India smartphone market: Device shipments up 4% in Jan-March, says Counterpoint

By: |
April 25, 2020 3:30 AM

Consumer demand will have a larger impact on smartphone sales, as people will focus on saving and therefore limit discretionary purchases.

While the smartphone market registered an annual growth in Q1, the feature phone market saw a decline of around 24% y-o-y during the same period implying consumers are transitioning to smartphones. (Represnetative image)While the smartphone market registered an annual growth in Q1, the feature phone market saw a decline of around 24% y-o-y during the same period implying consumers are transitioning to smartphones. (Representative image)

Smartphone shipments in India rose a modest 4% y-o-y to around 31 million units in January-March this calendar year (CY) as the quarter witnessed launches and promotions during the first two months, while the nationwide lockdown in last week of March due to Covid-19 outbreak impacted shipments, Counterpoint Research said.

“January and February shipments grew annually due to new launches and aggressive promotions. However, a steep annual decline in March (-19%) due to Covid-19 outbreak restricted overall quarter growth to just 4%,” the research firm pointed out.

Since the country is in lockdown till May 3, Counterpoint Research explained that any signs of recovery will likely only start from July-September 2020 onwards. “As a result, we are estimating that overall smartphone shipments will decline by 10% for the full calendar year,” it added.

The second quarter (April-June) will see a major decline in numbers as the lockdown due to Covid-19, which commenced on March 24 and is likely to end on May 3, has severely impacted production, supply and sales across the country.

Senior research analyst at Counterpoint Research Prachir Singh said, “Covid-19 effect on India was relatively mild until mid-March. However, economic activities declined as people save money in expectation of an extended period of uncertainty and an almost complete lockdown. Almost all smartphone manufacturing has been suspended”.

Further, with social distancing norms, factories will be running at lower capacities even after the lockdown is lifted. Consumer demand will have a larger impact on smartphone sales, as people will focus on saving and therefore limit discretionary purchases.

“As entry-level smartphone consumers will be the worst-hit by the lockdown, the demand for the entry-level smartphones will decline in the near-term. We believe demand will shift to the second part of the year. Even if the situation stabilises by mid-year, people may hold-off purchasing until the festive season,” Singh anticipated.

While the smartphone market registered an annual growth in Q1, the feature phone market saw a decline of around 24% y-o-y during the same period implying consumers are transitioning to smartphones. Chinese brands are gaining momentum in the feature phone market, reaching a combined 33% share of total feature phone shipments, up from 17% in Q1 2019. Itel is the principal brand driving this change.

Shilpi Jain, a research analyst at the company, pointed out that for original equipment makers (OEMs), a lot of work will be required to restart operations once lockdown is lifted.

“This will range from managing existing inventory across all distributors and retail touch points as well as supporting retailers sell-through older inventory. Also, if the lockdown is lifted in phases starting with green zone areas, OEMs will have to align their channel and sales strategies to drive sales in these non-affected areas,’ she said.

Considering people are dependent on smartphones as a primary mode of communication during the lockdown, the company said it should be an essential item and sales should be allowed through online channels or at least adopting an online-to-offline (O2O) model. This is happening in Europe and the US, where online channels still remain in service.

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