Smartphone shipments set to decline 5-10% Y-o-Y in 2020; feature phones by 35-40%
The Indian smartphone market — the world’s second-largest after China — is likely to contract by 5-10% Y-o-Y in 2020 as companies recalibrate their operations and consumers cut back on discretionary spends due to the adverse economic conditions following the novel coronavirus outbreak and the ensuing lockdown.
The decline comes after India clocked a record smartphone shipment of 158 million units in 2019 calendar year (CY), surpassing US as the world’s second-largest smartphone market.
With supply chain disruptions, logistical challenges and slower than expected consumer demand for the next few quarters, IDC India research director (client devices & IPDS) Navkendar Singh said the impact on the sector will be high.
“IDC expects the India mobile phone market to follow a U-shaped curve, from Q3 2020 onwards. The slowdown will be more prominent in the first half on 2020 and pent-up demand will gradually shift to the second half, rolling over to 2021 as well. Overall mobile phone market is expected to decline by 20-25% — smartphone category to decline by 3-5% and feature phone by 35-40%,” he told FE.
According to Counterpoint Research, “Any signs of recovery will likely only start from the third quarter (2020) onwards. As a result, we are estimating that overall smartphone shipments will decline by 10% for the full calendar year.”
Counterpoint’s senior research analyst Prachir Singh said the epidemic’s impact was relatively mild until mid-March, but 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 the 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 entry-level devices 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,” he added.
On what can be expected from the offline and online markets going ahead, Singh explained that e-tailers should be expected to be aggressive in terms of marketing and investments around portfolio and delivery initiatives, considering that cautiousness around retail walk-ins will persist for the next few quarters.
“The last four months of the year will see huge marketing blitz across price points and channels. Of course, this is under the assumption that we see recovery by September timeframe, just as the festival season kicks in. Brands will be forced to relook at marketing investments, focus on initiatives like extended phone warranties to earn the goodwill of existing consumers and engaging through social impact messaging and campaigns, which can help in building positive brand association,” he added.