That the Indian smartphone market is hot is well-documented by now. Given India’s huge population yet fairly low smartphone penetration (still), this is an industry poised for exponential growth in the next few years. Naturally, key players command a lot of attention, especially when “market dynamics” a term phone companies and industry analysts love to use is shifting every quarter. Also Read - Samsung Galaxy Z Fold3, Galaxy Z Flip3 launch on August 27? New report suggestsAlso Read - OnePlus Nord CE vs Redmi Note 10 Pro Max: Does 4G still outdo 5G at a lesser price?
At present, Samsung leads the smartphone market with a 26 percent share, according to Counterpoint Research. Now, these are shipment numbers. Industry insiders reckon that if actual store sales figures were taken into account, Samsung’s share would be somewhere around 40 percent. The Korean phone-maker might have lost a bit of brand equity following the Galaxy Note 7 debacle, but it continues to bat steady, accounting for the highest market share in both premium and mid segments. Xiaomi, however, is more aspired it seems. 26 percent of potential Android buyers list Xiaomi as their preferred next brand, according to Strategy Analytics. Only 12 percent aspired for Samsung as their next phone. ALSO READ: Samsung cracks down on retailers for signing up with Xiaomi s preferred seller program: Report Also Read - Samsung now lets you make an appointment to shop at its stores, book demo via WhatsApp
In terms of market share, Xiaomi is now at number 2. It commanded 14.2 percent share at the end of Q1 2017. It was the only smartphone maker that grew its shipments both year-on-year as well as quarter-on-quarter. The Chinese smartphone manufacturer, which had seized the top spot from Samsung in China back in 2014, is turning out to be the latter’s key competitor in India as well. “Healthy demand of low-end Redmi smartphones series, dedicated local manufacturing, and accumulated brand equity jointly enhanced the vendor s performance in the country [India],” writes Yiwen Wu, Senior Analyst at Strategy Analytics.
Xiaomi’s aggressive marketing and exclusive tie-ups with online retailers too have fuelled demand and contributed to huge buzz around the brand. Every flash sale has been a success; almost all models, except the Mi 5 perhaps, have been sold-out; and the company has nearly wiped out domestic budget phone-makers like Micromax, Karbonn and Lava from the sub-10K segment. However, all is not won yet. Samsung is still shipping nearly double the number of phones Xiaomi is. ALSO READ: Oppo, Vivo and other Chinese smartphone brands are slowly taking over the world
Even when it comes to offline distributors, Samsung has better control. It is more likely that shops would stock a Samsung phone ahead of a Xiaomi phone unless there’s some kind of an arrangement. But something’s changing. Industry experts say that the demand for Xiaomi in physical stores has grown significantly. “Everyone who walks into a store asks about Xiaomi phones even if they are not buying them,” Tarun Pathak, Associate Director at Counterpoint Research, tells BGR India.
No wonder then that Xiaomi is now focusing its energies on offline channels, having recently opened its first Mi Home store in India, as well as tying up with large-format retailers, and lining up “preferred partners”. The last bit might have rubbed competition the wrong way though. Reports have emerged which claim that close to 200 distributors, who’d earlier been preferred partners for Samsung, have now signed up for Xiaomi’s seller programme. Typically, preferred partners get better margins and incentives from phone manufacturers for which they are required to prominently display the brand’s signage outside their stores. ALSO READ: 2 new Mi Home stores coming up in Bengaluru this month: Xiaomi
Some preferred partners in Delhi and Jaipur seem to have to “dishonoured the arrangement” which Samsung had with them. As a result, the company has decided to stop supplying stock to these stores. Contrarily, Xiaomi has promised to replenish that stock. BGR India has learnt from industry sources that the preferred partners are now willing to re-negotiate with Samsung. Both companies, however, declined to comment on the specifics of the issue. A Samsung India spokesperson said: “Samsung is India’s biggest and most trusted brand of smartphones. We have built the widest network of partners across the country, with whom we have been working for over two decades,… we will continue to work with our partners for this.”
Samsung still has the most robust distribution network in India. Xiaomi is mostly focused in metros and Tier 1 cities while other Chinese brands like Oppo and Vivo have made steady strides in Tier 2 and Tier 3 markets. They have lured sellers with handsome margins something both Samsung and Xiaomi might have to address soon. Also, neither Xiaomi nor Samsung owns the advantage of nostalgia that Nokia is riding on… which makes signing up sellers a tad easy. “Most distributors willingly stock Nokia phones because they say the first phone they ever sold was a Nokia,” an insider tells BGR India. ALSO READ: 5 reasons why Nokia is poised for a comeback in the Indian smartphone market
While on the surface it might look like a price-versus-price or specs-versus-specs battle, both Xiaomi and Samsung have their own issues to sort. “There’s a lot of pressure on Samsung to have aggressive seller margins… Oppo and Vivo have completely disrupted the distribution network,” says Counterpoint’s Pathak. “As for Xiaomi, it’ll face stiff competition in the rural markets. Samsung has the advantage of a wide distribution network.”
And distributors, who literally can make or break a brand’s offline story, are being smart. They are aware that no one brand will stay on top forever. And are keeping their apples in separate baskets. “No one is committing to any one brand. Everyone knows that the market dynamics is changing fast,” adds Pathak.