Festive season in 2016 had been most prosperous for Chinese smartphone makers in India. For brands such as Lenovo and Xiaomi, the month of October drew major smartphone sales while Tier 2 and Tier 3 cities were the key drivers of this growth. According to a new IDC report, the period from July to October made up for more than 40 percent of annual smartphone sales in India. Interestingly, even prior to the demonetization announcement, major sales were witnessed through the online channels from the Tier 2 and 3 cities which have been historically averse to online buying. However, what led to the surge in online sales were the festive offers this year. Also Read - MIUI 13 to add 3GB of RAM to any Xiaomi phone with its memory expansion featureAlso Read - Amazon Prime Day sale deals revealed: Discount on OnePlus Nord CE, Mi 11X, Samsung Galaxy M42
It was almost like a Chinese Smartphone Diwali across all city tiers, Upasana Joshi, Senior Market Analyst, IDC India, said. China-based smartphone makers, which drive sales primarily from the online marketplaces, collectively accounted for over 40 percent market share in the top 30 cities during the month of Diwali festival. Following the rollout of Reliance Jio 4G services, the festive season witnessed surge in sales of 4G handsets. Also Read - Xiaomi might have a new Snapdragon 888 phone up its sleeve, to be Mi 11T
The IDC report further notes that top 30 cities in India registered a quarter on quarter growth of 20.4 percent in Q3 2016 as compared to the previous quarter. Additionally, in the month of October, the Tier 2 and 3 cities witnessed a growth of 23.3 percent over previous month as smartphone makers focused on affordable options and newer payment options. ALSO READ: Chinese smartphone vendors gain market share in India at the cost of Samsung, Indian brands: Counterpoint Research
In terms of brands, Oppo and Vivo continue to shake the traditional line up of Indian vendors with their superior build quality, massive marketing investments in the offline channel, Joshi added. However, Samsung continued to lead the vendors list. The South Korea-based manufacturer registered 26.1 percent share in the top 30 cities. In the month of October, the company clocked 15.8 percent growth with the launch of J5 Prime and J7 Prime. Following it closely was Lenovo which reported almost a 50 percent growth in annual sales share owing to the launch of Moto E3 Power and existing Moto G4 series along with Lenovo K5 series.
Xiaomi, which is number one in home country China, was the top third vendor in India in the given quarter. It reported a surge of 41.7 percent in October as its success continued with the Redmi Note 3 and newly launched Redmi 3s and 3s Prime. When it comes to the premium smartphone category, the Apple iPhone 7 series along with the older iPhone 5S and iPhone 6 helped the Cupertino, California-based company maintain smartphone sales share. In the same category, Samsung s Galaxy S7 Edge continued to be the hot favorite.
While on one hand it was a truly festive season for Chinese smartphone makers, it wasn t the case for Indian makers. Micromax, which was one the market leader in India, continued to feel the pressure from other local vendors and Chinese vendors. Despite it being a festive season, the company faced a dip to 6.8 percent in sales. Intex, another Indian smartphone maker, also witnessed a share dip to 5.3 percent in October. Threatening its position in the market is the Lava and Reliance s LYF smartphones.
In light of demonetization, the research firm predicts that the improbable move towards digital payments and a cashless economy will significantly change the smartphone business. We feel that the demonetisation process, currently underway, will lead to a significant but temporary contraction in the mobile phone market in Q4 2016. Due to relatively slower sales, the inventory in channel is piling up which will take some time to be liquidated as the currency situation improves, says Navkendar Singh, Senior Research Manager, IDC India.
But all is not well for smartphone players who intend to enter the lucrative market in India. In a separate report by another research firm, there will be more exits than entries of manufacturers in the country s smartphone industry. A Counterpoint Research report predicts that in 2017 there will be seven new entrants compared with nine exits. This compares with 13 newcomers in 2016 compared with five exits. It is expected that of these seven new entries in 2017, 80 percent are likely to be from the sub-$100 (Rs 6,800) category, involving regional players. This basically means, we will be seeing a whole lot of budget smartphones in the coming year, which the premium segment still reined by Apple and Samsung.
There are over 100 smartphone players in the Indian smartphone market, of which the top 15 contribute almost 90 percent of share, said Tarun Pathak, senior analyst at the firm. With the increased competition, it is further expected that some smartphone players will exit the industry in the coming year. In India, the smartphone market has seen slowed growth at 6 percent in 2016 and the primary reason behind the slowed growth is the reluctance of feature phone makers as well as users to move to smartphones.