Smartphone sales unlikely to see any fireworks this festive season

Market trackers estimate sales of smartphones during the September-October festive season are likely to grow in single digits on-year supported by affordable 5G phones amid huge efforts by brands to boost demand through discounts and offers.

Research firm Counterpoint Research expects handset sales to grow 4-5% year-on-year to 30-35 million units during the one-month festive period, with online channels being more aggressive in terms of promotions and discounts.

“Online channels saw a decline in the first half of the year, so we can expect them to be back with aggressive discounts and promotions for consumers. High-end brands like Apple and Samsung also saw a dip in their fortunes, and there could be aggressive price cuts on iPhones and flagship Samsung phones,” said Shilpi Jain, senior research analyst, Counterpoint Research.


Though higher than the first two quarters, 2024’s festive season sales could fall short of 2021 peak of over 40 million units shipped, said research firm Canalys, adding that brands are expected to start filling in channels from late August with festive sales starting from September.

“With more people now buying high-end devices and device replacement cycles now at an all-time high, it would be difficult to emulate the success of previous years. 5G will continue to be a growth driver, but that won’t have any outsized impact on the festive season,” said Sanyam Chaurasia, analyst at Canalys.

Shipments for the festive period are expected to range between 38-39 million, according to Canalys, though revenue collections could be higher due to increasing consumer preference for high-end devices.

Analysts track both shipments and sales to measure market performance. Shipments, or sell-ins, are units that go from the factories to channels, while sales or sell-outs are outflow from retailers to consumers.

“Our forecast is a 6-7% growth in shipments, but brands might face issues in clearing out inventories. As of now, Realme and Samsung have a lot of inventory, and are dependent on the monsoon sales to clear them out to make room for fresh shipments for the festive season,” Chaurasia said.

“Samsung faced some sellout challenges in Q2 as retail did not do that well due to the adverse weather conditions, while Realme presently has a confusing portfolio which is creating challenges in clearing out inventory for them,” Chaurasia said.

Analysts added that Vivo and Xiaomi are have a lean inventory after the end of the second quarter, putting them in a better position to increase shipments for the festive season. Both brands also have plans to announce new models ahead of the festive season.

Xiaomi has confirmed it will be bringing out a sub-$100 5G smartphone powered by a Qualcomm 5G chip before the end of the year.

CyberMedia Research (CMR) India expects the festive season to deliver growth after a 4% on-year decline in the June quarter. “Aggressive offers and easy financing schemes will fuel consumer smartphone upgrades. It will be interesting to witness 5G diffusion towards lower price tiers," said Pankaj Jadli, analyst-industry intelligence group (IIG), CMR.

Counterpoint’s Jain said the Rs 10,000-15,000 price segment will see a lot of action during the period, along with the ultra-premium segment above Rs 45,000 where majority of the discounts and promotions will be pushed by ecommerce platforms.

The discounts may help ecommerce gain more market share, Jain said, forecasting a jump to 48-49% of the market from 39% in the second quarter, while offline retail is expected to see a surge near the end of the season, ahead of Diwali.

Jain added that the August sales, which are set to start around Independence Day, will be crucial for brands. “The August sales will be an indicator for the brands as to how the market is expected to behave during the upcoming festive period. They will also focus on clearing out existing inventory during these sales, before shipping fresh units for September and October,” Jain said.