New Delhi/Gurugram, 26 March 2020: As per new research estimates from CyberMedia Research (CMR), the coronavirus-induced shock has hit the India smartphone market. CMR has revised its market guidance for CY2020, with smartphone production likely to tumble by 38-40% in H1. The prospects for H2 2020 are brighter with shipments likely to rise 15% year-on-year, raising the industry spirits.

“Our current India smartphone market assessment points to a bleak picture, with some promise in H2 2020. We anticipate a significant drop of around 20% year-on-year (YoY) in smartphone shipments in Q1 2020. There will be a full-blown impact in Q2 2020, with a sharp decline of around 28% YoY. That said, we are keeping a close tab, and will continue to update our guidance,” said Prabhu Ram, Head-Industry Intelligence Group, CMR.

Both Supply and Demand Hit

While the OEMs could tide over the initial wave of coronavirus crisis in January and February with adequate component supplies, the closure of smartphone factories in India has dented recovery prospects for H1 2020.

On the demand side, with the coronavirus scare, offline channels are massively impacted with sales down by 55-60%. In the face of personal and economic uncertainty, consumer spending is likely to get moderated and remain muted for a major part of this year.

“If one were to go by China’s experience, the online channels made-up for the deficit, incurred in offline channels. However, in the Indian context, with the initial 21-day lockdown in force, we are now looking at a rather uncertain future. That said, we believe online has the potential to pick-up in terms of sales during mid- to late- Q2 and beyond,” said Amit Sharma, ManagerResearch, CMR.

“Offline-heavy smartphone brands will be the most-hit. They would now have to revisit their channel strategy, and allocate for a judicious mix of online and offline in a post-virus era,” added Amit.

H2 2020 would lift industry spirits

“In H2 2020, the smartphone market will recover, and perform better in the run-up to festive season and beyond. The pent-up consumer demand will be high, and with the right messaging from smartphone brands, consumers would seek to upgrade their value for money, and premium smartphones,” said Prabhu.

For smartphone brands, the coronavirus pandemic will cause them to reflect, and realign their market strategies.

“Smartphone vendors will take this current crisis to pause, rethink and reposition their product offerings, with more stronger product innovations debuting in H2 2020. From a larger industry wide perspective, the supply chain disruptions induced by coronavirus pandemic will now push smartphone brands to seriously ramp-up their India localization strategies,” added Prabhu.