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Xiaomi closes in on Samsung as Indian smartphone shipments grow 12% in Q1

Xiaomi closes in on Samsung as Indian smartphone shipments grow 12% in Q1

The first quarter of 2017 saw a return to growth for India’s smartphone market, with over 27 million units shipped marking a 12% year-on-year increase.

Research firm Canalys noted that while Samsung retained its lead in the market, sequential growth saw Chinese device manufacturer Xiaomi take the second spot, while Vivo came third. The top five spots were rounded out by Lenovo and Oppo, with the former shifting up a place to fourth and the latter falling to fifth.

Samsung shipped 6 million units in the quarter, keeping its 22% market share steady. Xiaomi meanwhile boosted its market share to 14%, up by 3% year-on-year, with sales of 4 million units. The firm’s rapid growth is allowing it to close in on Samsung’s lead.

Canalys Research Analyst Ishan Dutt said: “Xiaomi’s success in India is underscored by its online go-to-market strategy.” He added that the Modi government’s recent strategy of pulling high-value bank notes from circulation did not seem to affect the vendor, saying: “demonetisation seems to have had no impact on [Xiaomi] as its target customer is young, Internet-enabled and primarily buys online.”

Last month, Xiaomi confirmed that it was planning a further $500m investment in India after investing this amount into the market across the past year, with co-founder and CEO Lei Jun describing India as Xiaomi’s most important overseas market. Lei added that the company was expecting to double its Indian sales in 2017 to $2 billion.

Third-placed Vivo surpassed the 10% mark this quarter, with an impressive 36% growth in sequential shipments. Canalys research analyst Mo Jia said that Vivo’s “focus on the highly fragmented ‘unorganised’ retail market is paying off. Its ability to drive sales by investing in marketing campaigns has seen it displace local vendors that once thrived in this space.”

The Indian smartphone market is set for upheaval as the government looks to phase in its Goods and Services Tax in the coming quarters. “We will see a change in vendors’ channel strategies as new distribution models become more cost-effective,” said Dutt. “Pure online players are likely to suffer, and those that react quickly to the new regulations will benefit.”

Indeed, there have already been significant shifts since Q4 2015, when almost 30% of the market belonged to Indian brands Intex, Lava and Micromax. All three companies have been pushed out of the top five in the past six months.

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