On the positive side, smartphones formed 35 percent of the overall mobile phone business in Q4 2014, compared to a 13 percent share in the same quarter a year earlier
For the first time ever, smartphone shipments fell in India during the last quarter of 2014. The smartphone market contracted by 4 percent, while the feature phone market plummeted by 14 percent in relation to the previous quarter, according to data from the International Data Corporation (IDC).
The 64.3 million units shipped by vendors to sales channels in Q4 2014 was also 5 percent lower than the number of phones shipped in the corresponding period of the previous year. This includes both smartphones and feature phones.
It’s worth noting here that the contraction was in shipments from phone vendors, and not necessarily in phone sales from retailers.
Realities of saturation
The main reason for the drop in shipments has been attributed to the big inventories built up with sales channels during the third quarter. That was due to the strong surge in sales during the festive season.
While the overall phone market contracted by 11 percent quarter-to-quarter, the decline was mainly in feature phones. On the positive side, smartphones formed 35 percent of the overall mobile phone business in Q4 2014, compared to a 13 percent share in the same quarter a year earlier. This confirms a strong shift from feature phones to smartphones.
Samsung maintained its leadership position in Q4 2014, with Apple presenting stiff competition, but “online exclusive” brands like Xiaomi are making big inroads in the value-for-money category. Homegrown vendor Micromax shipped fewer phones in Q4 2014 owing to high inventories pumped into sales channels during the previous quarter in the festive season.
“In the current market scenario there is a drive in demand for products pitched with high specifications at low price points. This trend is likely to continue over the next four to six quarters, after which consumers are expected to turn back to the handset vendors who charge premium for quality,” says Karan Thakkar, senior market analyst with IDC India.
Intex had a late surge in the year, entering the top five smartphone vendor list for the first time in the third quarter and ending up at the number three slot in the next quarter. The brand’s retail presence had a two-fold increase during this time, with a number of product launches. Lava slipped to the number four position.
Xiaomi completed the top five in the last quarter, and this was despite a temporary ban on sales of some of its models due to a patent dispute with Ericsson.
IDC anticipates a sluggish first quarter in 2015 too, as the inventory correction phase pans out. The next spike in smartphone demand is likely to be linked with 4G.
“Operators are gearing up for the 4G network rollout. For vendors and ecosystem partners, greater emphasis on 4G enabled handsets at competitive price points will be the order of the day. End-users’ desire to upgrade and keep abreast with the latest technology will continue to drive strong growth for the smartphone market throughout the course of 2015,” says Kiran Kumar, research manager with IDC India.
Image Credit: Shutterstock/ DELHI – FEBRUARY 5: Sleeping salesman waiting headlessly for customers on February 5, 2008 in Delhi