With an Year-on-Year Growth of 84%, Smartphone Market Still Has An Immense Potential: Says IDC

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18 Aug 2014

Smartphone market in India has maintained its growth impetus with smartphone shipments touching year-on-year growth of 84% in Q2 2014 and a quarterly growth of 11%.  The potential for growth in the smartphone market is quite high as 71% of the market continues to be on feature phones.

According to International Data Corporation (IDC), the overall India mobile phone market stood at 63.21 million units in Q2 2014 i.e. a 5% quarter on quarter growth against Q1 2014. The growth can be attributed to both the product categories i.e. smartphones and feature phones from Q1 2014 to Q2 2014.  Back to back volume growth in the smartphone market are being noted due to the re-defined low price models in smartphones and continuous migration from feature phones to smartphones.



Figure 1

The Indian smartphone market grew by 84% year-on-year in Q2 2014. According to IDC Asia Pacific Quarterly Mobile Phone Tracker (excluding Japan), vendors shipped a total of 18.42 million Smartphones in Q2 2014 compared to 10.02 million in the same period of 2013. The sub $200 category of the smartphone market is increasing in terms of the shipment share as the contribution from this category stood at 81% in Q2 2014. With the influx of Chinese vendors and Mozilla’s plans to enter the smartphone category at $50 level, the low end segment of the smartphone market will become crucial in the coming quarters.

The Shipment contribution of “Phablets” (5.5 inch - 6.99 inch screen size Smartphone) in Q2 2014 was noted to be 5.4% of the overall Smartphone segment. Phablet category grew by 20% quarter-on-quarter (QoQ) in terms of sheer volume. More than half of the Phablets shipped are under $250 price band and Indian vendors are dominant in the noted price segment.



Figure 2

Source: IDC Asia Pacific Quarterly Mobile Phone Tracker Q2 2014

Jaideep Mehta, Vice President and General Manager - South Asia, IDC says, “While Samsung has held on to its leadership position in the market, it is noteworthy that Micromax is growing faster. Samsung needs to continue to address the low-end of the market aggressively, and also needs a blockbuster product at the high end to regain momentum. Given the current growth rates, there is a real possibility of seeing vendor positions change in the remaining quarters this year.”

“IDC observes that a new entry level price point is being breached by the Indian home grown vendors every quarter. These devices are not equipped with high end specifications and RAM is typically 256 MB. This ultra low cost segment may not sound a viable option to the repeat buyers, but it works well on the targeted segment”, says Karan Thakkar Senior Market Analyst at IDC India.

Q2 2014 has been an exciting quarter for the players in the mobile phone market.  Among the top five vendors, Micromax and Lava were the only ones to have outstripped the market growth. The former grew by 18% and the latter by 54% in the overall phone business.  Micromax not only toppled Nokia to clinch the 2nd spot but also created a gap between the 2nd and the 3rd spot.



Figure 3

Source: IDC Asia Pacific Quarterly Mobile Phone Tracker Q2 2014

Top Five Smartphone Vendor Highlights

  • Samsung: With 29% market share in Q2 2014 Samsung is the outright market leader. High volume support came in from the sub $150 products such as Galaxy Star pro and Galaxy S Duos. In order to maintain their leadership in the market, Samsung needs to work on the margins at the entry level models. With the entry of Chinese vendors and repeated challenges being poised by the Indian vendors, the entry level segment of smartphone market has become a game changer and plays an important role in defining the leadership position.
  • Micromax: Micromax with 18% of the market share stood at the second spot and has been growing quarter on quarter.
  • Karbonn: Karbonn has maintained its third position. However the gap between Micromax and Karbonn has widened significantly.
  • Lava: This brand is within the striking distance from Karbonn and it will not be a surprise if Lava topples Karbonn to clinch the third spot in the smartphone category in the coming quarters.
  • Motorola: Motorola has maintained its success story in the smartphone market in India. Despite being available only through online channel, Motorola has crossed 1 million mark within 5 months of its launch.

 

IDC India Forecast:

“Smartphone market is expected to more than double between now and 2018 and much of this is expected to be driven by the migration from feature phones to smartphones. The user expectations are simple i.e. best-in-class user experience at affordable prices. With the introduction of Mozilla and Android One, the sub 200$ segment is anticipated to become even more appealing”, says Kiran Kumar Research Manager, Client Devices, IDC India.

IDC anticipates high growth in the smartphone market in the coming quarters due to the festive season and continuous run rate buying from the consumer. In the highly competitive mobile phone market, there is a high possibility of a shuffle in the ranking within the top five smartphone vendors in the coming quarters.

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