Indians can buy smartphones within a price range of Rs 3400 and Rs 1,64,999, depending on their budget and brand preference. However, over the past few quarters, the number of brands to choose from has shrunk considerably. This means a few brands like Xiaomi, Samsung, Vivo, Oppo and Realme have also become more visible.
This trend is also showing up in the numbers for the Indian smartphone market. Research firm IDC says in 2019, the top five smartphone players in India — Xiaomi, Samsung, Vivo, Oppo and Realme — together cornered around 86 per cent of the market. In 2017, the others had about 30 per cent share which has now shrunk to less than half of that.
As the data shows the top five brands becoming bigger, it also leaves very little space for other brands like HMD Global (Nokia), Motorola, Transsion (Infinix) and Honor (Huawei) to manoeuvre in. While Apple might be able to survive with a smaller market share because of its higher average selling price and overall value, the smaller brands need the volume to make meaningful revenues.
IDC’s analyst Upasaana Joshi says Xiaomi, Samsung, Vivo and Oppo consistently appeared in top five every year ensuring that the play is tough and requires efforts to climb up the ladder for any other brand. The Rs 7,000 to Rs 15,000 price segment, she said, is too crowded for any new brand to make a mark in. The Rs 15,000 to Rs 25,000 price bracket is driven by known brands, and the super-premium smartphone category is limited to a select few brands that have their own loyal fans, she elaborated.
Smartphone players exit India
With the market increasingly dominated by three-four major players willing to sell products at aggressive prices, the smaller players who can’t compete on scale, marketing budgets, offline retail presence and premium features are being squeezed out. The smaller players together had only 10.9 per cent market share in the final quarter of 2019, according to IDC.
As a result, there have been many high-profile exits. The list includes Sony, Obi, Comio, Mobiistar, TCL and LeEco among others. Rumour has it that Black Shark has put its expansion plans on the back burner for now, citing less than expected sales of its gaming smartphones in India.
Sony, despite having good brand recall, failed to sell smartphones that resonate with Indian consumers. Many felt its phones were “too boring”, others felt Sony was too slow to refresh its lineup of devices. The brand left the Indian smartphone market last year. LG too has scaled down its offering. But there have been some who have returned after a small hiatus.
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Established players like HTC have also faced headwinds in India. The brand actually exited the market in 2018, but recently re-entered the Indian smartphone space with a partner called InOne Smart Technology. But the response to the newly launched HTC-branded smartphones have been muted, to say the least.
Gionee is another player that struggled despite having a significant presence in offline retail channels and distribution at one point in time.
The arrival of Xiaomi in 2014 completely changed the Indian smartphone market. As its stature rose, thanks to its unique business model and affordable prices, the company started eating into the market share of domestic smartphone brands like Micromax, Lava, Karbonn and Intex. While Karbonn and Intex decided to leave the market completely Micromax and Lava still sell smartphones.
“The market share of Indian smartphone vendors has been declining considerably every quarter,” says Prabhu Ram, an analyst with CyberMedia Research (CMR). “From 4.1 per cent market share in the smartphone market in Q1 2019, the market share for Indian brands has declined to an alarming 0.7 per cent at the end of the year.” This is in contrast to a time when Micromax alone held over 20 per cent share.
“The presence of Indian brands like Lava and Micromax can still be felt in the feature phone segment. Since both these brands had their manufacturing lines set up in India they are now contract manufacturers to AT&T and T-Mobile and shall continue to focus on such deals in 2020,” says Joshi.
It’s hard for domestic players to compete with Xiaomi, Oppo or Realme, Prabhu feels. He suggests Indian brands need to invest in R&D and try to capitalise on their reach in tier-3 and tier-4 cities. That’s one way to become relevant in the smartphone market.
Perhaps the biggest reason why so many smartphone brands failed in India is the lack of unique products. They were also slow to react to the changing dynamics of the market.
Growth opportunities for newer brands
Although the Indian smartphone market is rapidly consolidating, there are still growth opportunities for newer brands. “The market might seem consolidated to a very large extent but doesn’t shut doors for newcomers, as can be witnessed from Realme’s online growth or early quarters when Transsion group forayed into India market through offline way,” Joshi said.
Realme, which started as a sub-brand of Oppo before becoming an independent brand, is now considered to be among the top five smartphone players in India. The brand, which was founded in 2018, has successfully made a mark in the budget and mid-range smartphone segment in India, where the demand for smartphones under Rs 20,000 is booming. Realme is now eyeing the premium smartphone segment and has already launched the Realme X2 Pro which starts at Rs 30,000.
Taking on the likes of Realme, Xioami recently decided to spin off Poco into a new brand. Launched in 2018, Poco created waves with the Poco F1, an affordable smartphone with flagship specifications. However, the brand went into a hibernation mode due to the exit of product head Jai Mani. Now, Poco is back with a new business strategy and clear aim to take on Realme and Samsung.
Similarly, Vivo is introducing a new brand iQOO in India later this month. This will be an independent brand with its own team based in Bangalore. IQOO will play in the premium smartphone segment, where OnePlus has a significant market share. The smartphone, likely to be called IQOO 3, will be powered by a Snapdragon 865 processor and 5G connectivity.
Small players like Apple and OnePlus are big gainers
Recent data from research firm IDC shows that Apple was the number one player in the premium smartphone segment, surpassing Samsung with a market share of 47.4 per cent in 2019. This is the same company that has been targeted for not focusing on India. Sure, Apple has roughly 2 per cent market share in India’s smartphone market but the company has done exceedingly well in the segment it is present in thanks to the iPhone XR and iPhone 11.
Unlike its Chinese counterparts, Apple does not focus on market share. Instead, it focuses on producing high-quality smartphones for a particular section of the market. Its parameter of success is its revenue from each iPhone user. According to Counterpoint Research, Apple captured 32 per cent of total smartphone revenue, and 66 per cent of total smartphone industry profits.
OnePlus is another smartphone brand that only focuses on the premium segment by focusing only on high-quality smartphones. Despite an increasing ASP, OnePlus continues to sell its smartphones in record numbers in India, which is also its biggest market.
Both Joshi and Prabhu agree that there is a scope of growth in the low-end of the smartphone market. “If any new brand can offer a compelling yet low-cost device, it will take the overall market with a blow as the existing ones have already made attempts with Android Go offerings which had middling demand,” Joshi said.
“The Indian market offers plenty of pockets for growth for smaller players, who are able to define their niche with the right target segment focus, specs, pricing and right messaging,” he said, adding that in a price-sensitive market like India smaller brands should focus on aggressive pricing to get consumer acceptance.
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