The Indian consumer is becoming data-savvy and increasingly turning towards buying smartphones and that too the trendier ones. As operators have started launching 4G services, 4G phones are set to overtake 3G-enabled ones in terms of sales. And what may not warm the hearts of brick-and-mortar stores is that the country’s top five cities saw 61% of smartphone sales take place through online channels during the October-December quarter.
These are some of the findings of IDC, which released its latest study on Thursday.
The highest demand for top-end smartphones come from Delhi and Mumbai, which is not surprising considering that these two are the most lucrative markets for mobile operators as well.
“The leading 30 cities of India make up approximately 51% of the entire smartphone market in Q4 CY 2015. New Delhi generated the maximum demand, closely followed by Mumbai. With increasing appeal and penetration of the smartphones in smaller cities and towns, the tier 2 & 3 cities and beyond are expected to constitute a significant portion of the Indian smartphone market in the near future,” IDC said.
The 25 major tier 2 and 3 cities of India currently make up around 21.3% of Indian smartphone market. The bulk of the demand from these cities is for 3G models, but with a widening 4G smartphone model portfolio across all brands and expanding 4G network footprints by Airtel, Vodafone and the soon-to-be-launched Reliance Jio, the demand for 4G smartphones is expected to grow exponentially, it added.
In the top five cities, consumers preferred to buy either Apple’s iPhone or Samsung Galaxy series, giving these companies more than a 40.7% share in these cities. Of the total devices sold online during the three months through December, 45% were 4G smartphones, IDC said.
Among consumers in the top 30 cities, Samsung remained the first choice while buying online during the October to December period, with the company’s market share at 29.4%.
This was closely followed by Micromax Informatics with a 14.7% market share, helped by sales of its smartphones priced below $100 or Rs 6,700 per handset.
Lenovo Group, after the acquisition of Motorola, was the third preferred choice as consumers saw “value for money” when they bought smartphones such as the K3 Note, Vibe P1M and the third-generation Moto G. The Chinese company had a 10.1% market share as the company adopted a strategy to sell its phones first through e-commerce websites and make it available at physical retail stores three months later, IDC said. Other home-grown companies Intex Technologies and Lava ranked fourth and fifth, with 8.2% and 7.1% market share, respectively, the data showed.
Apple had a 42.1% market share and was in the top position when consumers chose a smartphone priced above $300, IDC said. Apple’s higher market share was helped by an increase in sales of the iPhone 6S and 6S plus, as well as the price cuts for its 5S, 6, and 6 Plus models, IDC data showed.
“With increasing data penetration and enhanced reach of e-commerce, the smartphone consumers in tier 2 and 3 cities is becoming more aware and demanding. They want a smartphone with the latest features and specifications, affordable prices, and convenient buying options,” said Jaideep Mehta, managing director, IDC South Asia. “The coming 4G revolution is promising to trigger the next wave of smartphone growth with 4G-enabled devices already overtaking 3G devices as the largest smartphone category”.
To be sure, the tier 2 and 3 cities and towns that make up for two-thirds of the market for smartphones priced blow $100 and are a stronghold for Indian handset makers are now being overtaken by Chinese brands such as Lenovo, Motorola and Xiaomi as they position their product better “with a value for money proposition”, added Swapnil Bhatnagar, research director at IDC India.