The smartphone market is continuing to shrink in India, with sales dwindling 10-15% in the fourth quarter of the current year as compared to the third quarter. This is likely to force companies to slash prices by as much as 20% in the next few months. Smartphone sales in Q3 was 15%-20% lower as compared to Q2 FY09.

“The smartphone market in India has shown a rapid growth year on year. However, in the last few months, it has been dull,” commented Ajay Sharma, country head, HTC (India). “The last couple of months have been quite dull and growth has been slower for the overall market. Though we have not seen negative growth, there is a reduction in momentum,” commented Sharma.

According to industry experts, times are expected to be tough for the next couple of months; achieving sales targets could become difficult for device players.

“In ensuing quarters, there could be 20% reduction in pricing of the smartphones across all models to attract consumers,” commented an industry analyst. Smartphones are priced between Rs 10,000-45,000.

Lacklustre sales in India bear a semblance to global sales of the product. Amidst the current economic turmoil, in the third quarter of 2008, the global smartphone market reached its weakest year-on-year growth, said Gartner in a report on Thursday. Worldwide smartphone sales to end-users totalled 36.5 million units in the third quarter of 2008, an 11.5 % increase from the same period in 2007.

“The current economic climate is negatively impacting sales of higher-end devices,” said Roberta Cozza, principal analyst at Gartner. “Going forward, we should expect the smartphone device market to continue to grow, but at a slower pace. Although leading mobile operators are subsidising more smartphones to reach lower prices, they tie the device to two year contracts with monthly data plan rates, which remain too expensive for mainstream users,” she added.

However, for the entire year, the volume of smartphones in India has increased rapidly, compared to the previous year. In 2007, the volume of smartphones was pegged at 6 lakh units, whereas in 2008, 15 lakh units have already been sold.

According to IDC, in 2007, the total number of mobile handsets shipped in India was around 80 million; smartphones had a market share of 4.7%, which is expected touch 9.5% by 2011.