Smartphones once again led the most sought-after shopping category with capturing 47 percent of total festive sales in the 7-day period (October 15-21), driven by new launches and affordable models. According to RedSeer, smartphones worth Rs.1.5 crore were sold every minute across online platforms in the first week of festive sales.
India was the only smartphone market in the top 3 to witness growth, as both the China and USA markets declined YoY in 3Q20, says IDC Quarterly Mobile Phone Tracker, India. A record 54.3 million units were shipped during the quarter with 17 percent YoY growth in the crucial third quarter of the year. The reopening of the country with fewer restrictions was further fueled by pent-up demand in July and August and channel stocking in September to meet the upcoming Diwali quarter demand.
Key market trends for 3Q20
Channel highlights. E-tailers led the online channel share reaching an all-time high of 48 percent, growing by a healthy 24 percent YoY. Cautious consumers preferred online purchases as they were driven by promotions and sale events on e-tailer platforms. Offline channels registered a moderate 11 percent YoY growth after a challenging first half of the year. New launches had severe supply constraints in offline channels. IDC expects growth to continue for the online channel, driven by more affordability initiatives and pricing aggression in comparison to offline channels during the festive months, even as supply starts to normalize for the offline channels.
Specification trends. While OEMs launched more low-priced smartphones, they upped the game on specifications with more phones featuring quad-cameras, high megapixel counts (48MP+), more storage (64GB+), bigger batteries (5000mAH+), etc. even as prices declined. Though the 5G network will only launch by end-2021, the devices go first strategy led to a million units of 5G smartphone shipments in 3Q20. IDC expects a gradual uptake of 5G devices in 2021, expanding into the mid-range segment, as the ASP gap between 4G and 5G offerings narrows.
Price trends. ASPs declined by 2 percent YoY at USD 156, with 84 percent of shipments in the sub-USD 200 range (29% below USD 100), driven by e-learning requirements since smartphones remain the only device for internet access for most households in India. The mid-range segment (USD 200<500) declined YoY, as consumers held back on upgrading to a more expensive smartphone due to economic uncertainties. The premium segment (USD 500+) witnessed a strong growth of 91 YoY; where Apple, Samsung, and OnePlus continued to be the top three players. Apple also launched its online store in 3Q20, offering a wide range of first-time services.
A total of 25 million feature phones were shipped in 3Q20, a decline of 30 percent YoY. As a result, the overall mobile phone market shipment dropped by 4 percent YoY, with feature phones accounting for only 31 percent share.
Xiaomi continued to lead for 3+ years, shipping 13.5 million units in 3Q20, a growth of 7 percent YoY. Xiaomi’s Redmi 8A Dual, Redmi 8, and Redmi Note 9 were the top three models nationally despite Xiaomi facing supply constraints in the early weeks of the quarter. Xiaomi also maintained the lead in the online channel with a
35 percent share, with POCO (sub-brand under Xiaomi) reaching an all-time high of more than one million shipments in 3Q20.
Samsung at the second slot registered strong YoY growth of 38 percent in 3Q20 with record shipments of 12.1 million units. India became Samsung’s largest smartphone market globally, ahead of the US in 3Q20, accounting for 15 percent of its global shipments. It maintained steady supplies through the quarter in comparison to China-based vendors, clubbed with more offerings in low-end and mid-range price segments. Samsung also benefited from the anti-Chinese sentiments prevailing in the initial weeks of the quarter, which soon vaporized in the latter half. The online channel accounted for 43 percent of Samsung shipments, witnessing unprecedented growth in 3Q20 with the Galaxy M21 and M31 featuring in the top 5 online models nationally.
vivo stood at the third position, with shipments of 9 million units, growing by 27 percent YoY in 3Q20. It regained its top slot in the offline channel, ahead of Samsung, with a share of 29 percent. With fewer offerings in the online channel, vivo remained offline heavy with more offerings to come in the Diwali quarter.
realme at the fourth position grew 19 percent YoY to 8 million units in 3Q20. It also regained its second slot in the online channel ahead of Samsung with a 23 percent share. The C11 featured in the top 5 online models nationally.
OPPO in the fifth position with 6.1 million shipments grew by 11 percent YoY in 3Q20. Its supply constraints improved in 3Q20, with the A12, A53, and A11K as its top shipped models. It regained its third position in the offline channel with an 18 percent share, following vivo and Samsung, with managed supplies in the retail counters.
Chinese brands managed to increase their overall share in India’s smartphone market in the July-September period to 74 percent from 72 percent in the previous quarter, but are still some way off from their peak share of 81 percent they recorded in the January-March period. Chinese brands may just manage to increase their share to upto 75 percent this festive season with consumers having a wider choice of global and niche brands.
The US opportunity
Top US telecom operators are turning to India to source low-cost mobile phones as the US ratchets up national-security scrutiny of Chinese companies handing Indian handset makers an opportunity to win of contract-manufacturing orders. While key hardware parts can still be imported from China, US telecom firms are increasingly relying on India to develop software solutions to ensure data privacy. Vietnam is also being evaluated as a hub.
So far, telecom service providers in the US have typically procured almost all of the low- to mid-end mobile devices from Chinese companies such as TCL and ZTE. Around 70 percent of all smartphones shipped in the US in the quarter to June was made in China, up from 60 percent in the previous quarter. The country saw 31.9 million smartphone shipments in the quarter, but the number should rise in the coming quarters as supply chains stabilize from pandemic-induced lockdowns.
Verizon, T-Mobile, AT&T and Cricket Wireless, a sub-brand of AT&T have initiated talks with Indian smartphone makers to procure unbranded handsets that will be bundled with data subscription contracts in the US. If Indian companies win the contracts, it will be a shot in the arm for the government’s plan to export smartphones worth Rs.6.5 trillion from India in the next 5 years.
A silver lining in an otherwise gloomy scenario indeed!