Pre-Diwali Sales Lead to a Record Quarter for Smartphones in India

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The smartphone shipments in India reached a record high of 39 million units in 2017Q3 with a substantial growth of 40 percent from the previous quarter and a healthy 21 percent growth from the same period last year as per International Data Corporation's (IDC) latest Quarterly Mobile Phone Tracker, Q3 2017. This has led to several firsts for the India smartphone market. One, the India smartphone shipments accounted for 10 percent of the global smartphone shipments for the first time ever in a quarter. Two, the overall mobile phone registered a 30 percent quarter-on-quarter (QoQ) growth, highest sequential growth ever in India with more than 80 million of mobile phone shipments in the third quarter of 2017.

The e-tailers’ several rounds of online festivals and sales in the month of August and September led to robust growth in the smartphone category. Thirteen million smartphones were billed to e-tailers with 35 percent annual growth and 73 percent growth from the previous quarter. Also, Xiaomi’s sales through its website continued its growth and helped boost the share of overall online channel from 32 percent to 37 percent compared to a year ago.

“eTailers have popularized many trends in the Indian smartphone market, like making devices more affordable through easy financing options, attractive exchange offers on existing smartphones. On the back of fresh infusion of funds and focus on India market, the eTailers are expected to remain aggressive in 2018 as well,” says Jaipal Singh, Senior Analyst, IDC India. “Online channel in India sees a seasonal spike peaking in Q3 on the back of multiple round of online sales following upto festival months in India. However, it is gradually becoming an integral part of the omni-channel strategy for almost all vendors with online exclusive model launches and partnerships with e-tailers during these sales,” adds Singh.

The competition amongst the top five vendors further intensified to capture a larger share of 72 percent of the smartphone market compared to 50 percent a year ago. Samsung and Xiaomi led the smartphone market in the quarter with each having 24 percent market share. Xiaomi’s aggressive pricing made the brand a clear winner in selling devices on eTailers and direct internet platform. The brand’s offline expansion through preferred partner program and mi stores is also getting a good response as its shipments doubled from the last quarter.

“In the coming few quarters, both Samsung and Xiaomi would need to further strengthen their channel play and significantly differentiate their products on technology and quality to sustain and fight for leadership in this hyper competitive smartphone market,” says Upasana Joshi, Senior Analyst, IDC India.

Raising concern on upcoming offline trend Joshi adds, “The offline channels were enjoying good growth in the past few quarters due to high retail spend by China-based vendors to create pull for their brands. But now, when the channel margins and incentives are getting normalised and few other previously online heavy vendors are getting aggressive in offline, the fight for the retail shelf space is expected to further intensify.”

Vendor Highlights:

Samsung is tied with Xiaomi as the leading brand. However, this quarter has been a record breaking quarter for Samsung after they registered 39 percent sequential growth QoQ and 23 percent year-on-year (YOY). Galaxy J2, Galaxy J7 Nxt, and GalaxyJ7 Max were the key models that contributed to almost 60 percent of Samsung’s volume.

Xiaomi almost tripled its shipments YOY and doubled QoQ in 2017Q3 as vendor increased its focus on the traditional channel for marketing its products. Redmi Note 4 continues to be the best-selling smartphone in India as Xiaomi shipped approximately 4 million units in this quarter.

Lenovo (including Motorola) made it back to the third position after two quarters as its shipments increased 83 percent from the previous quarter. A couple of new launches under the Motorola brand reversed its internal brand share and now Motorola contributes to two-third of its portfolio.

vivo slipped to fourth position as its shipments declined after a record breaking second quarter, although registered a healthy 153 percent annual growth. Vendor started to bounce back from September onwards as its newly launched V7 Plus and Y69 gained strong initial traction in the market.

OPPO had the biggest sell-in quarter so far in India as vendor shipments increased by 40 percent sequentially and 81 percent from same period last year. Vendor share also noticeably increased as it started participating in the eTailers platform to sell its devices.

IDC India Forecast:

“After an online dominated pre-and post-Diwali period, the offline channel went through a rather soft festive period. eTailers will continue to be a big driving force for smartphone growth in India, although vendors' offline focus will continue to keep retail as the dominant channel in India,” says Navkendar Singh, Associate Research Director, Client Devices, IDC India. “It will be interesting to see how exclusive partnerships between telcos and vendors, own smartphones brand launches by e-Tailers and availability of dual cameras, bezel less screens at more affordable price points, shape up in the coming quarters”, added 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.