It has been a rather rough last few quarters for the Indian smartphone market — something that we had foreseen way back in February when many focussed on a record shipment and revenue year. The Indian smartphone market, which was once known for almost constant growth figures seems to be stuck in a slowdown spiral, and as per IDC’s latest report, has recorded not just another quarter of declining shipments, but actually recorded its worst third quarter since 2019. There are some silver linings on the clouded horizon, but there is no doubt that the Indian smartphone market is in the midst of one of its most challenging phases, with declining shipments and most brands also witnessing shrinking volumes.
Here, then, are the key takeaways of the preliminary data from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker:
Shipments are down… but average selling price of phones is up
The third quarter of 2022 saw a sharp decrease in smartphone shipments in India.
In all, 43.5 million smartphones were shipped, down from 48 million in Q3 2021, a decline of about 10 per cent. This is the lowest third-quarter figure since 2019, and the shocking part is that it comes in spite of a number of high-profile online shopping festivals and an early onset of Diwali-related commercial activities.
Recent times have seen the average selling price (ASP) of smartphones in India rise, both because of people investing in more expensive devices and also because of prices going up generally due to higher component costs.
This trend continued in Q3 2022, with the ASP of a smartphone in India going up to USD 226 (about Rs 18,300), a growth of 15 per cent as compared to last year, and 6 per cent up from the previous quarter.
As per an IDC executive: “The ASP has grown consistently for the past eight quarters in a row due to increasing costs and growing 5G shipments at mid-premium price points.”
We also think this trend reflects the growing influence of the premium segment on the ASP – recent times have seen volumes expand in higher price segments while the lower and mid-price segments have either slowed down or declined.
We wonder how much of a role the increased sales of older editions of the iPhone in this quarter (spurred by some massive discounts on online platforms) played in this.
Growth in the premium segment as others slow down
A notable trend in the Indian market in recent times has been the growth of the premium segment, even as the traditionally stronger mid- and low-price segments have stagnated.
This continued in Q3 2022, with shipments of phones below USD 300 (about Rs 24,300) declining by 15 per cent, even while the premium segment (above $500, or about Rs 40,500) grew by an impressive 64 per cent.
Apple continues to call the shot in the premium segment
A lot of the premium segment’s growth seems to have been spurred by Apple. We think the fact that the quarter saw a number of older models of the iPhone (most notably the iPhone 13) become available at massive discounts online boosted the brand’s share significantly.
As per IDC, Apple enjoyed a massive 63 per cent share of the segment, with Samsung coming second with 22 per cent and OnePlus a distant third with 9 per cent.
Online smartphone purchases saw a boost
Q3 2022 saw most Indians purchasing their smartphones online. As per IDC, a staggering 58 per cent of smartphone shipments in the quarter were online.
Online sales festivals like The Big Billion Days on Flipkart and the Amazon Great India festival played a key role in this, although interestingly, the number of smartphones shipped online itself did not change.
It was the same as Q3 2021 – 25 million units. However, offline shipments fell by 20 per cent as they could not match the aggressive pricing of online players. In the online segment, Xiaomi led the field with 27 per cent, while Samsung shared second place with Realme at 18 per cent.
Xiaomi continues to lead, with online playing a key role
Xiaomi continues to be the number one smartphone brand in India, but the brand’s shipments suffered a decline of 18 per cent in Q3 2022. Its market share too dipped from 23.4 per cent last year to 21.2 per cent.
Seventy per cent of its shipments went to online channels, giving the brand a 27 per cent share of the online market (as stated above). Although the brand has been trying to move up the price ladder, it is interesting to note that its key performers actually came from lower price points — the super affordable Redmi A1 and the likes of the Redmi 9A Sport /10A/10.
Samsung stays stable…and Oppo grows
Samsung stayed in second place in the Indian smartphone market with a share of 18.5 per cent, up from 16.9 per cent last year, although its shipment figures remained the same.
The Galaxy M and F series did well, with the M13 being one of the highest-selling phones of the quarter.
A surprise for many, however, was the fact that Oppo recorded growth in a generally slow quarter — the Chinese brand was the only one in the top five to grow.
It remained in fifth place in the market, but its shipments grew by 6.1 per cent and its share increased from 10.7 per cent last year to 12.5 per cent. Interestingly, Oppo was the leader in offline channels, in a quarter when other brands went increasingly online.
Vivo, Realme tussle for third and fourth
Chinese brands Vivo and Realme slugged it out for third and fourth places, with Vivo finishing slightly ahead with a 14.6 per cent share as compared to Realme’s 14.2 per cent.
However, both brands suffered significant declines in shipments as compared to last year — Vivo’s shipments were down 19.5 per cent while Realme’s slipped by 18.1 per cent. Both brands depended heavily on online channels, with 35 per cent of Vivo’s shipments (with the T series and iQoo doing well) and two-thirds of Realme’s shipments going to e-tailers.
Vivo however, also held a strong position in the offline market with a 22 per cent share of it. Realme on the other hand, had the highest shipped device of Q3 2022 — the Realme C35.
MediaTek is the chip boss in India
This might surprise some, but almost half of the smartphones in India run on MediaTek processors.
The chip manufacturer is the dominant player in the Indian smartphone market with a share of 47 per cent. As per IDC, Qualcomm’s share has shrunk to 25 per cent while new player Unisoc is at an impressive 15 per cent already.
5G phones continue to increase
The network itself might still be taking baby steps in India, but 5G-compatible phones are increasing in number. As per IDC, 36 per cent of the smartphones shipped in Q3 2022 came with 5G.
Samsung was the leader here with a 27 per cent share – in fact, more than half the brand’s portfolio – 53 per cent – is already on 5G.
Of course, the proliferation of 5G handsets might have something to do with the fact that most new processors support 5G, but their growth is still impressive.
Q4 2022 to be tough too…oh, and actually 2023 as well
IDC does not see light at the end of the slowdown tunnel for the Indian smartphone market. It expects a “muted Q4 2022″ as a result of “inventory pile up and post-festive cyclical demand tapering.”
In fact, it expects shipments of around 150 million units in 2022, a decline of 8-9 per cent year on year. And things are unlikely to get better in 2023 either, with “the impact of inflation on consumer demand, increasing device costs, and slow feature phone-to-smartphone migration.”
However, the market is likely to get a boost with 4G users moving to 5G, especially in the higher price segments. How much of a boost that is likely to be is tough to say and will depend on the speed of the 5G rollout, we suspect.