Indian smartphone market to see double digit growth in 2018; seen as bright spot globally
Overcoming the impact of demonetisation and Goods and Services Tax, the Indian smartphone market grew for the second consecutive quarter in the October-December period of 2017, proving to be the only market globally to show significant growth in 2017. The segment is expected to be the lone bright star globally in the year 2018 as well. According to data from International Data Corporation (IDC), the Indian smartphone market rose around 18% year-on-year (YoY) in Q4 2017, a second consecutive quarter of healthy growth. The feature phone market saw surprisingly strong growth of 70% YoY due to a low base in Q4 2016 (affected by demonetization) and the launch of Reliance Jio 4G feature phone and similar products from Indian brands. Within the smartphone segment, the Average Selling Prices (ASPs) continued to move up with the $150 (Rs 10,000) segment being the current sweet spot. More:
Also, Chinese brands continued to take share in smartphones with around 55% cumulative share. Xiaomi secured the No.1 market share ranking in Q4 2017, with 27% unit share, ahead of Samsung Corporation.
The IDC data stated that the market share momentum for Chinese players like Oppo, Vivo and Lenovo was sluggish in the last few quarters, however, the local brands like Micromax have improved their market share due to a more focused product portfolio. Within feature phones, emerging Chinese player, Transsion has done well in 2017, securing No 2 position.
JP Morgan in a research note said that in 2018, India will be one of the few bright spots for smartphone unit growth and expects mid-teens unit growth barring any headwinds. "In the fourth quarter, the Indian smartphone market has continued the growth from the third quarter and is likely to be the sole bright spot in the global smartphone landscape. Affordable mobile internet plans from the rising competition in the telecom space and relatively low penetration are both key drivers,” JP Morgan research note said.
The Average Selling Prices (ASPs) were also up in 2017 and are likely to maintain slow upward momentum. The smartphone ASPs in India market moved up 13% in 2017 (an average at $150) as consumers migrated to the mid-market in the Rs 6,000 to Rs15000 segments through the year.
“In 2018, we expect ASPs to continue to maintain a slow upward momentum, as replacement purchases become more significant and consumers migrate to more feature rich devices. This is similar to the trend that we have seen in the China smartphone market, but may play out in a more gradual way in India,” the report said.
According to the IDC data the feature phone shipments have also seen a growth of around 70% YoY or up to 56 million units, partly due to the launch of the much awaited Reliance Jio 4G feature phone, and other competing products in the same category by local brands like Micromax. However, this has not prevented continued growth in smartphone units either. With price segments remaining quite segregated between the $150 range (Rs 10,000) smartphones vs $20-30 (Rs 1500-2000) for feature phones, experts believe the market will likely evolve in a two tiered fashion, to support significant feature phone shipments given the low entry price points, while also seeing steady growth in smartphone adoption, due to rising adoption of mobile internet.
The data elaborates that the Chinese brands have captured around 55% of market share in India with Xiaomi beating Samsung to the top-spot in the fourth quarter of 2017 with 27% unit share, surpassing Samsung which has 24% share for the first time as its offline channel strategy started to show impressive results, according to IDC. Other Chinese brands like Oppo, Vivo and Lenovo lost share in the last quarter and are likely to remain under pressure in the first half of 2018. Local players like Micromax had a minor revival as they have streamlined their product portfolio. In feature phones, emerging Chinese player, Transsion, showed good momentum in 2017, reaching No. 2 spot behind Samsung, with 14% market share.
However, it can be summarized that India remains the only large smartphone market which exhibits healthy unit growth. Mediatek’s revival in mid-high end chipsets could see better prospects if Indian smartphone market continues to remain strong in 2018, given its recent partnership with Google. For Lenovo, the loss of market share in India, the second biggest market in volume terms, could push the company further towards a potential re-think of its mobile ambitions. With very affordable mobile data plans from telecom carriers and affordable smartphone pricing, it is believed that the mobile internet ecosystem in India is poised for meaningful growth in adoption.
Samsung, Apple, Huawei, Xiaomi, and Vivo will continue to be the top 5 players in 2018 as well with little variation in positioning. These 5 players will constitute more than half of the shipments putting extra pressure on the Tier2 and local vendors in India. On new smartphones, Samsung is likely to launch the folding or bendable phone in the first half of 2018 as part of a test run (around 100,000 units). Depending on the success, a formal launch will be done in 2019, including in India. Other competitors have also planned a foldable phone launch in 2019. The year could further see enhancements in features like AI (Artificial Intelligence) in a limited way, along with its integrated capabilities with other digital equipment at homes and offices. The year 2018 could well be the year for companies to jump on the AI bandwagon and Indian consumers would most likely be the frontrunners in their application.
- TradeBriefs Bureau -