Indian smartphone market closes with 124 million total shipment units in 2017

The Quarterly Mobile Phone Tracker of International Data Corporation's (IDC) has revealed that the Indian smartphone market has witnessed a healthy 14-per cent annual growth with a total shipment of 124 million units in 2017, making it the fastest-growing market amongst the top 20 smartphone markets globally. The market resumed its double-digit growth after a temporary slowdown in 2016, caused by factors such as demonetization and a shortage of smartphone components. This contrasts with China, the world's largest smartphone market that saw its first decline this year, while the USA was relatively flat.

After the 2017 Q3 festive quarter, the smartphone category saw a sharp dip of 22 per cent quarter-over-quarter (QoQ) in 2017 Q4 as vendors focussed on clearing channel inventory. However, it registered a healthy 18-per cent growth compared to last year's weak quarter which was impacted by demonetization.

China-based vendors further strengthened their positions in the smartphone category with the collective share of China-based vendors reaching 53 per cent in 2017 from 34 per cent a year ago. "The untapped demand in the lower-tier cities remains the key attraction for China-based brands to explore the growth trajectory in India. Their strength in their home market of China and weakening position of local players has helped some of these China-based players to solidify their operations in India," says Jaipal Singh, Senior Market Analyst, IDC India.

India is the world's third-largest smartphone market, and also continues to hold its position of being the biggest feature phone market globally. 2017 has been an exceptional year for this category as it witnessed a 17-per cent annual growth after declining for three consecutive years. While feature phones remain relevant to a large consumer base in India, the Indian telecom operator Reliance Jio shipped huge shipments of 4G-enabled feature phones taking the leadership postion on its maiden quarter in this category. This resulted in a total of 164 million feature phone shipments in 2017 from 140 million a year ago. In 2017 Q4, vendors shipped a total of 56 million units in the 2017 Q4, making it the highest-ever shipments in a single quarter. The category registered a huge 67-per cent year-over-year (YoY) growth and 33-per cent growth from the previous quarter.

Commenting on the key trends of 2017 Q4, Upasana Joshi , Senior Market Analyst, IDC India, said, "Xiaomi taking a lead over Samsung in the smartphone market and Reliance Jio emerging as the leading feature phone company in India were the two key highlights of the last quarter of 2017. Joshi adds further, "The growth of both the vendors was propelled by their aggressive pricing. Xiaomi's offline expansion and higher marketing spends were other key factors for the vendor's high shipments in the seasonally low quarter."

Xiaomi replaced Samsung for the leadership position in the 2017 Q4. Xiaomi tripled its shipments year-over-year and sold more than 2 million units from its offline channel. In continuation of its offline expansion through Mi stores and preferred partners, Xiaomi appointed its first product endorser, and is now very aggressive in above the line marketing, which helped the brand to gain traction in the offline channel.

Samsung slipped to second position in smartphone ranking in the last quarter of the year but leads in the overall year. Despite growing 13 per cent year-over-year in 2017Q4, it faced challenges in competing with the aggressive pricing strategy of Xiaomi in India. However, the channel trust remains strong on brand and Samsung's distribution strength remains strong too, even as other vendors approach retailers and channel partners with lucrative offers.

Vivo rose to the third position after dropping to fourth in the last quarter. However, its shipments saw a 41-per cent decline from the previous quarter and remained flattish on YoY basis. To extend its omni-channel experience, Vivo launched its maiden experience centre in India and also participated in Amazon and Flipkart's winter sales this quarter.

Lenovo (including Motorola) slipped to fourth position as its shipments declined sequentially and annually in the 2017 Q4. Lenovo continues its efforts to strengthen its Motorola brand in India as Lenovo-branded shipments declined almost 60 per cent, while its Motorola portfolio saw a marginal increase compared to a year ago.

OPPO maintained its position though its shipments dropped almost by half compared to its record-breaking quarter in 2017Q3. OPPO made changes to its channel strategy as it started focussing more on selective outlets instead of having a presence across all outlets.