Samsung Electronics displaced Apple in India’s premium smartphone segment in the January-March quarter and maintained its leadership in the country’s handset market, while No. 2 Xiaomi narrowed the gap with the South Korean company, research firms said.
In the overall handset market, Samsung stayed on top, China’s iTel was at the No. 2 spot with a 9% share and Micromax Informatics was third (8%), according to Counterpoint Technology Market Research. Samsung had a 26% share in both the smartphone and overall handset segments, as per Counterpoint. Samsung’s smartphone share remained unchanged at 22% sequentially, although shipments fell to 6 million in the quarter from 6.2 million a year earlier, Canalys said.
Xiaomi jumped to the second spot in the smartphone segment for the first time with a 13% market share, Counterpoint said. The Chinese handset maker enhanced its market share by 3 percentage points sequentially to 14% in the January-March quarter, as per Canalys data. Xiaomi shipped 3.8 million handsets in the first quarter of calendar 2017, up from 3 million in the previous quarter, when it had a 10% share. It had a 3% share in the first quarter of 2016.
Xiaomi’s success in India is underscored by its online go-to-market strategy. “Demonetisation seems to have had no impact on it as its target customer is young, internet-enabled and primarily buys online,” Canalys research analyst Ishan Dutt said in a note dated April 27. Vivo, Oppo and Lenovo (including Motorola) made up the rest of the top five, as per both agencies, although not in the same order.
Samsung replaced Apple as the top premium (Rs 30,000 and above) smartphone vendor with a 48% market share in January-March, up from 31% in October-December. Apple’s share dropped to 43% from 62%, Counterpoint Research said. Samsung brought in new inventory of S7 Edge smartphones after withdrawing the Note 7, which led to an increase in its premium market share, according to Tarun Pathak, senior analyst at Counterpoint.
“There was a price cut for S7 Edge, which along with the introduction of C7 Pro smartphone, helped the vendor,” Pathak said, adding that Apple’s share declined due to a seasonality issue.
The research firms noted that there was a shift in distribution strategy by major handset companies. Offline brands Oppo, Vivo and Gionee have started focusing on online channels as well to gain market share, while online-only brands Xiaomi and Motorola are moving into offline markets to widen their reach. Canalys said the Indian market may be headed for an upheaval with the government set to implement the new Goods and Services Tax regime from July 1.
“We will see a change in vendors’ channel strategies as new distribution models become more cost-effective. Pure online players are likely to suffer and those that react quickly to the new regulations will benefit,” Dutt said.
Analysts at Counterpoint said the new tax regime will affect domestic manufacturing and the government will need to continue incentives to push the local ecosystem.
India’s smartphone market grew 12% year on year in the first quarter of 2017, with over 27 million units shipped and no new names in the top five, Canalys said, adding that shipments fell sequentially from 28.1 million units in the fourth quarter of 2016. As per Counterpoint, smartphone shipments in India grew 15% to 29 million units in the quarter. Overall mobile handsets witnessed a healthy growth of 6% year-on-year. The firm said smartphones and feature phones contributed equally to overall mobile handset shipments.
During the quarter, LTE-capable smartphones contributed 96% of total smartphone shipments. LTE, a 4G mobile communications standard, is now the default feature for smartphones in India. The average selling price of smartphones in India increased by Rs 2,000 year-on-year during the quarter, Shobhit Srivastava, a research analyst at Counterpoint Research, noted, as a growing number of users upgraded to high-end specifications offered in the Rs 8,000-Rs 20,000 price segment.
iTel shipped 5.2 million handsets, largely feature phones, in the quarter. “iTel leveraged its successful low-cost strategy, effective distribution and scale,” Counterpoint Research said.
The premium segment grew 35% from a year earlier. OnePlus, Oppo and Google made the top five in this segment, each with marginal market shares.