Indonesia Smartphone Shipments Reach 6.5 million in Q12016

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According to International Data Corporation’s (IDC) Quarterly Mobile Phone Tracker, 6.5 million smartphones were shipped in Indonesia in 2016Q1 – reflecting a moderate 2.7% YoY growth but declining 22.2 % QoQ. However, the sequential decrease in 2016Q1 was higher than the same period last year where it recorded 2.7% increase YoY.

“Vendors slowed down their shipments due to two major factors: Firstly, relatively lower sell-out performance in 2015Q4 which resulted in a stock carry-over into 2016Q1. Secondly, the market also slowed down after the Chinese New Year period. Thus, shipments were slow in late February and early March”, says Reza Haryo, Senior Market Analyst, Client Devices at IDC Indonesia.

Samsung was back in No. 1 position in the Indonesia smartphone market gaining 33% of the market share. According to Reza, “Big promotional campaigns, cashback offers and telco bundling for their J-series smartphones have absolutely been the catalyst for growth.”

The China-based vendors continue to expand their share in the Indonesian market, with their share rising to 23% in 2016Q1 from 21% in the previous quarter and 12% a year ago, largely at the expense of local vendors. OPPO, which launched its flagship smartphone F1 in the quarter, was the winner amongst the China-based vendors. "Their campaign was mostly focused on promoting this new model and retailers were also being incentivized to receive attractive margins through selling the OPPO F1. Lenovo, on the other hand, continued to establish a strong foothold by forming a partnership with 6 eTailers in Indonesia to sell their much awaited model Lenovo K4 Note that came bundled with VR glasses", Reza added.

The online channel recorded a 40% YoY decrease accounting for 3.6% share of smartphone units in 2016Q1. According to Reza “Online channels still thrives on the introduction of new models mostly through flash sales to generate hype. However, not many new smartphone models were launched through eTailers in 2016Q1."

4G smartphone shipment recorded 3.3 million units accounting for 52% of smartphone shipment in 2016Q1. 4G based smartphone shipment surpassed 3G volume for the first time in 2016Q1 coming mainly from US$100 to US$150. Shipments from global and China-based vendors such as Samsung, Lenovo, OPPO started pouring in 2016Q1, incrementally contributing to the already fast growing LTE segment in Indonesia. In addition, the aggressive 4G smartphone penetration caused the average selling price of smartphones to go up from US$111 in 2015Q4 to US$141 in 2016Q1. Local vendors are also trying to get a foothold in the 4G smartphone market as 4G smartphones have caused some enthusiasm amongst Indonesians who crave smartphones for social media and entertainment purposes.

According to Reza, not many new models were launched in 2016Q1 and vendors are expected to increase their shipments by launching new models and focusing on their bestselling models in the next quarter where historically Q2 is a high season due to Ramadhan and Hari Raya. While local content regulation (TKDN) towards 4G phones is still unchanged, more and more vendors are expected to follow the footsteps of those who initially complied to TKDN and to take significant role in the provision of ICT by enhancing the development of Device, Network and Application (DNA).

“We have been seeing vendors such as Samsung and Lenovo take part in the development of DNA by conducting idea pitching roadshow in big cities in Indonesia. Thus, it is expected that more vendors will follow the step of these two vendors to promote smartphone local application development. Therefore, the growth of 4G smartphones will remain robust with strong double digit growth rates over the next few years,” said Reza.

Lastly, as individuals have increasingly gone mobile for business productivity, leveraging apps to access, and transmit heavy corporate data, businesses must realize that the challenge and opportunity is getting bigger. IDC believes that more and more enterprises in Indonesia will realize that to deliver true value from their mobility initiatives they must mobilize their internal operations and customer interactions and since mobile devices are transforming business productivity any worker can access up-to-date information; stay connected with colleagues, clients, and customers. Therefore, with the growing concern about Enterprise Mobility, smartphones will continue to be indispensable item to most users in the enterprises.