Xiaomi, Lenovo, Oppo and Vivo: These four Chinese players have conquered the Indian smartphone market, pushing out their Indian counterparts from the list of top five vendors, and relegating them to the feature phone market. This was confirmed after the latest numbers from research firm International Data Corporation (IDC) were released.
IDC’s research showed while Samsung continues to lead the smartphone market in India with over 25.1 per cent market share, the rest of the top five players are all Chinese. At number two is Xiaomi with 10.7 per cent market share, which saw a 15 per cent quarter-on-quarter growth. Xiaomi is followed by Lenovo Group which has 9.9 per cent market share (after a quarterly decline of 17.4 per cent) and Oppo and vivo are at number four and five, respectively.
As the list makes it evident, the rise of Chinese smartphone players has hit Indian manufacturers pretty hard. None of them managed to make it to the top five for Q4, which IDC says is the first time. The firm also notes the combined share of China-based vendors touched a whopping 46 per cent in this quarter, with their shipments doubling in volume. In contrast, the total share of homegrown vendors slipped to 19 per cent of the smartphone market.
For Samsung, its J-series, with the J2 in particular, continues to drive shipments. Xiaomi is also expanding its offline retail presence; the company has Redmi 3S + as exclusive for offline. Lenovo’s shipments were driven by Moto E3 Power and Lenovo’s K5 series, which accounted for almost half of the company’s shipments in the quarter.
Oppo and vivo have managed to establish themselves in the market as well. Oppo saw 29.9 per cent sequential growth in the quarter, and has a strong retail presence coupled with aggressive marketing. Finally, vivo, which stands at number five, saw 50.8 per cent sequential growth.
“This is first time when none of the homegrown vendors were able to make their position in top five,” Jaipal Singh, Market Analyst, Client Devices, IDC India said in a press statement. “The decision of sticking with a 3G-heavy portfolio and prioritising the price game over product experience is working against the dominance of homegrown vendors,” he added.
However, the overall mobile phone market for 2016, which includes feature phones that are still the dominant selling phones in India, is where homegrown manufacturers have a significant share. But here too they face competition from China.
Samsung still leads the overall mobile vendor market for 2016, followed by Micromax which has 10 per cent market share. Micromax, which used to be the number two smartphone manufacturer in India, saw an annual decline of 20 per cent. Intex, Lava and Karbonn follow in the list respectively, but all have seen a double-digit decline in their annual growth, show numbers from IDC.
The Indian mobile market saw 109.1 million units of smartphones being shipped for all of 2016, and this was a modest 5.2 per cent annual growth. In Q4 2016, the number of smartphone shipments stood at 25.8 million units, which was a 20.3 per cent decline over the previous quarter. IDC puts this as a seasonal decline post the festival season combined with demonetization impact for the low consumer sales in November and December.
“This is relatively lower than expected smartphone shipments for India owing to sluggish first half and demonetisation at the end of year” Karthik J, Senior Market Analyst, Client Devices, IDC said in a press statement.
The report also notes the prices of smartphones is still quite high, and thus migration from feature to smartphones has slowed down. “Also, ease of use, long battery life and durability of feature phones continue to be relevant for large numbers of users of this category,” added Karthik.
The report also says for Indian players, the bad times could last with Chinese vendors entering the feature phone market. China’s Transsion Group and its ‘itel’ feature phone brand is already at number two in the overall mobile phone market for Q4, 2016. Plus the group will launch more brands in the latter half of 2017 within the same price bands. This could spell further trouble for Indian manufacturers. Overall 136.1 million units of feature phones were shipped in all of 2016, much more than smartphones.
For Indian players, the market has changed drastically from what it looked like back in 2015. The rise of online sales for smartphones along with the aggressive expansion of Chinese players has resulted in loss for Indian players. Online sales in smartphone market were 31.2 per cent, and this is dominated by Xiaomi and Lenovo, which account for more than half of the channel’s volume.
Xiaomi and Lenovo’s dominance in this channel, where sales continue to grow, shows that Indian players have missed out on a serious opportunity.