India handset shipments reached an all-time high of over 84 Million for the first time ever driven by strong sell-in of both featurephones and smartphones.
In terms of performance during the quarter, Smartphone shipments in India grew by 18% YoY while featurephone shipments declined by 4% YoY. Bulk of the growth was driven by online channels such as Flipkart’s Big Billion sale and Amazon’s Great Indian festival in September. Offline players also contributed to some of the shipment growth filling the channel ahead of Diwali. As a result, fourth quarter will be crucial for offline players as they need to streamline their inventory levels which they have accumulated ahead of Diwali. We expect discounts and offers to run even post Diwali.
India continues to be an attractive destination for handset OEMs. With strong smartphone growth and a sizeable featurephone market for at least three to four years, OEMs in India can target a diverse set of audiences. This has allowed a number of OEM’s to still realize double-digit growth in the featurephone segment in spite of being absent in the smartphone segment.
Samsung and Xiaomi together contributed to almost 45% of the smartphone market. This is the first time since 2012, that the top two brands have reached this level of combined share, signaling that key brands are ramping up their presence in India. Additionally, the quarter was marked with return to growth for local handset players such as Micromax and Lava in the smartphone segment.
There’s no denying that Xiaomi has made deep inroads in the smartphone market in India. Xiaomi’s market share increased from 6.3% to 22% YoY during Q3 2017 with over 300% growth. Hence, considering Xiaomi’s growth trajectory – it is highly probable for Xiaomi to become the market leader if Samsung doesn’t come up with a strategy to counter Xiaomi’s growth especially in the online segment.
Samsung has been a trusted smartphone brand in India over the years. It still enjoys the wider distribution network when compared to any brand in the market. However, with the entry of new brands in India over the past few years, users have been lured into trying spec-heavy alternative devices with a strong value for money proposition. As a result of which, its brand pull, in $150-$250 price band got diluted to a certain extent. Having said that, on a volume basis, Samsung is not declining YoY in India, in fact, the major concern for Samsung is that it is not growing with the same pace as the market. A larger chunk of replacement demand in mid-segment is captured by players like Xiaomi, OPPO, Vivo and others.
Xiaomi has been successful in luring Indian consumers through its smart marketing, aggressive devices and strong focus on online channels. No other brand is close to Xiaomi as far as online sales are concerned, where it dominates almost half of the market. Online consumers are known to be smart consumers who usually compare products at different levels before making a purchase decision. Xiaomi was smart enough to hit the sweet spot by offering the best deals at cost-sensitive price bands that drive the volume sales. Xiaomi Redmi Note 4, Redmi 4 and Redmi 4A were the top smartphone models in Q3 2017 with highest shipments targeting $150-$250 and $90-$125 price band. In case of Samsung, Galaxy J2 and J7 have been their key offerings in the same price band. There is a significant difference in smartphone specifications between the key offerings within these price bands. Hence, Samsung must come up with a different value proposition within these price bands to regain the attention of Indian consumers as the mid-segment is the fastest growing smartphone segment in India.
It has been almost a year since Reliance Jio launched its 4G LTE network officially, which drove an inflection point for mobile data consumption as well as demand for 4G capable phones. Within a year, Jio attracted more than 100 million subscribers to its network and now is targeting the next 100 million subscribers by bringing the first ever LTE featurephone to the market. This has changed the dynamic of the Indian mobile market where OEMs and operators are partnering to launch affordable 4G bundled offerings. It will all boil down to how attractive the bundled value proposition is, keeping in mind the effectiveness of Total Cost of Ownership.
India Smartphone and Featurephone Shipments Market Share in Q3 2017
- India mobile handset and smartphone market grew by 6% & 18% YoY driven by strong pre-Diwali shipments.
- Featurephone segment declined 4% YoY but grew 22% QoQ driven by sub-USD15 (INR1,000) devices as well as entry of Jiophone and Nokia branded phones in the market during the quarter.
- Chinese brands performance remained strong and contributed to more than half of the total smartphone shipments. It is their third consecutive quarter when their market share is well over 50% after they took over local players in 2H 2016.
- However, local brands like Micromax and Lava grew 41% and 24% QoQ in the smartphone segment recovering from their all-time low during demonetization last year. Micromax Bharat 2 was the bestselling model in the sub $75 segment.
- Xiaomi, iTel, Oppo, Vivo & OnePlus were the fastest growing smartphone brands during the quarter.
- Three out of four mobile handsets shipped were “Made in India” during Q3 2017. As the number of assembly units has crossed the 100 factories landmark, Government through its phased manufacturing program will look forward to an increased contribution of mobile ecosystem players to increase local value addition currently pegged at a low 5.6%. For this, an introduction of SMT lines by players will be crucial in the short term, further catalyzing the growth of number of factories and component ecosystem.
- LTE capable smartphones contributed to 97% of smartphone shipments in Q3 2017. However, in terms of installed base almost 40% smartphones are still only 3G or 2G capable signaling a faster upgrade cycle.
- Affordable mid-end segment (₹10,000-₹15,000 or US$150-$230) was the fastest growing segment driven by strong performance of Xiaomi, the Chinese vendor, contributing to almost half of the shipments.
- Premium segment (>₹30,000, US$465) grew record 3X YoY during Q3 2017 due to the strong performance of Apple, OnePlus & Samsung which grew the overall size of the premium segment
- Qualcomm was the leader among smartphone chipset suppliers. Qualcomm powered smartphones grew a healthy 73% YoY in Q3 2017. The demand of Qualcomm chipsets in the mid segment was driven by Chinese brands as they continue to be the key reason for growth.
Xiaomi continues to post back to back record quarters in India and create new benchmarks. Three out of the top five bestselling smartphones in India were from Xiaomi alone. Xiaomi has been popular in the past for its “value for money offerings”, however, the popularity is now transitioning into performance compared to last year. This can be attributed to a streamlined supply chain effort by Xiaomi and relatively weaker offerings from competitors in the online channel.
Samsung continues to dominate the segment in spite of pulling out of the featurephone segment elsewhere, highlighting the importance of catering to the huge base of Indian featurephone users. However, we also witnessed the strong entry of Nokia branded featurephone with Nokia 105 becoming one of top selling models during the quarter. Entry of the much awaited Jiophone also propelled it to the top five bestselling featurephones.
India Top Models Q3 2017
