Samsung, Oppo and Asus Maintain Strong Presence in Indonesia's Smartphone Market

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According to International Data Corporation’s (IDC) latest Quarterly Mobile Phone Tracker, total smartphone shipments recorded a moderate increase of 3% Year-on-Year (YoY) and 22% Quarter-on-Quarter (QoQ). It was a seasonal increase due to the festive Ramadhan, when vendors would increase their supply in order to cope with the demand.

“Samsung and Oppo were actively promoting big marketing campaigns in retail channels. Oppo added more weight to its success in the last couple of quarters by appointing brand ambassadors which were popular among Indonesians,” says Reza Haryo, Senior Market Analyst, Client Devices

Key highlights in the Indonesian smartphone market in 2016Q2 include:

Stronger demand for phones with better specifications outside of Tier-1 cities. There is starting to be a stronger demand for smartphones with better specifications from end-users living in the up-and-coming cities such as Denpasar, Makassar and Palembang. The increased marketing activities by vendors, as well as with locals looking to upgrade their mobile phones due to improvements in their lifestyles, have spurred demand for phones in the US$100<US$150 price band. Heavy sales activities remain concentrated in larger cities such as Greater Jakarta, Surabaya, Medan, Bandung and Semarang where the higher population there would drive greater demand for phones.

4G enabled phones made up slightly over 58% of smartphone shipments. 4G enabled devices grew 37% QoQ as operators continued with their expansion activities across the Indonesian archipelago. The bulk of 4G smartphone shipments were priced at US$100<US$150, coming mainly from global and China-based vendors, such as Samsung and Lenovo. In order to compete, local vendors have increased their 4G model line-ups as well, with the cheapest phones available in the market costing <US$50 that were pushed out by Advan and Smartfren.Increased marketing activities by operators and electronic-retailers (eTailers). Due to Ramadhan, smartphone shipments via operators rose 166% QoQ alongside eTailers which also increased by 71% QoQ. Operators bundled larger amounts of handsets with their data plans as part of their festive Ramadhan marketing campaign where data traffic generally increases due to the long holidays and frequent exchange of well wishes via social messaging apps. Meanwhile, eTailers also increased marketing activities, offering larger discounts and freebie bundles. However, physical retailers still remained as the predominant channel for end-users to acquire their smartphones.“Phablets (smartphones that fall within the 5.5"< 7" screen size band) and phones that have a rear camera megapixel band of 8 <13 grew 42% QoQ. Increased utilization for entertainment and communication based apps for social messaging, video streaming, gaming, etc. have propelled local end-users to opt for larger screen sized smartphones and cameras with better quality,” adds Haryo.

Top Five Vendor Highlights in 2016Q2

Samsung continued to be the market leader by pushing promotional campaigns to boost its sell-out during Ramadhan with the Galaxy J series being its key hero series.

Oppo maintained its number two position. Its massive marketing campaign for both retailers and end-users have been a catalyst for growth.

Asus secured the third position by shipping its low-end Zenfone Go series.

Advan was one of the local vendors that put utmost focus on offering various 4G models.

Lenovo concurrently offered low-end and mid-range 4G models. It also pushed its K4 Note as one of its best-selling models through both the online and offline channels.

IDC Indonesia Forecast

Update in Local Content Policy a Breath of Fresh Air for Vendors

The five TKDN options which were facing heavy criticism before by industry players have been replaced by a more welcoming process based measurement instead of the previous cost based measurement. “While still imperfect, this is a welcoming change as it is one of the pivotal small steps towards providing a clearer and fairer approach in regards to local content contribution for both local and foreign vendors,” adds, Haryo.

Vendors to Make Their Moves to Stay Competitive

Shipping affordable entry level 4G handsets within the price range of US$50<US$150 will be the next move by vendors to drive sales. However, to add value to the end-users, these handsets will be embedded with local applications suited for both consumer and commercial usage.

Small-Medium Enterprises to Drive Commercial Smartphone Usage

Small-Medium Enterprises (SME) will be the next segment to adopt mobility initiatives. One of the key enablers of digital empowerment would be the ability to port and enable "mobility" platforms within their businesses. IDC estimates that by the year 2020, more than 40 million mobile devices will be shipped, driven by more than 150 million internet users in the country – where a mobile first platform will be in full force, and consumers will wholly utilize mobile platforms as a manner to communicate, interact and shop. SMEs will "leap-frog" towards a mobile platform, in order to seize more opportunities and widen their scope of market coverage.

“IDC Indonesia has plotted Indonesian SMEs to be the early-adopters in the opportunistic phase with small and micro SME being the largest group of adopters. Meanwhile, medium sized companies will continue to enable their workforce via mobility. Commercial smartphone adoption by SMEs will face various challenges as majority of SMEs still do not view ICT as a key enabler of their businesses, and still lack proper understanding of how it can help to enable their businesses,” adds, Haryo.

Overall Positive Outlook for Indonesia

“Continuous economic improvement from heavy infrastructure investments will continue to boost the local Indonesia economy thus improving local end-user sentiments and buying power. The overall outlook for smartphone shipments remains positive for the rest of the 2016,” ends Haryo.