More Phones, More Choices
Thanks to growing consumer demand, the last three months of 2021 are expected to generate smartphones sales to the tune of Rs 1.25 lakh crore, or virtually 40 per cent of the Rs 3.11 lakh crore size of the connected devices market in India. According to Techarc – Technology Analytics, Research & Consulting, a new-age technology market research firm, about 49.9 million smartphones are expected to be sold by the end of this year.
Another study by Counterpoint Research shows that smartphone sales in India are expected to touch a record $7.6 billion (about Rs 56,858 crore) this festive season. The truth may lie somewhere between these two mind-boggling figures.
Smartphones with better quality cameras, faster processors, and enhanced user interface have been selling like hot cakes all through 2021. A report by RedSeer Consulting shows that smartphones worth Rs 68 crore were sold every hour during the festive sales by a leading e-commerce website recently, led by active participation from consumers residing in Tier-II towns.
Sample this: At the time of filing this story, leading smartphone brand Samsung India had already launched 27 smartphones, four more than last year. Chinese brands Vivo India had launched 15 smartphones, Xiaomi India 13 smartphones while Oppo India had launched 11 smartphones.
Amidst the anticipation of higher sales in the upcoming festive season, the smartphone shipments fell five per cent year on year (YoY) in Q3 2021 to 47.5 million units as per market researcher Canalys.
But there is not much to worry about as the marginal dip is due to certain supply-side issues and that too in the low-end models. Overall, the smartphone shipments in July-August-September period were 47 per cent higher than the preceding three months because of increased consumer demand.
Xiaomi has maintained its lead by shipping 11.2 million units for a 24 per cent share while Samsung remained the second-largest smartphone brand in India that shipped 9.1 million units in Q3 2021, accounting for 19 per cent of the market. Vivo was third with 8.1 million shipments, followed by Realme (7.5 million units) and Oppo (6.2 million units). Canalys underlines in its report that Xiaomi numbers include its sub-brand Poco, while Oppo includes OnePlus.
More Launches Mean More Sales?
To continue the shopping spree, the smartphone brands are coming up with new launches almost every 15 days. When asked about expectations from the festive season, Nipun Marya, Director – Brand Strategy, Vivo India, said, “We expect a strong scope for engagement with the consumers, and smartphone sales are expected to increase in the next few months. Businesses across industries are witnessing an upward trend, and the smartphone sector is no exception.”
On the contrary, plenty of launches also bring ambiguity to the consumer’s mind apart from choices. We went out (masked) in the streets asking consumers what they thought about the frequent product launches, and we were surprised by their responses. Said Kartik Saini, who works in a production company: “Actually, we get confused sometimes as there are lots of products in the same segment. Yes! There is choice for us, but at the same time, we need to research a lot for buying a smartphone.”
It is a known fact that the budget segment contributes to most of the sales, but this year, consumer’s buying preference is shifting towards to mid and premium smartphone segment. According to the TechARC research, of the total Rs 1.25 lakh crore expected revenue to be generated by the smartphone category, about 51 per cent will come from the premium smartphone segment, which consists of devices that are priced between Rs 25,000 and Rs 50,000. Around 42 per cent contribution will be from the mid-segment smartphones priced between Rs 12,000 and Rs 25,000. The ultra-premium smartphone segment is witnessing stiff competition between established brands like Apple, Samsung, Google and OnePlus who are also competing with brands like Vivo and Xiaomi.
Marya shared, “We expect that the premium segment will continue to grow in the future as consumers want to upgrade and they are willing to pay a premium for meaningful innovation.”
Explaining the demand curve of Apple devices, Prachir Singh, Senior Research Analyst at Counterpoint, said, “Competition will be very high in the ultra-premium segment, with Apple likely to corner the lion’s share of around 40 per cent in Q3. We have seen high shipments of iPhone 11 and 12 in August, and it will continue coupled with the iPhone 13 series.”
Chip Shortage Impact
Global supply chain constraints and shortage of chips and other electronic components can take a toll on consumers’ pockets this festive season, experts fear. This shortage in chips, a crucial component in any smart device, is expected to continue deep into 2022. The fear is of shortages and a corresponding jump in prices of handsets that are available in the market.
Counterpoint Research has downgraded its smartphone shipment outlook for 2021 to around six per cent from its earlier projections of nine per cent growth. A multi-brand retailer told BW Businessworld that they have started stocking more units after witnessing the high demand due to the festive season. “Earlier, we were maintaining the stock for 30 days, now we are increasing it to 45 days,” the retailer said.
