India is now second only to China in global smartphone sales, having surpassed the USA.
Year-on-year smartphone shipments in India grew by 23% in the third quarter of 2017, exceeding 40 million units according to research firm Canalys.
“There are close to 100 mobile device brands sold in India, with more vendors arriving every quarter. In addition, India has one of the most complex channel landscapes, but with low barriers to entry,” said Canalys research analyst Ishan Dutt. He added that the “explosion of LTE” coupled with low smartphone penetration would see growth remaining strong.
Samsung saw its year-on-year shipments increase substantially, hitting 9.4 million in Q3 this year compared to 7 million at the same time last year, but it was Xiaomi that saw the most dramatic growth. The Chinese vendor saw a huge 290% increase in shipments, leaping from 3 million last year to 9.2 million this year.
Between them, these two vendors sold roughly half of the smartphones bought in India. Lenovo, Oppo and Vivo round out the top five smartphone makers in India, with the five companies collectively accounting for 75% of all shipments.
Canalys analyst Rushabh Doshi said: “Xiaomi’s growth is a clear example of how a successful online brand can effectively enter the offline market while maintaining low overheads, but Xiaomi focuses on the low end. It struggles in the mid-range – devices priced between INR15,000 [$230] and INR20,000 – where Samsung, Oppo and Vivo are particularly strong. Nevertheless, we predict Xiaomi’s continued go-to-market innovations will allow it to overtake Samsung within a couple of quarters.”
Despite not being granted its requested tax breaks, in May this year Apple began manufacturing iPhones in India and shipped 900,000 handsets in Q3 2017. It distributes its devices through authorised resellers but is reportedly close to receiving permission from the government to open single-brand retail outlets in India.
Recent shake-ups to the Indian economy included the introduction of a goods and services tax (GST) during 2017 and the government’s swift removal of higher-denomination banknotes from circulation – termed ‘demonetisation’ - as a fraud prevention measure. However, now that these steps have been taken, vendors are adhering to them and the economy has grown more stable.
Doshi said: “The Indian economy is proving very strong in the second half of 2017, now that the twin shocks of GST and demonetisation are behind it. Reduced indirect taxes have added new equity to the market, with distributors and retailers able to serve areas beyond their home regions as inter-state operations become easier. As the infrastructure matures, consolidation in distribution is inevitable.”
IDC India senior analyst Jaipal Singh also noted: “Sentiment is indeed positive in the market. All the ambiguities have cleared now, and vendors are gearing up for the upcoming festival season to recover from the slow start in the first half of this year.”