India's Smartphone Market: 5G Shipments Cross 100 Million, YoY Decline Shrinks to 3%

India's smartphone market experienced a notable turnaround in the second quarter of 2023, as reported by Counterpoint's Monthly India Smartphone Tracker. Despite a challenging year, the market showed signs of improvement with a 3% year-on-year decline in smartphone shipments during the April-June period.

This decline was significantly less severe compared to the previous quarter's 19% drop. Various factors contributed to this recovery, including the base effect, pent-up demand, and positive changes in macroeconomic conditions, as stated by the report. Notably, the premium smartphone segment witnessed remarkable growth, registering a staggering 112% year-on-year increase and accounting for 17% of overall shipments.

The Factors Driving Recovery

The second quarter of 2023 saw improvements in inventory and demand for Original Equipment Manufacturers (OEMs) ahead of the festive season. Both OEMs and channels took aggressive measures to clear existing inventory through multiple sales and promotions. On the consumer end, falling inflation and improved growth prospects contributed to the recovery in demand.

The adoption of 5G devices in the ₹10,000-₹15,000 (~$122-$244) price segment also played a significant role in driving growth. As brands prepare to introduce interesting launches and offers during the festive season, 5G technology is anticipated to be a major growth driver in the coming months.

The Competitive Landscape

In terms of market share, Samsung retained its position at the top for the third consecutive quarter, holding 18% of the market. The company made an impressive comeback in the premium smartphone segment (>₹30,000 or ~$366), capturing 34% of the market share and surpassing Apple to regain its leading position.

Aggressive offers on specific Samsung models, such as the Z Flip3 and S21 FE, along with Samsung Finance+ services, contributed to this growth. Apple, on the other hand, continued to dominate the ultra-premium segment (>₹45,000 or ~$549), holding a commanding 59% share.

Vivo secured its second spot in the overall market and was the only brand among the top five to experience year-on-year growth. Its strong offline presence and the growth of sub-brand iQOO in the online space, along with multiple launches across different price tiers, contributed to this positive performance.

Meanwhile, OPPO focused on expanding shipments in the higher-tier segments, particularly the upper mid-tier range (₹20,000-₹30,000 or ~$244-$366), and emerged as the top brand in this segment with a 21% market share.

5G Smartphone Growth and Premiumization Trend

India's 5G smartphone shipments surpassed 100 million units in Q2 2023 due to the expansion of 5G networks and the availability of affordable devices. Year-on-year, 5G smartphone shipments grew by an impressive 59% during the quarter. The premiumization trend gained momentum as well, with the premium segment experiencing a rapid growth rate of 112% year-on-year. This growth was fueled by value-based incentives for retailers, aggressive promotions, availability of credit through financing schemes, and a focused approach by OEMs.

Channel Dynamics and Feature Phone Growth

The offline channel's share in smartphone sales has been increasing and is projected to rise to 54% in 2023. Even online-heavy brands like Xiaomi, Realme, and OnePlus are emphasizing offline expansion to enhance customer engagement and ecosystem development. Samsung and Apple are also increasing their offline presence to cater to diverse consumer preferences, indicating a comprehensive approach utilizing both online and offline channels for a better customer experience.

In addition, 4G feature phones showed growth during Q2 2023, with their share in overall feature phone shipments increasing to 10%. This growth was driven by the launch of the JioBharat and itel Guru series. The share of 4G feature phones is expected to further rise to 18% by the end of 2023, supported by growing demand for UPI, multiple OEM launches, and Reliance's initiatives.

With brands gearing up for the festive season and 5G technology expected to drive further growth, the smartphone market in India holds exciting prospects for both consumers and manufacturers.

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Image Source: Counterpoint