India smartphone market shrinks; Samsung still leads, Xiaomi enters top 5: IDC

NEW DELHI: Korean major Samsung maintained its leadership position in the Indian smartphone market in the fourth quarter of 2014 with a 22% share, but the overall market shrunk for the first time ever as most handset makers had an inventory pile up at the start of the October-December period, market research firm IDC said.

“This (the fall) was largely owing to a high channel inventory at the beginning of the quarter amongst general trade which in turn was caused by the surge witnessed in online sales during festive season,” IDC said in a report issued Tuesday.

The overall mobile phone market stood at 64.3 million units in the fourth quarter of 2014, which reflects a sequential drop of 11% over Q3 and an on year drop of 5%.

The fourth quarter was seen as a correction phase wherein the smartphone market also declined by 4% while the feature phone market plummeted by approximately 14% over the previous quarter.

Smartphones made up 35% of overall mobile phones business in the country, nearly three times of its share in same quarter in 2013.

Samsung’s smartphone market share however went down two percentage points during the quarter due to stiff competition from Apple and online exclusive brands like Xiaomi and Motorola. IDC said that online brands are hurting Samsung in the value for money category.

Xiaomi’s “online only” strategy has paid off well, which helped it to break in to the top five smartphone vendors in the country, despite of minor hiccups like temporary ban on a particular handset model. The brand held 4% market share in the fourth quarter, IDC said.

Home-bred smartphone vendor Micromax retained its second spot with 18% market share, down two percentage points due to an inventory correction in the quarter owing to high inventories pumped into the channels during the previous quarter.

Intex clinched the third spot, surpassing Lava during the quarter. The brand did not feature in the top five smartphone vendor list until the third quarter of 2014. IDC said the retail presence of Intex has seen more than a two-fold increase while focused product launches and media advertisements worked it during the quarter.

Lava slipped to the fourth spot with 7% share, down one percentage point. However, the brand remains consistent and stable with a good amount of visibility of its distributors, IDC said.

Shipment contribution from vendors like Asus, Microsoft and HTC has witnessed traction in the recent past.

“In the current market scenario, there is a drive in demand for products pitched with high specification at low price points. This trend is likely to continue over the next 4 to 6 quarters, post which consumers are expected to turn back to the handset vendors who charge premium for quality,” Karan Thakkar, Senior Market Analyst at IDC India, said in the report.

He added that smartphone vendors are quick to gauge the consumer demand for 4G handsets. In percentage terms, 4G handsets are still in single digits but vendors who are not yet ready with their 4G portfolio are likely to miss the next wave of smartphone growth story.

IDC anticipates a sluggish Q1 2015. However few global vendors which were in the inventory correction phase until now are likely to exhibit big shipment numbers starting this January-March quarter.

“Operators are gearing up for 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,” said Kiran Kumar, research manager, client devices, IDC India.