India Consumer Storage Flash Memory market registers 20.38 million unit shipments in 1Q CY 2013, a marginal growth of 2% QoQ but a decline of 3% YoY

 HD video and high resolution imaging drive overall movement towards higher capacity cards and drives

Increased flash memory prices slowing growth momentum

The India Consumer Storage Flash Memory market comprising Micro SD cards, SD cards and Pen drives was affected by a price revision across all categories, thereby resulting in a tepid growth of 2% in 1Q CY2013 over 4Q CY 2012. Shipments on an annual basis dropped 3% (1Q 2013 versus 1Q 2012). This was revealed in the CyberMedia Research report CMR’s India Quarterly Consumer Storage Flash Memory Market Review, 1Q 2013, June 2013 release.

Table 1_India Consumer Storage Flash Memory Market_1Q 2013 vs 4Q 2012 vs 1Q 2012

Pen drives was the only category that witnessed a positive 24% growth in unit shipments quarter-on-quarter and 14% year-on-year, largely driven by enhanced shipments by market leaders SanDisk and HP. Toshiba managed to nearly double its Pen drives business (1Q 2013 versus 4Q 2012) in terms of unit shipments, by introducing price competitive models. Table 2_India Consumer Storage Flash Memory Market_Top 3 Players_1Q 2013 vs 4Q 2012

In the overall consumer storage flash memory market, SanDisk enjoyed a growth in unit shipments of 27% quarter-on-quarter, helping the company capture 33% market share in 1Q 2013. Transcend, at number two spot also witnessed growth in its shipments, however the company’s market share remained almost flat. Kingston, after a slow fourth quarter of 2012, registered a 3% growth in its market share and took third spot, via increased Micro SD card shipments. HP stood at fourth position, whereas Toshiba, for the first time attained fifth position by adopting an aggressive pricing policy in the quarter.

Video and Imaging apps drive up demand for higher capacity portable storage

A definite traction towards higher capacity storage was visible in the first quarter of CY 2013. The 4 GB segment captured almost half of the market; 8 GB and 16 GB capacity segments witnessed more than 30% growth in unit shipments quarter-on-quarter, whereas the 2 GB market registered a decline of 45%.

“With rising consumer demand for sharing HD video, high resolution images and pictures, a need has been created for higher capacity personal storage media. Advancements in technologies used for connecting devices such as Bluetooth, USB, Wi-Fi and NFC have made data sharing easy and comfortable at higher speeds, thus adding to the demand for more storage” stated Narinder Kumar, Analyst, InfoTech and Channels Research Practices, CyberMedia Research.

“The price gap between different capacities of personal storage media has gradually declined on account of rising global demand. This has further motivated consumers to go in for higher capacity consumer storage to meet their growing storage needs”, Narinder added.

 Price Revision Impact

Shortage of NAND flash components due to a ‘demand-supply’ gap in the international markets forced an upward price revision of 20% to 30% by all vendors during 1Q 2013. The unbranded segment was adversely hit by this hike that reflected in a reduction by as much as 35% in shipments. Other branded vendors also felt the heat and were forced to reduce their shipments by 28% as compared to 4Q 2012.

It took a few months for the market to absorb the revised prices of flash components. Price volatility led to delays in procurement by distributors and sub distributors as there was heightened speculation about downward price revision and price support from vendors.

 Future Drivers of Growth

In spite of the global price shake-up, the India market for consumer storage seems positive in the long run. During the second quarter i.e. April-June 2013 some minor price adjustments were already being witnessed. The upcoming ‘festive’ season starting August 2013 is likely to witness increased demand for consumer flash memory, driven in part by the use of these products as freebies with electronic gadgets. The overall market is expected to grow, riding on the increased shipments of mobile phones and tablet PCs. Of late, ‘Tier II’ and ‘Tier III’ cities were seen to be creating comparatively more demand for consumer storage vis-à-vis the large metros.

“Shipments of mobile phones and Tablet PCs, which are base devices for Micro SD cards, are growing at a healthy pace. At the same time content creation and content sharing from these devices has also gathered speed. Thus, mobile phones and tablets, which were meant to handle basic computing needs of users, have now transformed into full blown portable entertainment centres. Since the built-in memory of most mobile phones and tablets is comparatively limited, this creates the need for higher capacity secondary storage”, Narinder surmised.

“In the Pen drives category, USB 3.0 drives, which currently contribute a minimal share of shipments, are expected to see increased adoption in computing devices. Pen drives have become a ‘must have’ personal storage accessory for customer segments like students and working professionals” Narinder concluded.

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