NEW DELHI: Smartphone shipments are likely to weaken during the crucial festive season for the second year in a row as consumer demand in one of the world’s top markets has weakened, according to industry analysts and retailers. This despite a flurry of new launches and a decline in the average selling price of a smartphone.
NEW DELHI: Smartphone shipments are likely to weaken during the crucial festive season for the second year in a row as consumer demand in one of the world’s top markets has weakened, according to industry analysts and retailers. This despite a flurry of new launches and a decline in the average selling price of a smartphone.
Last year, smartphone brands started early for Ulsava season sales. However, the segment could not be spared from witnessing the biggest drop in exports in the September quarter ahead of the festive season. Market research firm International Data Corporation (IDC) reported a 10% (yoy) drop in exports during the period.
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Last year, smartphone brands started early for Ulsava season sales. However, the segment could not be spared from witnessing the biggest drop in exports in the September quarter ahead of the festive season. Market research firm International Data Corporation (IDC) reported a 10% (yoy) drop in exports during the period.
Industry analysts and retailers Mint spoke to forecast smartphone shipments to remain flat or decline further in the ongoing September quarter.
“Smartphone shipments in India are expected to decline this year and may not be flat from last year. A decline in exports is expected for the overall calendar year 2023, with the festive season being the biggest part of it,” said Navkender Singh, Associate Vice President, IDC India.
The festive season, which runs from the last week of September to the end of December and extends into the first week of the New Year, typically accounts for 60-65% of India’s annual smartphone shipments, according to industry experts.
The industry is seen as a bellwether for the broader consumer electronics market. According to IDC data, smartphone shipments fell 10% to 144 million units in 2022, with 73 million units shipped in the second half of the year.
Tarun Pathak, director of research at market research firm Counterpoint India, said in January that last year’s fall in festive period exports was due to record high unsold inventories for more than 10 weeks. Typically, smartphone retailers keep stock for around 3-4 weeks.
“Inventories have normalized to some extent now – up to about 7 or 8 weeks. The launch of new devices saw a slight increase in demand even as the average selling price (ASP) of smartphones fell. ₹17,000 onwards ₹18,000 from now ₹20,000 at the start of the year,” Pathak said on Monday. He said this would lead to “low single-digit growth” in smartphone shipments in the current quarter.
However, consumer demand remains moderate. Manish Khatri, partner at Mumbai-based retailer Mahesh Telecom, said device sales and consumer interest “remain low”.
“The mid-range price bracket of smartphones is falling and demand is falling. There are some isolated demand factors in the premium segment like Samsung’s Galaxy Flip series and Apple’s iPhones. However, bulk segment shipments remain weak and show no sign of revival from the previous year,” Khatri said.
Kailash Lakhyani, founder and chairman of industry body All India Mobile Retailers Association (AIMRA), said there is no sign yet of a revival in demand, similar to the offerings during the Ulsava season.
“Most retailers continue to see modest demand, and until after Independence Day when most of the discount offers kick in, there is no sign of demand picking up,” he said.
IDC’s Singh added ₹The 20,000-second hand drives more buyers into the smartphone market.
“Xiaomi and Realme, the two largest brands by volume, are likely to remain conservative this festive season and throughout the year. Xiaomi is struggling to pick up their device shipment numbers, which has created a void in the market that Samsung, Transition Group and homegrown Lava are trying to fill. It is roughly in the price range for mainstream market devices ₹15,000. However, high component costs in the supply chain prevent brands from reducing the price of 5G smartphones to this point. As a result, buyers are looking for 5G phones ₹7,000 onwards ₹12,000 are turning to the second-hand market for their equipment,” Singh said.
Industry forecasts estimate around 35 million units of smartphone shipments in the June quarter, which would account for around 65 million units of smartphones shipped in the first half of the year. With less demand in the market, smartphone shipments are unlikely to pick up pace in the second half of the year—leading to another 10% decline this year.