Demonetization Anniversary: Where Smartphone Market Stands After A Year

It’s been a year since our Prime Minister Narendra Modi announced the discontinuation of Rs 500 and Rs 1,000 currency notes. None of the sectors were unaffected by the decision, however, the buying power of the customers have seen a decline too. Let’s take a look into the smartphones shipping trends over the year.

The smartphone industry is the fastest evolving industry in the world and India is a sugar bowl for smartphone vendors. Here are some takeaways from the industry.

Q3 2016 (July-September)

The smartphone market in India was touching new heights in first three quarters of 2016, third quarter (July-September) saw sales of 32.3 million smartphones in the country. According to IDC, Samsung led the market with 23 per cent market share, followed by Lenovo (9.6 per cent), Micromax (7.5 per cent), Xiaomi (7.4 per cent) and Reliance Jio (7.0 per cent), respectively.  While other brands had 45.5 per cent share.

Q4 2016 (October-December)

Then came Diwali, smartphones were being sold at a good rate. After Diwali, demonetization occurred; was it good or bad? I will only talk in the context of the smartphone market. According to IDC, the demonetization resulted in smartphone sales falling by 30 per cent month-on-month in November over the October Diwali season.

In Q4 2016, only 25.8 million smartphones were sold during this quarter which was 20 per cent less than the previous quarter. Also, with the launch of Reliance Jio 4G service, many Indian companies didn’t had 4G VoLTE compatible smartphones.

During this phase Chinese players took the advantage and for the first time, there wasn’t any Indian player in the top five smartphone companies.  Indian vendors were affected the most with the sales drop of 37.2 per cent in November as compared to October. On the other hand, Chinese players with their huge presence in online segment and extensive marketing channels saw 26.5 per cent drop in their sales during November.

According to IDC, Samsung led the market with 25.1 per cent market share, followed by Xiaomi (10.7 per cent) Lenovo (9.9 per cent), Oppo (8.6 per cent), and Vivo (7.6 per cent), respectively. While other brands had 38 per cent share.

Q1 2017 (January- March)

In 2017, the market slowly recovered from the effects of demonetization and the smartphone sales went back on track. In the first quarter of 2017, 27 million smartphone units were shipped in India. According to Analysts, the market had recovered from demonetization during this quarter.

According to IDC, Samsung led the market with 28.1 per cent market share, followed by Xiaomi (14.2 per cent) Vivo (10.5 per cent), Lenovo (9.5 per cent), and Oppo (9.3 per cent), respectively. While other brands had 28.3 per cent share.

Q2 2017 (April-June)

During this quarter, 28 million smartphones were shipped in India with Samsung leading the market with 24 per cent market share, followed by Xiaomi (17 per cent) Vivo (13 per cent), Oppo (8 per cent), and Lenovo (7 per cent) respectively. While other brands had 28.3 per cent share.

Q3-2017 (July-September)

According to Canalys, smartphones shipment in India reached a new high of 40 million units. India overtook U.S. this quarter by becoming the world’s second-largest smartphone market only behind China.

Despite posting excellent results, the market continues to concentrate, with the top five vendors (Samsung, Xiaomi, Vivo, Oppo and Lenovo) now accounting for 75 per cent of total shipments in India.

Samsung shipped 9.4 million smartphones, almost 30 per cent more than in Q3 last year. Second-placed Xiaomi increased shipments by over 290 per cent to 9.2 million units. “Xiaomi’s growth is a clear example of how a successful online brand can effectively enter the offline market while maintaining low overheads,” said Canalys Analyst Rushabh Doshi. “But Xiaomi focuses on the low end. It struggles in the mid-range (devices priced between INR15,000 and INR20,000 [US$230 and US$310]), where Samsung, Oppo and Vivo are particularly strong. Nevertheless, we predict Xiaomi’s continued go-to-market innovations will allow it to overtake Samsung within a couple of quarters.