India's smartphone market records steepest first quarter decline of 19%

India's smartphone shipments dipped to about 31 milion units in the January-March quarter, thereby recording the steepest fall of 19 per cent in the first quarter on year-over-year basis, market research firm Counterpoint said on Thursday.

Mobile phones priced below Rs 30,000 apiece recorded a sharp decline while shipment in the premium and ultra premium category registered 60-66 per cent increase.

"This was the highest ever Q1 decline seen by India's smartphone market, besides being the third consecutive quarterly decline. Sluggish demand, high inventory build-up carried over from 2022, growing consumer preference for refurbished phones and pessimistic channel view of the market contributed to this decline," Counterpoint's market monitor service report said.

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5G smartphones's contribution to total smartphone shipments reached a record of 43 per cent.

"With a 20 per cent share, Samsung led the Indian smartphone market for the second consecutive quarter. It was also the top 5G brand," the report said.

Samsung's new 5G-capable A series performed well in the offline market, contributing 50 per cent of the shipments.

Samsung's ultra-premium segment (priced above Rs 45,000) grew 247 per cent YoY in March 2023 quarter driven by the successful launch of the S23 series and financing options, the report said.

Apple grew 50 per cent YoY and acquired a 6 per cent share in March 2023 quarter.

Apple maintained its lead in the overall premium segment (Rs 30,000) as well as in the ultra-premium segment ( above Rs 45,000) with 36 per cent and 62 per cent shares, respectively.

The shipment of the iPhone maker was fuelled by its new financing scheme with HDB Financial Services and promotions on the latest iPhone 14 series in offline channels.

"Premiumization trend is becoming stronger with each passing quarter. The premium segment's share almost doubled in the first quarter of 2023 compared to the first quarter of 2022," Counterpoint senior research analyst Prachir Singh said.

Singh said affordability is the key here as more financial schemes were being launched, like Apple's 'no-cost EMI with zero down payment' offers on the latest premium segment, increase in trade-in offers and push from retailers.

"The premium segment's growth is reducing the mid-tier share as consumers are upgrading to higher-priced smartphones," Singh said.

Mobile phone price in the range of Rs 20,000-30,000 recorded a 33 per cent fall in shipment, Rs 10,000-20,000 segment registered a 34 per cent decline and phones priced below Rs 10,000 recorded a 9 per cent decline in shipment on YoY basis.

"We are observing a change in consumer behaviour – demand is now concentrated around promotional periods. The beginning of the quarter saw a surge in demand across channels around the Republic Day sales period. However, demand dropped significantly after the sales period. Channel players are now focussing on getting rid of existing inventory instead of creating a fresh inventory of new models," Counterpoint senior research analyst Shilpi Jain said.

She said the quarter's silver lining came from 5G smartphones, whose contribution (43 per cent) crossed 40 per cent for the first time, registering a 23 per cent growth YoY as consumers kept upgrading to 5G devices.

"We believe these situations will remain similar in the second quarter of 2023 as well with growth coming back in the second half of the year owing to faster 5G upgrades, easing macroeconomic pressure and festive season," Jain said.

Vivo also maintained its second position during the reported quarter with a 17 per cent market share despite a 3 per cent YoY decline in shipment.

Xiaomi experienced a 44 per cent YoY drop from first quarter 2022, falling to the third spot during the reporting quarter with a 16 per cent share.

"The decline was due to weak demand in the sub-Rs 10,000 segment, more dependence on online channels even when demand is higher in offline channels, and a confusing portfolio. The Redmi Note 12 series received a positive response from consumers, contributing to over 14 per cent of Xiaomi's total shipments," the report said.

OnePlus was the fastest growing brand with 72 per cent YoY growth in the March 2023 quarter.

"Among local brands, Lava did well with its refreshed portfolio in the sub-Rs 10,000 segment. Lava continues to offer the cheapest 5G smartphone (Blaze 5G). It was also the third fastest-growing brand in Q1 2023 with 29 per cent YoY growth," the report said.