Festive seasons are always important for all consumer facing industries. Smartphones are no different. But coming into the season with sales at multi-year lows — the industry is on the edge. Here’s why.
According to market researcher International Data Corp (IDC) India, the first half of this year saw sales of 64 million smartphones in the Indian market, which was a 10% annual drop. The second quarter also saw a 3% annual decline.
The report further stated that shipments of smartphones priced below $200 dropped 11% year on year (y-o-y) with a 65% market share. Devices priced between $200 and $400 saw zero growth with 22% market share. These two segments together command 87% of the market.
However, the $600+ price segment reportedly saw the most growth in shipments at 75% but with only 9% of the market share. The $400 to $600 price segment stood last with 5% market share and 34% annual growth.
The high performing 5G phone segment was also down 3% in the second quarter of 2023. Even forecasts for the whole of 2023, see smartphone sales declining by 2% y-o-y.
Multiple factors from chip shortages, to higher inflation, to saturated markets are contributing to muted demand. This is why smartphone makers are hoping for a turnaround this festive season.
But there are green shoots beginning to appear. Driven by the Great Freedom Sale and by recent 5G launches, the months of July and August have begun to see low single digit growth. For the same two months, the Ultra-Premium Segment, driven by Samsung and Apple, went through the roof, with 184% annual growth in July and 20% in August.
Owing to the huge discounts offered by Amazon and Flipkart during their respective seasonal sales, the sales of iPhones went up by 25% as compared to the previous year. According to Counterpoint Research, more than 1.5 million units were sold in the first week of the festive season (October 8 to October 15).
Premium smartphone sales were up 50% on Flipkart, up 200% on Amazon. Interestingly, 80% of devices sold were 5G enabled.
Speaking of 5G, Ericsson estimates that about 31 million 5G smartphones will be sold in Indiaby March 2024.
The smartphone industry in India is forecast to grow sales by 7% this festive season. But the question is if this momentum will carry forward to 2024, with inflation and macro concerns not easing any time soon.