India smartphone market posts strongest Q1 shipment

The popular Redmi 5A has helped Xiaomi retain its pole position in India.
The popular Redmi 5A has helped Xiaomi retain its pole position in India.

The India smartphone market shipped 30 million units in Q1, the strongest Q1 performance ever and an 11-percent growth year on year, according to IDC.

Xiaomi retained its top spot with further expansion in the offline channel and popularity of its models such as Redmi 5A and Redmi Note 5. It increased its share of total eTailer shipment from 32 percent a year ago to 53 percent this Q1.

“Xiaomi is in a unique position with a diversified channel approach and strong demand in each of the channels. Huawei’s Honor 9 Lite also made into the top 5 online models in its debut quarter,” said Jaipal Singh, Senior Market Analyst of IDC India.

The ultra-high-end segment (US$600+) saw a strong year-on-year growth of 68 percent due to strong shipment of Samsung’s Galaxy S9 series which arrived a quarter earlier this year, and led with a 77 percent share in this segment.

OnePlus, owing to its popular models 5 and 5T, continued to keep more than 50 percent share in the high-end segment (US$400-US$600)

“The recent import duty hike on PCBs, camera modules and connectors by the Indian government, definitely puts cost pressure on the [local] smartphone companies, till such time that they set up lines for CKD (Complete Knock Down) type of manufacturing to reduce this impact. This will increase the challenges for smaller companies even more,” said Upasana Joshi, Senior Market Analyst of IDC India.

“As companies continue to reel under margin pressure due to rising custom duty and raw material prices, retailers and distributors in the offline channel fear a cut in their commissions to absorb the impact of price hikes. Having said that, these partners will have to chalk out a way to mitigate some of the additional burden through special offers or schemes to the end buyer,” he added.

The 4G feature phone market continued to grow at more than 50 percent quarter-on-quarter, driven primarily by Jio Phone. The operator disrupted the market by introducing aggressively priced data plans at INR49 in the initial weeks of the quarter acting as catalyst for growth.

“The government push for high-end electronics local manufacturing and accompanying duty hike puts most of the mobile phone vendors under further margin pressure. However, a vendor looking to establish itself for long term will have to show commitment by setting up the SMT units here. Key vendors remain committed to the market and are taking steps to manage the hike,” said Singh.

IDC expects the smartphone market to continue its double-digit growth in 2018 with the popularity and focus on budget phones, efforts by ecosystem to make devices more affordable with finance schemes, aggressive offline expansion by key players and push by the online platforms driving this growth.

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