Indonesia Smartphone Market Demand Recovers in Q2 2016

“Indonesia smartphone market grew 8% QoQ but still down 5% YoY as a result of “Make in Indonesia” push. Close to fifty brands are now competing for the market share in the third most populous country in Asia”

According to the latest research from Counterpoint Research’s Market Monitor service for Q2 2016 (July-Sept), overall mobile phone market (smartphones + feature phones) in Indonesia grew 5% and the smartphone segment grew by 8% Q/Q after recovering from a steep sequential decline of 16% in Q1 2016 coming from a strong Q4 2015.

Commenting on the results, Counterpoint Senior Analyst, Jim Lee said “Even though the smartphone market recovered in single digits, there is still lack of clarity regarding local content sourcing rules which has slowed down the smartphone growth in Indonesia market. The regulations have been largely inconsistent as government continued to tweak the “Make in Indonesia” rules, now making it a ‘multi-tier scheme’ introducing contribution from software as well. This will be welcome for likes of Apple which has almost 1% share since the increase in import duties as well as operator driven smartphones which have preinstalled apps and services. However, this will also make it debatable and even more complex to calculate the real value addition of the brand to the overall production in the country.”

Commenting on the market performance, Senior Analyst, Tarun Pathak notes, “While the overall mobile phone penetration is high, the smartphone penetration in Indonesia is still under 50%. Furthermore, most of these smartphones are 2G or 3G smartphones. There is significant opportunity here for LTE growth in terms of devices as well as subscriptions which is estimated to grow five times in 2016 compared to 2015. For instance, LTE smartphone sales grew a massive 900% annually in Q2 2016 mostly driven by Samsung, Oppo and Asus.”

Mr Pathak, further adds, “Government’s push for 30% of content to be sourced locally for LTE smartphones have been driving local production of 4G LTE smartphones, as the brands move towards increasing the number of LTE models in their portfolio. Almost 88% of the LTE smartphones are now manufactured locally in Indonesia”

Market Summary:

Vendor Highlights

  • Both the handset and smartphone segments in Indonesia grew sequentially during the quarter.
  • Two in three mobile handsets shipped during the quarter were smartphones.
  • Samsungcontinue to hold its pole position in smartphone segment with 22% market share.
  • Samsung’s J series is now contributing over half of the total Samsung smartphone sales.
  • Oppo climbed to second spot for the first time ever with a market share of 17% during the quarter. Indonesia is now the second largest market for Oppo after China followed by India.
  • Oppo has been investing heavily in domestic manufacturing, distribution channel expansion along with aggressive offline campaigns targeting the youth through its selfie-centric phones.
  • Asus was the third largest smartphone brand during the quarter with a market share of 14%. Zenfone C was one of its bestselling models during the quarter
  • Local brands Evercoss and Smartfren continue to be among the top five smartphone players with market share of 6.4% and 5.9% respectively. A shift in strategy for Evercoss to higher ASP phones led to decline in smartphone shipments during the quarter.
  • Operator Smartfren has been adopting a multi-brand strategy to reach out to end users bundling data plans more aggressively with other brands alongside its own branded smartphones which slowed down the shipments for its own brand during the quarter. The transition from CDMA to 4G LTE network is also another reason for slowing down the push for its own-branded smartphones in near-to-mid-term.

Market Highlights

  • LTE ecosystem in Indonesia grew as operators such as Telekomsel, Smartfren, Axiata and Indosat expanded their LTE coverage to close to 100 cities with total LTE subscriber base reaching close to 18 million subs in Q2 2016.
  • From LTE smartphones point of view, the total shipments grew a massive 900% annually accounting to almost two-thirds of the smartphones shipped during the quarter.
  • “Make in Indonesia” initiative by the government has grown by leaps and bounds, now 65% of the total mobile phones are now manufactured in Indonesia
  • E-commerce contribution in smartphones sales increased during the quarter but is still low compared to that of India and now contributing close to 12% of all the smartphone shipments during the quarter. Lazada remains the number one e-commerce channel in the country.
  • The share of Chinese mobile handset vendors in the smartphone segment continues to increase capturing 33% of the total smartphone market. Most of the share was captured by brands like Oppo, Lenovo, Huawei, Vivo and others.
  • Indian brands like Lava, Intex, Micromax are also eyeing the SEA region for a while. During the quarter Lava saw a steady growth in its shipments. Other key brands to watch out in coming quarters are the Wiko, Infinix, Coolpad and Meizu among others which can grab market share from local and other international players with aggressive pricing and attractive device lineup.

Exhibit 1: Indonesia Smartphone Shipments Q2 2016



Exhibit 2: Indonesia Top selling smartphone Q2 2016



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The Market Monitor research is based on sell-in (shipments) estimates based on vendor’s quarterly results, vendor-polling triangulated with sell-through (sales), supply chain checks and secondary research.