India’s smartphone shipments in the premium segment (>₹30,000 or roughly >US$400) grew 21% YoY with the market-driven by new launches and aggressive offers. Although Q1 witnessed the launch of 5G phones and the entry of new players in the premium smartphone segment, growth was less than expected due to lockdowns, resulting in zero shipments in the last week of March.
Samsung’s premium shipment volume market share of 34% helped it recapture the top spot in the segment, just nudging out Apple. New launches in affordable premium like the Galaxy S10 Lite, Galaxy Note 10 Lite, and the ultra-premium Galaxy S20 series were the main drivers for its growth over the quarter. The company marked its lead in premium by becoming the first vendor in India to launch a 108MP camera with hybrid zoom capability. Price discounts, a favorable exchange rate, and S20 cashback offers all contributed to Samsung’s growth in the segment. As well, its revamped affordable premium offering (₹30,000 – ₹45000 or roughly US$400-$600) with lite variants of flagships Galaxy 10 and Note 10 series were well received. Despite Q1 success, Samsung is unlikely to carry forward this momentum due to shutdown of all retail activities through the first half of Q2.
Though Apple fell to second in premium shipment share during the quarter, the iPhone 11 remained the best-selling model in the segment, contributing almost 17% to total shipments. Apple kept the top spot in ultra-premium (>₹45000 or roughly >$600) with a 55% share, registering 326% YoY growth. Overall, the company had a strong Q1, growing 78% YoY. One of the reasons for growth same from a surge in online sales of iPhones on platforms like Flipkart and Amazon. Share of online sales reached 40%, the highest level during a non-holiday season. This bodes well looking beyond lockdown, as Apple’s online platform was granted approval a few months ago.
The iPhone XR model was replaced by the iPhone 11 as premium’s best-seller due to no-cost EMI and banking offers bundled with the device; these were Apple-specific promotions given during Flipkart Apple Days and Amazon Apple Day sale.
Other things which Apple did well to leave prices of the 11, 7 and XR unchanged even after hikes in basic customs duty while increasing prices on the rest of its portfolio. Apple’s aspirational status coupled with a strong 2020 product portfolio, including the highly anticipated SE, should see the company continue to hover at the top of the premium segment.
OnePlus fell to third in the premium segment with share declining to 8% in ultra-premium, partly due to seasonal factors with some consumers holding off on purchases while waiting for the upcoming 8-series launch. The 7T continued to be the top-selling model in affordable premium, and we expect the 7 series to become even more important for the vendor in targeting affordable premium buyers after introduction of the 8-series.
With the 8 series launching in Q2, a quarter already heavily impacted by lockdowns, OnePlus will need to aggressively scale up 2H efforts, where demand is likely to be shifted. Given the company’s positive brand image – supported by the introduction of services like community programs, experience stores, and doorstep service for repairs – and its strong online presence, OnePlus can look at different ways to push sales, especially those related to upgrades from its loyal userbase.
India’s premium smartphone segment, which was the fastest in terms of growth last year, is the only segment expected to grow in 2020 as lockdowns and GST hikes have hit the broader market hard; with lower price sensitivities, the premium segment will be least impacted.
Competition is intensifying as more OEMs enter the fray. After realme and Vivo, Xiaomi is now set to launch a premium device. Key segment features will include 5G, higher screen refresh rates (180 Hz), faster charging (>55W), super-high resolution cameras and hybrid zoom capabilities to name a few.
OnePlus also became the first ever premium smartphone brand to cross two million shipments in a year in 2019. The contribution of OnePlus’s ultra-premium segment (≥₹45,000 or roughly ≥US$634 retail price) to the overall OnePlus portfolio grew to 25% in 2019 driven by the OnePlus 7 Pro.
