‘Rivalry’ between Chinese and Indian brands changing into competition among Chinese brands

Gurugram / New Delhi, Thursday August 24, 2017: While releasing the numbers for India Mobile Handset Market for 1st six months for 2017, CMR today announced that with several Chinese brands like Xiaomi, Lenovo, Vivo, Oppo and iTel showing growth in the range of 7 – 33% in Smartphones (iTel being the exception with growth of 293% on a small unit base), the focus is now all about competition among these brands to occupy the leading positions in the market.  However, since all of them are still showing strong market fundamentals, it appears difficult that one or a few among them will take a substantial lead for a longer horizon and hence will be competiting neck to neck.

Thomas George, SVP & Head CMR while sharing some insights of the report said, “As  Smartphones complete its first decade in India, Samsung will continue to enjoy the market leadership, 6th time in a row.  He however, cautioned that though it will continue to leverage the offline physical reach and access, there has to be a clusterised strategy for each of the geo-markets in the country Samsung will have to adopt.”

As per the report, total of 61.8 million mobiles were shipped in the 2Q 2017, of which 54% were Featurephones witnessing 9% sequential growth.  As the Jio Phone launch looms the prospects of Featurephone as well as entry level Smartphones, brands aligned to these markets pushed the shipments in wake of anticipated contraction of the market due to Jio Phone availability in 3Q and beyond.

Figure 1 CMR's India Mobile Handset Market Release 2Q 2017
Figure 1 CMR’s India Mobile Handset Market Release 2Q 2017

Xiaomi was among ace performers in the quarter not only taking it to No 2 in the Smartphone market in India but also contributing to the revival of 4000 – 6000 price segment of the market.  The segment witnessed 55% growth sequentially.  CMR believes that going forward, the entry level Smartphone market will see a lot more action for few quarters from now onwards.

Faisal Kawoosa, Principal Analyst, Telecom and ESDM, CMR said, “The entry level market of Smartphone will see some growth primarily due to attempts by various handset makers to counter the emergence of 4G Featurephones.  This should also see support of incumbent operators who are seeing revenues eroding at the hands of Jio’s entry into the market.”

The price segment of 8000 – 10000 should also see some upward trend as a lot of 3G owners would want to go for a 4G upgrade.  At present of estimated 350 million Smartphone users, 150-160 million have a 4G Smartphone opening up a huge opportunity for sub 10,000 price category 4G Smartphones.  This will be targeting late adopters as well as the technology laggards.

Foxconn owned Rising Star India Pvt. Ltd., overtook Samsung as the No 1 ODM for Smartphones making phones in India.  However, Samsung, continues to be the overall leader ODM in country.

While camera will continue to be the focus component in coming quarters as well due to its increasing significance of becoming the default input and content creation device, the security hardening at the hardware level will also be among the prime focus of the handset makers.  CMR believes Smartphones with biometric security features will see an increase in shipments.

At the same time, since Android run Smartphones contribute over 95% of the shipments, it becomes very important that users have the latest OS version on their devices as dependency on Smartphones for financial transactions, IoT, etc. is on rise.  Though, a good sign is that in 2Q 2017, 73% of 4G Smartphones were having Android 6 or later version, the OS is still fragmented across the installed base.  The affordable Smartphones are generally equipped with Latest -2 OS version and the handset makers rarely upgrade it to the latest versions.  This could cause serious security loopholes and jeopardise the data integrity of users on their Smartphones – the all weather companion.

CMR believes that the market will be pretty flat for CY 2017; however, there should be a replacement of certain volumes of Featurephones as well as Smartphones for 4G Featurephone.  This could impact volume sales of Featurephones in the range of 25-30% and for Smartphones the offset could be 5-6% for the calendar year.

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