The smartphone market in India grew 44% in the three months of the current fiscal ended 30 June, riding largely on increased sales push through online retailers such as Flipkart, Snapdeal and Amazon.
Smartphone shipments increased to 26.5 million from 18.4 million for the same period last year, says a new report by International Data Corporation (IDC), a technology researcher.
“eTailers (online retailers) have opened additional avenues for growth for many vendors in India, who would have otherwise struggled to get a hold in the complex distribution network,” said Kiran Kumar, research manager with IDC India’s mobile phone team. “The share of smartphone shipments through etailers increased for most of the key vendors in Q2.”
Chinese vendors have tripled their year-on-year shipments and doubled it quarter-on-quarter. Lenovo Corp, Xiaomi Corp, Huawei Technologies Co. Ltd and Gionee Communication Equipment Co. together accounted for 12% of the total smartphone market in the second quarter of 2015, double from a year ago, the report stated.
“As China started to slow down, most vendors from the country have targeted India as the next big growth market for smartphones,” said Kiranjeet Kaur, research manager with IDC’s Asia-Pacific mobile phone team.
The new entrants to the Indian market have utilised specific strategies like flash sales through online retailers, Kaur said.
For instance, last year Xiaomi, introduced the term ‘Smartphone Flash Sales’ in India for its Xiaomi Mi3 mode on Flipkart. Since inception, smartphone flash sales have become the hottest sales strategy for many CDIT brands in India, including Xiaomi, Micromax, OnePlus, Lenovo, Huawei and more. Early this month, Lenovo made headlines with its first flash sale for the K3 Note phablet on Flipkart. In just over five seconds, Lenovo K3 Note went out of stock on the site, having sold a total of 47,440 units of the product.
Samsung Electronics Co. Ltd maintained its top position with 23% market share in smartphones, while Micromax Informatics Ltd captured 17% market share and Intex Technologies (India) Ltd 11%. Lava International Ltd (7%) and Lenovo Corp (6%) also made it to the top five smartphone manufacturers in the country.
India is the second largest smartphone market globally, according to a February report by Cisco Systems Inc. In 2014, the number of smartphones grew 54% in the country, touching 140 million. The number is expected to grow 4.7 times between 2014 and 2019, reaching 651 million in number.
“While the strong second quarter performance saw smartphone shipments grow by 19% following a sluggish first quarter this 2015, this growth was specific to smartphones only as the overall Indian mobile phone market shrunk by 6% in the second quarter of 2015 on a year-on-year basis,” the report said.
Vendors only shipped 59.4 million units in the second quarter of the year compared to 63.2 million shipped a year ago.
The feature phone market constitutes more than 80% of the overall mobile market. Companies like Micromax, Karbonn Mobile India Pvt. Ltd and Lava have huge stakes in the feature phone market as they have been trying to tap India’s low-end, low-cost device market.
“India phone market is still vastly under-penetrated (feature phone + smartphone combined). The decline in Q2 (in overall mobile market) is a temporary aberration while phone prices and their reach align with the mass market demand,” said Kumar. “We expect overall market to remain flat or have single digit growth over the next few years. Feature phones will continue to have double digit decline in the coming years.”
Analysts say smartphones makers are in for cut-throat competition as majority of Indians switch from feature phones to smartphones.
“The mobile phone vendors are very focused on the smartphone side of the business. There is big opportunity as people switch from feature phones to smartphones as the small installed base of smartphones in India leaves a lot of potential for growth,” said Kumar.