India Smartphone Market Exits 2018 with Highest Ever Shipments of 142.3 Million

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As per IDC’s Asia/Pacific Quarterly Mobile Phone Tracker, India smartphone market shipped 142.3 million units in 2018, registering a healthy 14.5% year-on-year (YoY) growth as compared to 2017. After a strong quarter of 2018Q3, the smartphone market saw a sequential decline of 15.1% in 2018Q4 owing to high channel inventory, but saw a healthy annual growth of 19.5%, driven primarily by multiple rounds of sales by e-tailers beyond the festive Diwali period lasting into December.

“Amongst the big highlights of 2018 were the online-focused brands that drove the share of the online channel to an all-time high of 38.4% in 2018 and a whopping 42.2% in 2018Q4. This was primarily driven by several rounds of discounts by e-tailers driving affordability through various financing options, cashback offers and buyback schemes. Shipments of the online-exclusive portfolios of Xiaomi, Honor, Realme, Asus, OnePlus etc., further fueled this growth, resulting in a year-on-year growth of 47.3% in 4Q18 for the online channel,” says Upasana Joshi , Associate Research Manager, Client Devices, IDC India.

However, the offline channel had a rather muted year with a modest 6.7% annual growth in 2018 and growing 5.0% sequentially in 2018Q4. The offline channel was unable to keep pace with the deep discounts and go-to-market initiatives from the e-tailers almost throughout the year. Having said that, offline remains the largest channel for mobile phone distribution in India and is crucial for the long-term success for any brand in India.

With the government initiative to push local manufacturing in India, 2018 witnessed further duty hikes on mobile phone components, coupled with weakened rupee further added to the challenges of the long tail of brands outside the Top 5.

The overall smartphone average selling price remained flat in 2018 at US$158, with high shipments in the mass segment of US$100-US$200 which accounted for more than half of the smartphone market in India. Commenting on the price segment trends, Joshi further adds, “The premium end of the market (above US$500) outgrew all other price segments in 2018 with 43.9% YoY growth, although it still constitutes a meager 3% share of the overall smartphone market. OnePlus emerged as the leader in US$500-US$700 segment on the back of the OnePlus 6 and the newly-launched OnePlus 6T. However, in the super premium segment of US$700+, Samsung surpassed Apple for the top position with its Galaxy S9 series," adds Joshi.

The feature phone market, which makes up 56.0% of the total mobile phone market clocked 181.3 million-unit shipments in 2018, with 10.6% YoY growth. This was primarily driven by Jio Phone shipments through the year, contributing to 36.1% of overall feature phone shipments. The 2G/2.5G market declined by 23.0% YoY in 2018 owing to high demand for 4G enabled feature phones in the market.

Top 5 Smartphone Vendor Highlights

Xiaomi continued to dominate, growing YoY by 28.6% in 2018Q4 on back of its affordable Redmi series devices aided by high decibel marketing campaigns and offline expansion with its Mi preferred partner program and opening of rural stores. Xiaomi’s Redmi 5A and Redmi Note 5/Pro series emerged as the fastest selling devices of 2018 across brands driving 10 million shipments each in the entire year. The brand continued to lead in the online channel with a share of 47.2%, climbing to the second slot in the offline channel by surpassing Vivo in 2018Q4.

Samsung remained in the second position, however with a YoY decline of 7.9% in 2018Q4. The newly-launched Galaxy A7 (2018) with triple cameras picked up demand in 2018Q4 followed by its Android Go model, the Galaxy J2 Core. The brand is expected to make a comeback with its new online exclusive “M series” to be made available in February’19 via flash sales.

vivo continued at 3rd position with high YoY growth of 79.6% in 2018Q4. Its affordable models - namely Y81 and Y71 - continued to generate maximum demand along with the flagship range of V11 and V11 Pro series. The brand continued to invest heavily in marketing and promotional activities and offering lucrative channel margins.

Realme entered the top 5 vendor list at 4th position on the back of its affordable and aggressively priced Realme 2 and Realme 2 Pro series. The brand also moved from the fourth position in 2018Q3 to the second position in the online space with a share of 17.3% in 4Q18. The brand plans to extend its footprint into offline channel initially through Large Format Retail Stores like Reliance Digital and gradually scale up to traditional brick and mortar stores.

OPPO continued at 5th position, with high YoY growth of 71.7% in 2018Q4. The brand’s “A series” with models like the A3s and A83 generated middling demand. However, it continues to face stiff competition from Vivo in the offline channel owing to lower channel incentives and consumer schemes.

IDC India Forecast:

Commenting on the outlook for 2019, Navkendar Singh, Associate Research Director, Client Devices & IPDS, IDC India mentions “Almost all the brands which were able to find traction in 2018 via e-tailers partnerships have already started their offline foray to establish themselves for the long-term. This has become more crucial as the new e-commerce guidelines come into force from 1st February 2019.

In 2019, we will see improvements in design like thinner bezels, eliminated notches, hole-punch screens, and increased promotions around three or four rear cameras, of which the utilitarian factor remains for – bokeh, wide angle, portraits, etc. We might also see innovations like on-device AI for superior video and photography experiences enabled going forward.”

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