grow in Q3 2016.

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