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According to the International Data Corporation’s (IDC) Quarterly Mobile Phone Tracker, the Indian smartphone market witnessed a healthy 14% annual growth with a total shipment of 124 million units in 2017, making it the fastest growing market amongst the top 20 smartphone markets globally. The market resumed its double-digit growth after a temporary slowdown in 2016 caused by factors such as demonetization and a shortage of smartphone components. This contrasts with China, the world's largest smartphone market that saw its first decline this year, while the USA was relatively flat.
After the 2017Q3 festive quarter, the smartphone category saw a sharp dip of 22% quarter-over-quarter (QoQ) in 2017Q4 as vendors focused on clearing channel inventory. However, it registered a healthy 18% growth compared to last year’s weak quarter which was impacted by demonetization.
China-based vendors further strengthened their positions in the smartphone category with the collective share of China-based vendors reaching 53% in 2017 from 34% a year ago. “The untapped demand in the lower-tier cities remains the key attraction for China-based brands to explore the growth trajectory in India. Their strength in their home market of China and weakening position of local players has helped some of these China-based players to solidify their operations in India,” says Jaipal Singh, Senior Market Analyst, IDC India.
India is the world's third largest smartphone market, and also continues to hold its position of being the biggest feature phone market globally. 2017 has been an exceptional year for this category as it witnessed a 17% annual growth after declining for three consecutive years. While feature phones remain relevant to a large consumer base in India, the Indian telecom operator Reliance Jio shipped huge shipments of 4G enabled feature phones taking the leadership postion on its maiden quarter in this category.This resulted in a total of 164 million feature phone shipments in 2017 from 140 million a year ago. In 2017Q4, vendors shipped a total of 56 million units in the 2017Q4 making it the highest-ever shipments in a single quarter. The category registered a huge 67% year-over-year (YoY) growth and 33% growth from the previous quarter.
Commenting on the key trends of 2017Q4, Upasana Joshi, Senior Market Analyst, IDC India “Xiaomi taking a lead over Samsung in the smartphone market and Reliance Jio emerging as the leading feature phone company in India were the two key highlights of the last quarter of 2017. Joshi adds further “The growth of both the vendors was propelled by their aggressive pricing. Xiaomi’s offline expansion and higher marketing spends were other key factors for the vendor’s high shipments in the seasonally low quarter.”
Xiaomi replaced Samsung for the leadership position in the 2017Q4. Xiaomi tripled its shipments year-over-year and sold more than 2 million units from its offline channel. In continuation of its offline expansion through Mi stores and preferred partners, Xiaomi appointed its first product endorser, and is now very aggressive in above the line marketing, which helped the brand to gain traction in the offline channel.
Samsung slipped to 2nd position in smartphone ranking in the last quarter of the year but leads in the overall year. Despite growing 13% year-over-year in 2017Q4, it faced challenges in competing with the aggressive pricing strategy of Xiaomi in India. However, the channel trust remains strong on brand and Samsung's distribution strength remains strong too, even as other vendors approach retailers and channel partners with lucrative offers.
vivo rose to the 3rd position after dropping to 4th in the last quarter. However, its shipments saw a 41% decline from the previous quarter and remained flattish on YoY basis. To extend its omni channel experience, vivo launched its maiden experience center in India and also participated in Amazon and Flipkart's winter sales this quarter.
Lenovo (Including Motorola) slipped to 4th position as its shipments declined sequentially and annually in the 2017Q4. Lenovo continues its efforts to strengthen its Motorola brand in India as Lenovo-branded shipments declined almost 60% while its Motorola portfolio saw a marginal increase compared to a year ago.
OPPO maintained its postion though its shipments dropped almost by half compared to its record-breaking quarter in 2017Q3. OPPO made changes to its channel strategy as it started focusing more on selective outlets instead of having a presence across all outlets.
IDC India Forecast
“While the competitive landscape is becoming more challenging in India, the low smartphone penetration remains a major attraction for all devices vendors, and they are now making serious attempts to address the problem of affordability in India with the introduction of more affordable products, resulting in initiatives such as Android Oreo 'Go edition', telco bundling with low cost 4G smartphones and even the 4G feature phone JioPhone,” says Singh. Also, as consumers experience and get hooked on to data, their need to be on a digital platform will go up and smartphones will be the first platform for many of them. IDC expects the Indian smartphone market to continue double-digit growth for next couple of years,” ends Singh.
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International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.