Weak demand, high prices lead smartphone shipments to fall 10% in festive quarter

Weak demand and rising prices are driving smartphone shipments down 10% in the festive quarter

Despite an early start to the festivities and a high market share for online sales, domestic smartphone shipments fell 10% annually on the back of weak consumer demand and higher prices. According to market research firm International Data Corporation (IDC)’s quarterly tracker data for the September quarter, smartphone shipments in India fell to 43 million units – down 10% year-on-year.

According to the company, the September quarter, which is usually the strongest period for smartphone brands in India, recorded the lowest shipment numbers since 2019, this year.

IDC also noted a rise in the average selling price (ASP) of smartphones in India, which rose for the eighth consecutive quarter. As of the September quarter, ASP has reached $226 (roughly Rs. 18,500) — up 15% year-on-year from $194 (roughly Rs. 14,500) last year. Keeping in view the appreciation of the dollar, the ASP of smartphones in India increased by around 28% in the last year.

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Upasana Joshi, director of research at IDC India, said that along with higher supply chain costs leading to lower discounts and higher retail prices, the higher influx of more expensive 5G smartphones is also responsible for the rise in smartphone ASPs in India.

Joshi’s assessment is in line with retailers. Last week, Manish Khatri, partner at Mumbai-based Mahesh Telecom, told Mint that strong offerings and a wide range of 5G devices saw brands like Samsung and Vivo have a strong festive period, even though the overall price of smartphones was higher than in past years. .

Certainly, 5G phones in India also rose in market share of total shipments quarterly. According to IDC data for September, 16 million 5G smartphones were shipped during the quarter, accounting for 36% of all smartphone shipments during the period. This was also the highest ever share of 5G smartphones in total shipments, to date.

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With these shipments and festive sales taking place in this quarter, the total number of 5G devices in the installed smartphone user base in India has reached 67 million. However, Navkendar Singh, associate vice president of customer devices at IDC, told Mint that the number of 5G smartphones in use in India by the end of this calendar year may be slightly lower than the company’s early estimate of around 85-90 million 5G devices.

Singh added that the lack of options at the mass-market price point, coupled with high supply chain costs that prevent brands from being able to drastically lower the prices of 5G phones, may be the reason why the total user base of 5G phones in India could reach around 80 million. by the end of the year.

Network availability, too, is still limited at the moment. On Friday, Mint reported that the first batch of 5G users in India are seeing a lack of consistency in terms of network coverage areas — even in cities where Bharti Airtel and Reliance Jio have announced their rollouts of 5G services.

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However, the average price of 5G phones has decreased. According to IDC, the ASP of 5G-ready smartphones fell to $393 (roughly Rs. 31,800) in the September quarter — down more than 18% in INR from $509 (roughly Rs. 38,900) in the March quarter of 2020.

The premium smartphone segment above $500 (INR 40,000) was the only category to grow – shipments were up 64% year-on-year. However, the premium segment still plays a partial role in India’s total shipments and was therefore unable to offset the 15% year-on-year decline in shipments of smartphones priced under $300 (around INR 25,000) in the September quarter.

Apple led the premium smartphone market in India with 63% market share in the September quarter, followed by Samsung with 22% and OnePlus with 9%.

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In the overall market, Xiaomi continued to lead with a market share of 21.2%, despite shipments falling 18% year-on-year. Fellow Chinese brand Oppo, which ranks fifth with a market share of 12.5%, was the only gainer among the top five smartphone brands in India – shipments were up 6.1% year-on-year.

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