Saturday, 24 December 2016

Chinese players Lenovo, Xiaomi dominated Indian smartphone market


It was a Chinese Diwali in 2016, as players from the largest populated country cornered more than 40% market share in the top 30 cities during the festive month, primarily driven by 4G-enabled handsets. While Samsung lead the market in October, Chinese players Lenovo and Xiaomi were the No 2 and 3 brands in the festive month, leaving behind their Indian counterparts, across all tiers.

The top 30 cities registered a 20.4% growth on-quarter in the three months ended September, while tier 2&3 cities saw growth of 23.3% on-month, as handset makers focused on new affordable launches, higher spending on marketing and innovative payment options.

"It was almost like a "Chinese Smartphone Diwali" across all city tiers," Upasana Joshi, Senior Market Analyst, IDC India said Friday.

"China based players contributed significantly to the growth at the offline retail counters, while continuing to dominate the online channel. Oppo and Vivo continue to shake the traditional line up of Indian vendors with their superior build quality, massive marketing investments in the offline channel," Joshi added.

Samsung had a 26.1% share in the top 30 cities on the back of J5 Prime & J7 Prime, and in October it clocked 15.8% growth on-month. Lenovo (including Motorola) expanded its share by 50% on-month, coming in second with 13.4% share due to Moto E3 Power, existing Moto G4 series along with Lenovo K5 series that accounted for more than 70% volumes.

Xiaomi's growth soared by 41.7% on-month to lead to a 10.7% share of the market, owing to Redmi Note 3 and newly launched Redmi 3s & 3s Prime. Its offline reach, besdies online expansion, seems to have worked for far, IDC added.

On the other hand, Micromax and Intex's shares dipped. Micromax had a 6.8% share in October, dropping by 16.7% on-month, as it faces huge pressure from other local vendors in below $100 (Rs 6,800) segment and with Chinese vendors in below $150 (Rs 10,200) segment. No 5 player Intex's share dropped to 5.3% due to flat growth but it still continues to command significant share in below $100 price segment, despite tough competition from Lava & Lyf devices.

Top 8 to 10 cities of India constitute the major portion of online sales, leaving a yawning gap between these markets and the still largely untapped smaller towns. Historically, consumers from tier 3&4 cities have been averse to online buying, showed significant interest in the online festive sales this year.

In the premium smartphone segment of $300 (about Rs 20,000) and above, Apple grew further on the back of the newly launched iPhone 7 series and the already hit series of iPhone 5s and 6.


The Samsung Galaxy S7 Edge continues to pull major demand, in addition to the series of new model launches by Samsung across both offline and online channels, IDC research said.

"While this festival season was one of the best for Offline channel, e commerce players have also started investing more on sellers in smaller cities, better models and improving delivery network, moving away from deeper discounts," said Varun Singh, another market analyst with IDC.

Previously offline only or online only vendors, have now started drawing benefits from their multi-channel strategies, acknowledging that offline and online channels can coexist in the market, without necessarily posing a threat to each other.


"We feel that the demonetisation process, currently underway, will lead to a significant but temporary contraction in the mobile phone market in October-December 2016," says Navkendar Singh, Senior Research Manager, IDC India.

Due to relatively slower sales, the inventory in channel is piling up which will take some time to be liquidated as the currency situation improves, he added.

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